Shopify using the electricity to offset all emissions from its employees’ home offices
Two of Canada’s biggest companies are teaming with one of the world’s richest investors to advance renewable energy in Alberta.
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Shopify Inc. and Royal Bank of Canada, the country’s largest technology company and lender, respectively, said this week they had signed a “purchase power agreement,” or PPA, that commits them to buying 90,000 KWh of electricity annually from the Rattlesnake Ridge Wind Power Project, which is located southwest of Medicine Hat.
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The wind farm, owned by billionaire Warren Buffett’s Berkshire Hathaway Energy Inc., is currently under construction and is scheduled to go live in May. Toronto-based Bullfrog Power Inc., a renewable energy company, joined with Shopify and RBC in the agreement.
The PPA, among the first of its kind, is part of a broader trend among Canadian businesses.
Not all companies are willing or able to decarbonize their operations completely, so instead, they are opting to offset their emissions, either by purchasing carbon credits or electricity. By putting money on the table, rich companies such as Shopify and RBC indirectly underwrite renewable energy projects by showing investors that demand is real, de-risking construction.
“These power purchase agreements are an example of the demand for clean, renewable energy for Canadian businesses to create a more sustainable future,” Ed Rihn, senior vice-president, government relations and corporate development at Berkshire Hathaway Energy’s Canadian unit, said in a press release.
Ottawa-based Shopify’s cut of the PPA equals 30,000 KWh annually. Generally in a PPA, one party buys electricity from another for its own use. Shopify, however, will not be using the electricity. Instead, the electricity will simply offset all emissions from its employees’ home offices by adding an equivalent amount of green electricity to the energy grid, Jackie Warren, Shopify’s communications manager, wrote in an email, citing a company blog post on the agreement with Berkshire.
Warren declined to disclose the precise dollar value of the deal, and when exactly Shopify signed the agreement.
Shopify’s chief executive and founder, Tobias Lütke, has long been an advocate for sustainable business practices. “I want Shopify to be a company that sees the next century,” he wrote in filings as the company prepared to go public in 2015.
Lütke is an advocate for “direct-air carbon sequestration,” the capture and storage of carbon. Through Shopify’s Sustainability fund, the company buys $1 million of sequestered carbon annually. The company also prioritizes carbon-neutral operations.
Historically, Shopify has accomplished this via carbon offsets. In 2020, Shopify purchased carbon offsets to cover the company’s entire historical operational carbon footprint, Warren said, citing Shopify’s 2020 Sustainability Report.
Carbon offsetting is an indirect way for businesses to reduce their environmental footprint. It involves purchasing carbon credits and investing money in projects that will ultimately reduce or remove carbon from the atmosphere. The goal of carbon off-setting, therefore, is not necessarily to make the company’s operations carbon negative, but rather, carbon neutral.
“We are proud to keep leading by example,” Alex Boulos, Royal Bank’s vice-president, climate strategy and governance, said in a press release that boasted that RBC is the first Canadian bank to “execute” two renewable energy PPAs.
Some argue that because greenhouse gases mix globally in the atmosphere, it doesn’t matter where exactly they are reduced. The net reduction is the same, no matter where it occurs.
But it’s an approach that Lütke has critiqued. “Carbon offsets are often opaque and misleading,” he wrote in a 2019 press release. “Plus, carbon offsets don’t often reduce carbon in the air. At best, they slow emissions. At worst, they fund ineffective projects.”
Shopify has since set its sights on PPAs, which the company says is “the gold standard” for any company that wants to help drive the green transition.
“Shopify has proudly become the first Canadian-founded company to sign a power purchase agreement (PPA) to power 100 per cent of employee home offices across North America with wind energy,” the company said in a press release.
Stacy Kauk, Shopify’s head of sustainability, predicted PPAs would become an important tool in the fight against climate change.
By purchasing the electricity as a buyer’s group, Shopify, RBC, and Bullfrog Power hope to “stack demand,” swaying the market in favour of clean energy, Kauk said in an email. “One company demonstrating demand isn’t enough,” wrote Kauk. “Other buyers have to do the same.”
• Email: mcoulton@postmedia.com | Twitter: marisacoulton
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