Navigant Research Blog

Corporate Climate Leadership at the Dining Table

— February 13, 2018

Over the last 3 years, 341 companies have joined the Science Based Targets initiative, of which at least 40 are from the food and beverage sector. These companies include household names such as Walmart, Coca-Cola, General Mills, Kellogg’s, and PepsiCo, with billions in combined revenue. Why are these food and beverage companies integrating climate science in their strategies and how is consumer behavior influencing this?

The agricultural and forestry sector alone is responsible for over 10 gigatons of CO2 equivalent annually. This equates to about 20% of the world’s total greenhouse gas emissions, according to a 2016 joint report from the University of Aberdeen, the energy experts of Navigant and Ecofys, and PBL. These emissions are embedded in the food we eat and the beverages we drink. Due to increasingly better corporate citizenship and pressure from non-governmental organizations and investors, major food and beverage brands are developing climate targets to reduce emissions from this sector, and they are publishing their targets online.

What Is the Purpose of Science-Based Targets?

Science-based targets (SBTs) are both an approach and a communications vehicle to help companies contribute to the Paris Agreement’s target of limiting warming to 2°C and pursuing efforts to limit it to 1.5°C. Consumer brands with a climate SBT not only look at their own emissions, but they also seek to reduce emissions in their supply chain. These emissions include those related to the agriculture sector, such as meat, dairy, and any other crops, as well as processing and logistics. This full value chain approach in the end helps consumers reduce their climate impact.

Investors Recognize Climate Threats to Business

Investors recognize that the food and beverage supply chain is exposed to many climate risks, including physical risks such as changes to weather patterns and sea levels, and those linked to the transition to a low carbon economy, such as policy and reputational risks. Major food, beverage, and apparel brands take this to heart and are responding by developing roadmaps to reduce emissions and risk management procedures to prepare for a changing climate. I will discuss climate related risk in more detail in my next blog.

Consumers Increase Their Opportunities to Make Better Decisions for the Climate

The Science Based Targets initiative, an initiative of World Wildlife Foundation, CDP, and World Resources Institute, provides a unique opportunity for consumers to reduce emissions by identifying the brands that are actively engaging on climate change and developing strategies to reduce their impact. Consumers can also reduce emissions by being mindful of the choices they make at a restaurant or store. For instance, beef has higher embedded emissions than pork or chicken, and dairy has higher embedded emissions than plant-based products. However, for companies that are on an SBT pathway, the gap between the carbon footprint of these ingredients is likely to decrease.

SBTs and increased customer insight in the embedded emissions of what they buy are trends that are here to stay. If you are looking at how to approach this theme for your organization, contact Vincent Hoen for information on the corporate sustainability services Navigant offers.

 

A Sign That Large-Scale, Offsite Renewable Energy Procurement Is Becoming Mainstream

— February 1, 2018

In an August 2017 blog, I highlighted how corporate commercial and industrial (C&I) energy facilities and sustainability managers have new options to address their energy management and procurement needs. These managers now hold the keys driving the growth of energy as a service (EaaS) solutions. The move by large C&I energy users to procure renewable energy from large, offsite renewable energy project sits within Navigant Research’s EaaS framework as part of the Offsite Energy Supply solution.

EaaS Delivery Models

The delivery models for this new EaaS solution in the US have been developing over the last few years, due in part to the market capacity development efforts of the Rocky Mountain Institute’s Business Renewable Center (BRC). While not all US projects are direct procurements, as of the end of 2017, a total of 8 GW of corporate renewable energy deals have been signed in the US and Mexico alone per the BRC.

The early stages of the market for this EaaS solution in the US was driven by pioneers like Google and Microsoft. These companies were primarily interested in putting their money where their mouth is in terms of their innovation and sustainability commitments. But these companies were also focused on how these deals could help mitigate their long-term energy price risk. Given the impact of shale gas on natural gas pricing and low wholesale electricity prices in the US, using this type of procurement solution as a legitimate energy price risk hedging tool has been met with mixed results.

Rocky Mountain Institute Corporate Renewables Data

(Source: Rocky Mountain Institute)

Ready for Risk Mitigation Challenges

However, a recent announcement on a European procurement deal may signal otherwise. In late 2017, Norsk Hydro, a leading European aluminum manufacturer, announced an agreement to purchase wind power from a 650 MW wind farm for 19 years in Sweden starting in 2021. While Norsk Hydro has been previously recognized for its sustainability performance, this announcement indicates that the purchase of large-scale offsite renewable energy is now posed to meet the complex energy price risk mitigation needs of energy-intensive manufacturers that have spent years trying to lower the cost of the energy they use.

Stay Tuned for Research

Later this year, Navigant Research will prepare a comprehensive global research report on the drivers, barriers, transaction models, and market forecasts for these new large-scale, offsite renewable energy procurements as part of the new Utility Customers Solutions research service. Meanwhile, Navigant Research will be closely watching for deals that show this type of energy procurement strategy is moving past a nice-to-have sustainability commitment toward a legitimate component of an enterprisewide energy price hedge strategy.

 

CES 2018: The Year of Behind-the-Scenes Innovation

— January 23, 2018

A year ago at CES, the event belonged to Amazon’s Alexa, with vendors touting Alexa integrations and displaying Echo devices prominently at their respective booths. At CES 2018, however, a single showstopper failed to materialize—unless one includes the power outage at the Las Vegas Convention Center, which was the biggest surprise (and I was there). In lieu of one standout product, I noted several key trends, including the ever-popular artificial intelligence (AI), a growing number of home healthcare offerings, an aggressive push from Google, and an expanding presence of French startups.

Everybody Is Doing AI

This year, much of the innovation is taking place in the backend software of smart products: the AI world. Nearly every company I spoke with flaunted the use of deep learning and AI. While the term AI was used loosely to describe algorithms and machine learning, this behind-the-scenes technology is progressing, which enables more advanced functionality for smart products. There are new and better algorithms, such as those used in Philips’ Hue Sync, which enables multiple connected lights to respond in sync to movies, video games, and music in real time. Advancements in machine learning are enabling digital assistants to recognize the voices of individual people and understand conversational context.

Home Healthcare Edges its Way into the Spotlight

Home healthcare continues to edge its way into more connected products, and this was underscored as I made my way around the crowded show floors. Offerings varied from elderly care solutions, to products for promoting better sleep, to services for people to better connect with their doctors. While propositions such as security, energy, and convenience are largely driving smart home adoption, healthcare solutions can provide enhanced value on a more personal or familial level. Health-focused products can help users better track their own health or the health of loved ones, and can help prevent unexpected illnesses and diseases.

Google Starts Taking CES and the Smart Home Seriously

Google’s presence was everywhere at CES 2018. The search giant’s messaging took over the Monorail, the Aria hotel’s display featured “Hey, Google” ads, and a giant Google gumball-style machine dispensed Homes and Minis to lucky CES attendees. Amazon took a lighter approach by booking ballrooms dedicated to business meetings with various Amazon business groups, including Alexa. This increased presence not only shows that these two companies are taking their engagement in the smart home market more seriously, but it also highlights the absence of Apple. Apple is being left behind in the smart home space, especially with the delay of its HomePod speaker and a continuous lack of traction with HomeKit.

The French Are Innovating

France’s efforts to become the startup capital of Europe were made obvious at CES by the sheer number of French startups present during CES 2018. From companies demonstrating software for making bathroom mirrors smart to Li-Fi-based IoT platform providers, the French are innovating and becoming a hotbed of opportunity for stakeholders across smart industries.

A World in Transition

Though CES 2018 did not have one major theme like that of past shows, the trends I observed fell in line with the progression of digitization that Navigant Research is seeing. Companies are transitioning from deploying hardware devices to enhancing their existing solutions through data and backend software. Large tech incumbents are recognizing the power of the smart home and investing heavily. New value propositions for this tech are emerging and providing more convincing use cases for consumers; new markets are growing from this opportunity. To learn more about these trends, see Navigant Research’s white paper on IoT and the Future of Networked Energy.

 

Smart Dust Has Yet to Settle, but the Hype Flourishes

— September 7, 2017

Smart dust … it sounds like a magical substance sprinkled on dumber things. Which is kind of true. The concept has been making the hype-cycle rounds late this summer and setting off some industry buzz among megatrend watchers during an otherwise lackluster news and information cycle.

But smart dust is not all that new a concept. Not long ago, it might have been known by the more mundane and geeky term micro-electromechanical systems, or MEMS, which is common in the computer chip world. Lump it together with the much hyped artificial intelligence (AI) notion and presto, smart dust gets new life.

Motes Not Dust Mites

So, what is smart dust? It is a swarm of tiny electronic sensors, some evidently smaller than a red blood cell, designed to float in the air and do various things. These tiny devices, known as motes, are self-powered. The idea is to unleash hundreds or thousands of them, have them interconnect wirelessly, and then perform a task or set of tasks. Think of releasing a batch over a farm for testing soil chemistry or pesticide levels.

Smart Dust for Energy Management

This smart dust could also be used in homes or commercial settings to reduce energy use. That was one of the use cases imagined by Kris Pister, a professor at the University of California Berkeley and smart dust pioneer. He has been tinkering with smart dust since at least 2001, when California was in the midst of an energy crisis. Back then, he worked on the technology with colleagues at Berkeley’s Center for Information Technology Research in the Interest of Society (CITRIS) in an effort to find new ways to conserve energy. The idea never quite took off as imagined.

The idea for dust networks goes back further to when the US Defense Advanced Research Projects Agency (DARPA) and RAND Corporation worked on the idea in the early 1990s. One can imagine the use of smart dust over a battlefield, feeding field commanders with relevant data in real-time to get the upper hand on an enemy. The idea can even be traced to novelist Philip Pullman’s His Dark Materials trilogy; dust in the books is a mysterious cosmic particle that is a central plot device.

A Cloud of Potential

Needless to say, smart dust motes have not made much of an impact outside the labs. Nonetheless, given the potential and the many swirling technologies of AI (e.g., deep learning, machine learning, smart robots, and the rest), smart dust’s future could be quite amazing, though that remains on the horizon. For now, one can keep the idea of smart dust on the radar while focusing on the more practical emerging technology trend affecting the grid and other industries, namely the Internet of Things, a topic extensively covered by Navigant Research.

 

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