Huhtamaki slashes carbon emissions with Europe’s largest solar power purchase

21 Dec 2021 --- Huhtamaki has signed what it believes to be the largest solar power purchase agreement in the European packaging industry. Inked with energy company BayWa r.e., the deal is a major step toward achieving the company’s goal of using 100% renewable energy by 2030 and will cover roughly 80% of the Finnish packager’s electricity usage in Europe.

Speaking to PackagingInsights, a Huhtamaki spokesperson says the arrangement will slash carbon emissions in its packaging operations.

“The agreement does not help Huhtamaki reduce energy usage, but it increases the share of renewable electricity (in all electricity that we use) and thus reduces our emissions.”

The deal is a Virtual Power Purchase Agreement (VPPA) – a contract structure in which a power buyer agrees to purchase a project’s renewable energy for a pre-agreed price.

The spokesperson says financial details of the agreement cannot be specified beyond explaining that it includes a pricing mechanism “that benefits both parties during times of high electricity costs.”

New solar sites will save around 89,000 metric tons of carbon emissions annually – enough electricity to power 25,000 households.An example to industry
The spokesperson says the VPPA should serve as an example to packaging industry players on how they can meet their climate targets and reduce carbon emissions.

“This is a great example of how companies can speed up the transition to renewable energy. With the financial security provided by this VPPA, BayWa r.e. is able to build a new solar park, and there is new renewable energy being generated and added to the grid,” they remark.

As part of the VPPA, BayWa r.e. will construct two new solar installations in Spain, bringing a “significant” addition of renewable energy to the European grid.

The two new solar sites have a combined volume of 200 GWh of renewable electricity per year – enough electricity to power almost 25,000 households – resulting in savings of over 89,000 metric tons of carbon emissions annually.

Facing down challenges
The spokesperson says the deal, which will link the two companies for a decade, had to overcame a number of hurdles.

“This VPPA is a long-term agreement in a new market (energy), so there was a huge learning curve internally to get ourselves comfortable with the mechanism as well as the risk involved.”

“On the practical side, there were a lot of new things, for example, related to accounting treatment. The timeline was also very challenging. These types of agreements typically take a long time to negotiate, given the sheer number of topics that need to be discussed for a contract of this magnitude and duration,” they explain.

After analyzing over 100 different proposals from renewable energy companies, the top four developers were selected for interviews with Huhtamaki. “BayWa r.e.’s offer proved to be the best fit to what we were looking for in size, duration of the deal, economics and timing,” underscores the company.

Thomasine Kamerling, executive vice president for sustainability and communications at Huhtamaki, says the company expects to embark on other VPPA’s shortly, with the next one in the US. “In addition, we are installing solar panels at our sites where feasible and working relentlessly to improve our energy efficiency,” she reveals.

Huhtamaki on the rise
The VPPA comes amid a series of environmental sustainability efforts made by Huhtamaki this year, including the release of new scientific evidence with Stora Enso, which found paper-based single-use products more environmentally responsible than reusable tableware in European quick service restaurants.

In August, the company announced it would be acquiring Elif, a flexible packaging supplier to global FMCG brand owners with operations in Turkey and Egypt, for €412 million (US$483 million).

Huhtamaki CEO Charles Héaulmé also recently spoke about the superiority of recycling in comparison with composting for packaging waste.

By Louis Gore-Langton

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