Honda to Offset 60% of its US Electricity use with Clean Options

Honda Company

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Multinational auto manufacturer Honda Motor Company, headquartered in Tokyo, revealed its plans to offset nearly 60% of its US-based electricity usage with clean alternatives. The company recently made the single largest amount of renewable clean energy purchase by any car maker to date. The electricity would be utilized to offset emissions from its US factories, thus facilitating Honda to reduce its greenhouse gas emissions by 60% in its North American manufacturing plants. To accomplish this Honda is participating in two virtual power purchase agreements (VPPAs).

A Virtual Power Purchase Agreement is a type of renewable energy contracting structure that provides a financial hedge against future energy fluctuations. It is a financially-settled arrangement between renewable energy project and buyer, with buyer owning RECs. Renewable Energy Certificates are tradable, non-tangible energy commodities that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource (renewable electricity) and was fed into the shared system of power lines which transport energy.

The multinational company acknowledges that the use of VPPAs is not the ideal way to reduce its carbon footprint and reiterated that ideally, they would purchase 100% renewable energy from the local utility, but that was not currently possible. So by employing VPPAs they would be able to meet their goals for today. The purchase includes 530,000 MWh per year from the Boiling Spring Wind Farm in Oklahoma and 482,000 MWh per year from a Texas solar facility by fall 2021.which is the largest single purchase of wind and solar power by any automaker.

The renewable energy would help to offset the carbon-powered electricity used in its auto-manufacturing plants in Ohio, Indiana and Alabama. In fact, the plants would not use electricity at and instead add clean energy to the nation’s electricity grid. Meanwhile, Honda expects to offset around 800,000 metric tons of CO2 emissions annually, which is the equivalent to emissions from 100,000 US households.

Renewable energy agreements are becoming quite common; IKEA recently announced that it was planning to produce more energy than it was consuming by 2020. Tech giant Google was planning to invest over $2 billion in renewable energy infrastructure across the US, Europe, and South America. Other automakers are also finding innovative ways to support renewable energy.

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