Honda makes largest renewable energy purchase of any automaker

Multinational auto manufacturer Honda Motor Company, headquartered in Tokyo, recently made the largest renewable clean energy purchase by any car maker. The electricity will be utilized to offset emissions from its United States factories, thus enabling Honda to reduce its greenhouse gas emissions by 60 percent in its North American manufacturing plants.

With widespread public debate and mounting regulatory pressures, automakers have no choice but to shift their business models to address the carbon dioxide reduction challenge. It is no wonder then that a growing number of automobile companies are turning to renewables, like wind and solar, to achieve sustainable returns.

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According to Honda, it currently obtains about 21 percent of its North American operations’ power from low- or zero-emission power sources.  But it hopes to improve upon that, thanks to clinching the car industry’s largest renewable energy purchase.

Honda’s new clean energy deal involves the purchase of wind power from an Oklahoma wind farm as well as sourcing energy from a Texas solar farm. Projections show that, with this clean energy purchase, Honda can annually offset 800,000 metric tons of carbon dioxide emissions. That’s equal to “100,000 U.S. households’ worth of CO2-emissions from household energy usage,” as described in Honda’s press release.

Honda revealed, “Two Virtual Power Purchase Agreements (VPPAs) will secure 320 megawatts (MW) of wind and solar power totaling over 1 million megawatt-hours (MWh) of renewable electricity annually.”

How do VPPAs operate? Honda explained that VPPAs are “a way for Honda to purchase renewable energy in locations where it is unable to purchase renewables from the local electric utility.” The automaker buys “electricity from a renewable energy supplier, but the clean energy does not go directly to Honda’s facilities; instead, it is sold into the electricity grid where the clean power is generated.”

In effect, Honda’s ‘virtual purchase’ of that “renewable energy adds more clean energy into the nation’s grid,” which decreases fossil fuel dependency and any accompanying carbon dioxide emissions. Honda’s VPPA purchase essentially “de-carbonizes” the electricity grid.

Analysts say VPPAs are becoming an ever-popular means for large corporations seeking to meet carbon dioxide emission reduction goals.  Tech giants, like Google and Microsoft, for instance, have historically purchased VPPAs as well. Business industry pundits forecast an uptick of VPPA procurements in the next couple of years as renewable energy policy intensifies.

Aligned with its revitalized green mission, Honda’s long-term plans go far beyond clean energy purchases, as it continues its commitment to sustainability. The company similarly announced plans to electrify two-thirds of its manufactured vehicular fleet so that they are charged via renewable energy by 2030.