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Climate Action Roadmap

Climate Action Roadmap

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For the retail industry

Roadmap milestones

The following milestones indicate good practice measures that will help the industry to reach net zero:

By 2025

By 2030

By 2035

> All new buildings powered by renewable energy 

> 100% LEDs in all new buildings 

> Only low impact refrigerant gases (max 150global warming potential) for all new refrigeration installations

> Sourcing 100% renewable electricity

> Renewables to cover all sites’ total energy uses 

> Only low impact refrigerant gases (max 150global warming potential) in use for all systems. 

> 100% LED lighting across all buildings

Short-term priorities

Immediate action is required for the industry to begin the decarbonisation of physical sites. While the priorities will vary based on the type of retailer, the type of premises occupied, whether the property is owned or leased and the work already undertaken, the following recommendations offer an entry point for retailers in the creation of programmes to mitigate greenhouse gas emissions from sites.

1)   Whole-building energy efficiency 

In retail, heating, lighting and refrigeration are the largest site-level energy consumers on average, but an individual business’s emissions footprint could vary considerably from the norm. The best way to target investment and effort in pursuit of reduced site emissions is to monitor the footprint of operations. Robust tracking and reporting allows retailers to plot out critical intervention areas. To reduce administrative burden, retail businesses can seize on existing requirements for reporting energy use and emissions – for example, large retailers can leverage Energy Savings Opportunity Scheme (ESOS) reporting requirements to map improvement areas, and retailers that rent premises can request Energy Performance Certificate information from landlords. 

The most dramatic whole-building emissions reductions are available in the planning phase. New builds represent the opportunity to utilise cutting edge low-carbon design and construction practices. The UK Green Building Council offers a specialised framework in their guidance for Net Zero Carbon Buildings

Retailers interested in a whole-building approach to emissions reductions should additionally review best practices for energy efficiency. The following guides offer detail on the leading technical and behavioural measures to lower energy demands, cut costs and reduce emissions for various building types:   

This approach also requires acknowledging the complexities of landlord-tenant relationships. Retailers can work with landlords to help ensure their compliance with the Minimum Energy Efficiency Standards, or forge more collaborative approaches to sharing cost and responsibility for energy efficiency improvements.

Case Study: Energy and sustainability review at Missguided 

Missguided has significantly reduced energy usage through a review of their Energy Savings Opportunity Scheme (ESOS) recommendations. The retailer has implemented 100% of practicable actions from the ESOS, including retrofitting 350 light fixtures with LEDs. Thanks to much lower energy demand, Missguided expects the investment in efficient lighting to be repaid within two years. 

Missguided has also been able to reduce energy use and carbon emissions through simple behavioural measures, such as reviewing timer settings, turning off electrical items at night and changing meeting room technology. A change in printing policies has additionally reduced printed paper waste by over 80%

2)   Heating efficiency and infrastructure

  • Building fabric improvements: To address gaps in energy efficiency, retailers should refit existing buildings with fabric improvements where available and cost-effective. Replacing or infilling insulation, adding draught stripping, replacing leaky windows and doors and mitigating damp all help to retain heat. With up to 75% of heat lost through the building fabric, these measures can help heating systems operate at maximum efficiency, reducing emissions and costs. See the Building Fabric Guide from the Carbon Trust for detail. 

  • Installing renewable heat equipment: Low-carbon heat systems will be the primary route to reduced emissions once heating efficiency has been maximised. Low-carbon heat technologies offer considerable carbon benefits by electrifying (and sourcing energy from a greening electrical grid), substituting fossil fuels for renewable alternatives, or distributing heat from a single point of generation to many buildings (referred to as ‘district heating’).

    While strategies like district heating will rely on policy guidance, retailers can adopt many low emissions technologies that are feasible now. The Non-domestic Renewable Heat Incentive (RHI) currently allows retailers to claim financial benefits for installing and operating:

  • Biomass boilers
  • Heat pumps (ground source, water source and air source)
  • Deep geothermal systems
  • Solar thermal collectors
  • Biomethane and biogas
  • Combined heat and power (CHP) systems

LED lighting 

LEDs consume approximately 15% of the energy of halogen bulbs while outputting the same amount of light – see Figure 5.3a. This efficiency improvement indicates the saving available from a technology switch, with further savings possible by optimising when and how lighting is used (e.g. through PIR sensors and timers).

Figure 6.3a: LED energy consumption compared to incandescent and halogen bulbs

While retail was one of the first sectors to invest in LED lighting (because of the significant energy and cost savings), significant further opportunities exist for the industry to transition as a whole.

Case Study: 100% LED lighting for Sainsbury’s[33],[34]

Sainsbury’s plans to install hundreds of thousands of LED fixtures in more than 450 stores by the end of 2020 and has committed to lighting all stores entirely with LEDs by the end of 2022. The retailer expects the adoption of all-LED lighting to reduce lighting energy consumption by 58% and reduce emissions by 3.4% annually. Sainsbury’s ambition is to become the first grocery chain in the UK to use exclusively LED lighting – in new builds, as well as by retrofitting all existing stores.

4)   Refrigeration efficiency and low global warming potential refrigerants 

  • Refrigeration efficiency improvements: Generally, the largest source of emissions from refrigeration is from energy consumption during operation. These emissions can be reduced by optimising the efficiency of refrigeration systems. Figure 5.3b offers an overview of current technologies and practices for more efficient refrigeration, as well as the expected energy savings.

    Regular maintenance of refrigeration assets should be highlighted as a means of inexpensively reducing the power consumption of cold storage systems and preventing refrigerant leaks.

Figure 5.3b: Refrigeration technologies for energy savings, from The Carbon Trust

See the
Refrigeration guide to energy and carbon savings opportunities from the Carbon Trust for detail.

  • F-gas substitution: Leaks of refrigerant gases are the other major source of emissions from cold storage. Aside from the impetus to reduce emissions from refrigeration, the ongoing regulatory phase down of F-gases will require many retailers to substitute refrigerants or opt for new cold storage solutions. Natural refrigerants, including carbon dioxide, ammonia, and propane (a hydrocarbon gas) all have near-zero global warming potential. This makes them attractive alternatives to F-gas in the sense that they are likely to be immune from future regulations.

    Retailers using natural refrigerants have generally favoured carbon dioxide systems, due to low flammability risks and the potential for carbon dioxide systems to be configured in a decentralised fashion like existing systems.[35]

    Retailers that need to purchase new systems, whether because of the age of the previous equipment or the desire for low global warming potential refrigerants, should consider equipment from the Energy Technology List that qualifies for an Enhanced Capital Allowance. The allowance offers a tax benefit in the first year after the purchase of certain energy efficient equipment. Refrigeration equipment on the Energy Technology List can additionally offer operational cost savings, thanks to energy efficiency.

Case Study: Aldi’s carbon dioxide refrigeration systems[36],[37] 

Aldi committed to installing natural refrigerants in all of its UK stores in 2017, designed to reduce emissions from refrigeration by 99% by cutting fugitive emissions from refrigerant leaks and improving energy efficiency. By the project’s conclusion, all of Aldi’s UK stores will replace high-global warming potential HFCs with carbon dioxide, an ultra-low global warming potential refrigerant. The transition from F-gases to carbon dioxide was intended not only to lower emissions, but also to ‘future-proof’ stores as regulations phase down the allowable global warming potential of refrigerants. As of 2019, Aldi had installed 300 carbon dioxide-based refrigeration compressors in stores across the UK.

5)   Sourcing renewable energy

  • Renewable electricity sourcing best practices: Retailers should look to decarbonise their own electricity supply to meet carbon reduction targets, even as the national grid continues to green. There are a number of ways that retailers can approach the sourcing of renewable energy, and the landscape and best practice advice is constantly shifting. The methods of sourcing renewable energy can be broadly categorized into 3 options:

Onsite Renewables 

Installing renewable energy technologies (mainly rooftop solar, but sometimes wind, storage capacity and various low carbon heating technologies) on company-owned premises. These can either be entirely owned by the company or owned by a supplier who manages the operational aspects and sells the energy to the company. If the company owns the technologies themselves they can sell any excess energy generated back to the grid.

Power Purchasing Agreements (PPAs) 

Many different arrangements can be made, but essentially the company enters into a direct contract with an offsite energy generator. The generator can either directly provide electricity to the company (via a Private Wire PPA), or the company can consume grid energy and the generator can provide renewable energy to the grid to match this consumption. There are various models for this (e.g. sleeved PPAs with an intermediary energy retailer, or virtual PPAs where many companies are aggregated to match one generator) but they all generally involve agreement of a fixed price for energy for a long (5-25 year) time period.

Energy Attribution Certificates (REGOs) 

When a renewable energy generator sells electricity to the grid, the generator receives an attribution certificate – known in Europe as Renewable Energy Guarantees of Origin (REGOs). REGOs can be sold separately to the physical energy, and the purchaser who buys and ‘retires’ the certificate can claim to have bought a unit of renewable energy. Thus a company can buy grid energy as usual, and then buy an equivalent number of certificates to match this consumption and green their energy. There are different REGO equivalents in other parts of the world, for example RECs in North America.

Retailers can also source energy from green energy retailers, who can provide energy through a mix of their own generation sites, PPAs and REGOs.

For accounting purposes, all of the options outlined above can be considered zero-carbon, renewable electricity. However, there are varying degrees to which each of them actually results in increased renewable capacity and/or lowered emissions. This is because:

  • REGOs do not directly add any renewable energy to the grid – they are a market-based mechanism designed to incentivize generators to build more renewable energy capacity. The problem is that the price of a REGO is currently extremely low – in 2019 REGOs cost 30-50p per MWh, so a typical yearly household consumption of ~3MWh could be ‘greened’ for just ~£1.50.

  • PPAs are seen as a better solution, because they provide direct financial support for generators and the long-term contract allows developers to finance the initial capital investment required to build wind/solar farms. The fixed price can also be useful for the investing retailer, as it can be used as a hedge against otherwise fluctuating energy prices. There are however still some difficulties involved in the process – selecting and setting up a PPA can be complex, there are questions of additionality, and if the wrong price is set, a business could be tied into a 25 year contract paying a high price for energy when energy prices are forecast to fall.

  • Onsite renewables are generally seen as the preferred option of the three. They are tangibly built as additional capacity to the grid, there are efficiency savings from avoiding grid transmission/distribution, and from a business perspective they are not only a visible marketing opportunity but once they are set up the electricity is essentially free (minus maintenance costs). There are still some issues however such as site availability (some roofs are not suitable, and some locations are not amenable to efficient wind/solar), as well as the capital investment needed to build the systems initially.

Given this, the following hierarchy is currently seen as ‘best practice’:

Figure 5.3c: Hierarchy of energy use and procurement

The RE100 initiative provides the following guidance on the best practice for retailers to consider when sourcing renewable electricity:

  • Generation from installations owned by the company (self-generation)
  • Purchase from on-site installations owned by a supplier
  • Direct line to an off-site generator with no grid transfers
  • Direct procurement from offsite grid-connected generators 
  • Contract with suppliers (green electricity products) 
  • Unbundled energy attribute certificate purchase

Note that this list is ranked from the most impactful to the least impactful procurement method in terms of new renewable capacity brought into the grid.

Case Study: Retailer Aggregation (Buyer Consortium)[38] 

The Dutch Wind Consortium comprising of AzkoNobel, DSM, Google, and Royal Philips made news in 2016 when it announced that it had executed two utility-scale, offsite wind PPAs as a joint venture. While not the first of its kind, the Consortium is noteworthy because it brought together four major players already active in the corporate renewables marketplace. 

In this aggregation model (variously known as a buyer consortium or club), corporate buyers unify to achieve similar goals: aggregate their energy offtake, achieve an economy of scale, and contract together to optimize energy prices and the offtake profile. The aggregation model also allows for the pooling of resources and development of purchasing models that are easily replicable.

  • On-site solar generation: One of the most prominent options for retailers to generate onsite renewable energy is solar photovoltaics (PV).

    From high street businesses to larger supermarket and distribution depots, a growing number of retailers are using solar photovoltaic technology to lower their energy costs or, in some cases, to completely power their retail stores. The ever-rising cost of grid electricity has seen the potential for on-site power generation and energy storage gain much greater acceptance from energy-intensive retailers.

    According to the International Monetary Fund (IMF)[39] prices for solar panels dropped 76% between 2009 and 2017, making them competitive alternatives to fossil fuels and more traditional low-carbon energy sources such as hydropower and nuclear.

    Because solar energy is most abundant during daytime hours – the period in which most retail stores are open – it provides cheap, dependable electricity when it’s required most by retail businesses. On larger premises (e.g. supermarkets) the large roof space is the ideal environment for a solar panel installation, very often this will be completely unused and have no form of shading from other surrounding buildings.

Case Study: Marks & Spencer (M&S) Castle Donington SolarWall® Installation[40] 

In May 2013 M&S opened a 900,000 sq ft distribution centre in Castle Donington, Leicestershire. The site was built with M&S’ Plan A in mind and features Europe’s largest solar wall - a sun-facing wall that absorbs solar energy and releases it to help heat the building. The facility is carbon neutral and has been part-built using concrete from a former power station. None of the waste from the site has gone to landfill. 

The SolarWall® air heating system is 4,330 m2 (46,000ft2) and will heat and ventilate the enormous building using solar energy, instead of fossil fuels. The M& system is expected to provide energy savings of 1.1GWh, resulting in the reduction of over 250 tonnes of carbon dioxide each year.

  • Sourcing green gas: Green gas generally refers to biomethane, which can be generated from multiple renewable sources, including anaerobic digestion from waste, capture of landfill gas, and gasification of biomass (also called syngas). Currently the only gas that is considered truly green falls under the Renewable Gas Guarantees of Origin (RGGOs), very similar to REGOs for electrical power. RGGOs identify each kWh of biomethane injected into the gas grid. They are registered with either the Green Gas Certification Scheme (GGCS) or the Biomethane Certification Scheme (BMCS).

    Retailers can acquire RGGOs from biomethane producers to cover portions of their natural gas use. RGGOs are allocated to match gas withdrawn from the gas grid by the purchaser, and once used, they are retired. RGGOs don’t represent physical consumption of green gas, but purchasers can claim to have consumed green gas. More information on RGGOs can be found on the GGCS website.

    Note that the recent Citizen’s Climate Assembly highlighted the ongoing debate around zero carbon heating and the place for green gas. Assembly members were heavily in favour heat pumps, heat networks, and hydrogen fuel as the means to achieve the decarbonisation of heat, but made very few mentions of green gas.[41] 

Longer term transformation for net zero

For the UK retail industry to hit net zero both the operational footprint of sites and the lifecycle emissions embodied in the construction of buildings will need to shrink rapidly. These changes will need to be supported by the rapid decarbonisation of the UK energy system and systemic changes to ensure the deployment of low-carbon heat. It should also be noted that existing buildings and new builds will face different challenges in the net zero transformation. 

To support long-term progress in decarbonising shops, warehouses and other buildings across the retail value chain, retailers can:

  • Conduct a whole life carbon assessment in the design phase to reduce the embodied carbon impacts of new builds. The UKGBC additionally recommends offsetting the residual carbon emissions that can’t be mitigated through design.[42]

  • Seize emissions reduction and operation efficiency co-benefits in warehouses and distribution centres through innovations like electrified forklifts, cranage, lighting controls (especially occupancy and daylight sensors) and automation. Measures to reduce demand from lighting and space heating – 65% and 12% of typical ambient warehouse energy consumption, respectively[43] – will have the greatest impact.

  • Invest in on-site renewable energy capacity, where conditions and constraints allow, and cover the balance of energy not produced on-site with renewable sources (through a PPA, for example).

  • Adopt smart building control systems that provide granular information on energy use and enable demand-side response (i.e. by matching energy use to current energy needs).[44]

  • Consider technologies that have the potential to reduce emissions and lower costs. For example, refrigeration systems that capture waste heat to use for in-store or district heating.[45],[46]

[33] Sainsbury's commits to 100% LED lighting by 2020 (2017). edie.
[34] Sainsbury’s Puts the Spotlight on Energy Efficiency in Stores Across the UK (n.d.) GE Current.
[35] Retail refrigeration: Making the transition to clean cold (2017). University of Birmingham.
[36] Aldi UK stores to get 'natural refrigerants' (2017). The Grocer.
[37] 300th BITZER CO2 unit for Aldi (2019). The ACR Journal.
[38] Dutch Wind Consortium: Successful aggregation of corporate renewables buyers in Europe (2017) Business Renewables Centre.
[39] Falling costs make wind, solar more affordable (2019). International Monetary Fund.
[40] Marks and Spencer Case Study (n.d.). Solar Wall.
[41] The path to net zero (2020). Climate Assembly UK.
[42] Net Zero Carbon Buildings: A Framework Definition (2019). UK Green Building Council.
[43] Warehousing and logistics (2019). The Carbon Trust.
[44] The Enablement Effect: The impact of mobile communications technologies on carbon emission reductions (2019). GSMA and the Carbon Trust.
[45] Surplus heat from Danish supermarkets utilized for district heating (2017). State of Green.
[46] Retail Refrigeration: Making the Transition to Clean Cold (2017). University of Birmingham.