CEO of the Zero Emission Maritime Buyers Alliance Ingrid Irigoyen at her Washington, D.C. office on Jan. 13.DEE DWYER/The Globe and Mail
Some of the world’s biggest brands are pooling their buying power to fund the production and development of sustainable fuels as 2030 emissions targets creep closer.
Netflix NFLX-Q, Google GOOGL-Q, Amazon AMZN-Q, IKEA and Vancouver-based Lululemon LULU-Q are among the big names listed as members of collectives such as the Sustainable Aviation Buyers Alliance (SABA) and the Zero Emission Maritime Buyers Alliance (ZEMBA). Experts say these firms are sending strong signals to investors and policy makers that there is a market for sustainable fuels, but no matter how big they are, they can’t drive the decarbonization of entire sectors alone.
“We like to have private-sector leaders go first, show that there is market potential here, and then get everyone across the value chain, including in the policy space, to come together and support those new markets as they’re being built,” ZEMBA president and chief executive officer Ingrid Irigoyen said.
According to United Nations Trade and Development, the shipping industry accounts for more than 80 per cent of global trade volume and almost 3 per cent of the world’s greenhouse gas emissions. In 2023, aviation accounted for 2.5 per cent of global energy-related carbon emissions, according to the International Energy Agency (IEA). Emissions from both those sectors are predicted to continue growing at a rapid rate.
Yet the IEA lists both as “not on track” to reach net zero by 2050. It cites the need for legally binding measures, policy incentives and significant investments to drive the adoption of low- and zero-carbon fuels such as waste-based biomethane, which is produced from biogas generated through the anaerobic digestion of organic matter, and electrofuels, which are made by combining hydrogen with carbon dioxide.
This is a problem for companies such as Lululemon that rely on ships and planes to move their products worldwide and must factor in distribution emissions when calculating whether they hit or missed their targets for the year.
That’s where buyers’ alliances come in, Ms. Irigoyen said. Led by expert facilitators, member firms begin by deciding the volume of freight they want to decarbonize, for example. Then, a competitive procurement process is run to find the right carrier, which has partnered with a sustainable fuel producer, to meet that demand. Once a winning bid (or bids) is chosen, a cost is finalized, companies are given the chance to re-evaluate the volumes they can afford and, finally, their associated emissions reductions can be confirmed.
The resulting flight or shipment may not deploy for a couple of years, while the fuel is produced, and the goods aboard won’t necessarily belong to the companies involved. But that’s not the point of the alliance, Ms. Irigoyen said.
“It’s a way of facilitating or enabling demand from all over the world, regardless of the physical freight flows of that company, aggregating that demand and channelling it into the available best deal solutions,” she said.
Working alone, it can be difficult, and frankly unrealistic cost-wise, for a company to transition its entire operation to sustainable fuels, said Bruce Fleming, the CEO of sustainable aviation fuel producer Montana Renewables.
“As much as they might want to, one airline cannot step out and say, ‘We’ve decided to go all renewable,’ because it costs more. And they won’t last very long if they’re paying more for fuel than the airlines next to them at the same airport,” he said.
According to a Bloomberg report, Alaska Airlines provided certificates to buyers from sustainable aviation fuel produced by Montana Renewables as part of US$200-million in deals made through SABA in 2024. Buyers’ alliances are important, Mr. Fleming said, because they help level the playing field in hard-to-abate industries.
But they can’t be the only force driving a transition to renewables. Governments must step up to the plate and recognize the value of consistent policy for growing technologies, Mr. Fleming said.
“All industry asks of regulators is, ‘Go ahead and set something up, but please then leave that alone, leave us to optimize against a predictable set of rules.’ If you change the rules every year, two years or three years, everybody’s going to give up,” he said.
However, getting the support of policy makers may soon prove more difficult for many North American companies, as a political shift to the right intensifies. Mere hours after he was sworn in Monday, U.S. President Donald Trump pulled his country out of the Paris agreement. And ahead of his second term, the Net-Zero Banking Alliance, an industry group similar to ZEMBA or SABA, saw its biggest members in the U.S. and Canada bail, questioning whether their membership was an effective way to fight climate change.
Kim Carnahan, the president and CEO of the Center for Green Market Activation, which works with and operates buyers’ alliances in five different sectors in partnership with non-governmental organizations, said the effectiveness of these groups is evident through the procurements that have been run by SABA, which she also helped found.
In its first procurement, she said, SABA had seven participants, requested 2.5 million gallons of sustainable aviation fuel but was only able to facilitate purchases for 850,000 gallons. In its second procurement, it had almost 20 participants, requested 100 million gallons and secured commitments for about 50 million. This year, she estimates, the alliance could hit $1-billion in total investment.
“It’s not enough. The overall aviation market needs vastly more investment. But having increases year on year that are as significant as those is certainly a sign of real progress and a sign that the initiatives we’re running work,” she said.
Andrew Dempsey, the director of climate at REI Co-op, said the outdoor gear seller joined ZEMBA in 2023 to help achieve its goal of halving emissions by 2030, based on a 2019 baseline.
By participating in ZEMBA’s first tender, which was awarded to Hapag-Lloyd to procure low-carbon biomethane fuel, Mr. Dempsey said the co-op will reduce its carbon emissions by roughly 2,700 tonnes in each of 2025 and 2026. That’s about a 90-per-cent reduction in the company’s ocean freight emissions from a few years ago, he added.
“That’s what it will take … for decarbonization in a lot of these hard-to-abate sectors. You need market signals. You need solutions that can scale. The carriers need to see that their customers want this, and they’re willing to pay a premium for it,” he said.