Mondelez is trying to accelerate America’s renewable energy boom by purchasing enough solar power to produce 10 billion Oreo cookies per year.
It’s Mondelez’s (MDLZ) largest renewable energy partnership around the world and the snack company’s first such agreement in the United States.
By agreeing to buy power from an under-construction Texas solar farm, the maker of Cadbury chocolate and Ritz crackers expects to slash 80,000 metric tons of carbon dioxide emissions — or roughly 5% of the company’s 2013 global manufacturing emissions.
The renewable energy purchase reflects Mondelez’s desire to protect its agriculture supply chain from the threat of climate change, the company told CNN Business.
“We want to be at the forefront of the fight against climate change,” Jonathan Horrell, director of sustainability at Mondelez, said in an interview. “It makes sense for our business, our consumers and our farmers.”
Mondelez joins Facebook (FB), General Motors (GM), Adobe (ADBE), Bloomberg and other major companies that are attempting to “green the grid” by promising to purchase renewable energy. Those power purchase agreements help pave the way for new renewable energy projects like the Roadrunner solar farm getting built by Enel Green Power North America in Texas, which is where Mondelez is buying solar power.
“Renewables are becoming increasingly price competitive. We’re seeking to support that by scaling up,” Horrell said.
Fossil fuels getting crowded out
Under the terms of the agreement, Mondelez agreed to purchase the energy delivered to the electricity grid from a 65-megawatt portion of the solar farm, which is scheduled to begin operating by the end of the year.
Mondelez estimates the renewable energy purchased is enough to produce more than 50% of all Oreo cookies consumed in the United States annually, or roughly 10 billion cookies.
“The more renewable energy that is produced, the more that fossil fuels are crowded out. These deals work in that direction,” Georgios Papadimitriou, head of Enel Green Power North America, told CNN Business.
Mondelez said the solar power purchase supports its goal to cut 2020 CO2 emissions in manufacturing by 15% from 2013 levels.
Climate change threatens cocoa, wheat
The snack giant said that goal is being driven largely by two forces: a desire from shoppers for sustainable products and a realization that supply chains are threatened by climate change.
“Climate change has the potential to affect us substantially as a business in the future,” Horrell said.
For instance, Mondelez’s snacks require access to raw materials, such as high-quality cocoa for Cadbury chocolate. Most of the world’s cocoa comes from West Africa, especially the Ivory Coast and Ghana.
Horrell noted that climate change may negatively impact the temperatures and rainfall in the region, dealing a blow to cocoa farming.
Likewise, Mondelez relies on wheat farmed in the United States and elsewhere to make Chips Ahoy! cookies, Ritz crackers and Wheat Thins.
But higher temperatures and droughts caused by climate change could hurt the production of wheat in the future.
“Whether it’s a wheat farmer in Michigan or a coco farmer in West Africa, it’s an important issue,” Horrell said.
Renewables on the rise
The Mondelez purchase comes on the heels of a major milestone in the booming renewable energy industry. In April, the renewable energy sector narrowly surpassed the installed capacity of coal for the first time in history, according to SUN DAY Campaign, a nonprofit research group that supports sustainable energy.
Power companies, under pressure from customers and states, are increasingly switching to renewable energy — especially as costs for wind and solar continue to drop.
Earlier this week, PSEG Power, a power company based mainly in the Northeast and Mid-Atlantic, announced an agreement to sell its stake in a pair of coal plants in western Pennsylvania. The rest of PSEG’s coal-generating plants have either been sold or scheduled for early retirement.
“Renewables are the way forward. Being cost competitive and sustainable is a value proposition that no one can deny,” said Enel’s Papadimitriou.