H&M Group has inked a virtual power purchase agreement to enable the construction of a new solar farm in Texas that the Swedish retailer says will play an “important role” in reducing its carbon footprint.
The agreement, which was announced Thursday, is an expansion of a preexisting relationship with Lightsource bp, which constructed two solar power stations in Leicestershire to supply electricity for H&M Group business activities in the United Kingdom, supporting the company’s goal to halve its Scope 1 to 3 emissions and increase the annual sourcing of renewable electricity to 100 percent by 2030.
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Lightsource bp is also the beneficiary of a collective virtual power purchase agreement that members of The Fashion Pact, including Kering and Prada, signed last October. H&M said it had declined to take part at the time because it had other commitments in the pipeline.
The 125-megawatt Second Division solar project in the Lone Star State’s Brazoria County will deliver electricity into the local grid that will reduce carbon dioxide emissions by an estimated 155,000 metric tons each year.
Unlike with a regular power purchase agreement, where a buyer agrees to receive the output of a renewable power asset, a virtual power purchase agreement does not funnel the electricity directly into the buyer’s facilities. Because they function like offsets, environmental groups such as Stand.earth have cautioned that virtual power purchase agreements can give the appearance of reduced emissions despite an “ongoing reliance on fossil fuels.”
H&M, however, sees virtual power purchase agreements, as preferable to renewable electricity certificates, which have been criticized for having little to no impact on decarbonization efforts, mostly because they don’t typically increase the supply of new renewable energy. It has also aided in the procurement of green energy for manufacturing more directly, such as teaming up with Bestseller, Copenhagen Infrastructure Partners and Global Fashion Agenda to scope the development of Bangladesh’s first utility-scale offshore wind project.
“Considering fashion’s environmental impact, we see great value in moving away from just using certificates to contributing to more clean energy,” Ulrika Leverenz, head of green investment at H&M Group, said in a statement. “By partnering with solar and wind farm developers, we can help build renewable electricity capacity in power grids around the world.”