Strategy and approach regarding renewable electricity purchases

IBM's strategy is to procure renewable electricity that is generated in the grid regions where IBM's facilities are located. When possible, we match our purchases to the physical consumption of our facilities so that we are consuming the electricity at the same time that the renewable electricity is being generated. However, output from wind and solar facilities varies depending on the time of day and the weather conditions. As such, we must rely on electricity generated from conventional sources (i.e., fossil fuels) to ensure business continuity. When our consumption exceeds the output from renewable sources, we may use "bundled" Renewable Energy Certificates (RECs) to offset the CO2 emissions associated with the electricity we consume from conventional sources. Our intent is to procure renewable electricity and its zero-emissions attributes from the grid regions in which our facilities operate, either by directly matching our physical consumption or using bundled RECs to offset emissions.

We do not use "unbundled" RECs, supplied from renewable generation projects in grid regions outside of our energy consuming locations, to offset the emissions from our use of conventionally generated electricity. The reason is simple: IBM would not actually be using the renewable electricity that the purchase of unbundled RECs helped to fund. It also obfuscates the need for hard public policy decisions and investments across the energy value chain that must be made to genuinely increase the quantity and availability of renewable electricity delivered to the grid.

We would certainly like to be able to power our operations with 100 percent renewable electricity, and we are committed to expanding our procurement of renewable electricity for our global operations. However, we recognize that it is not possible in today's market or in the foreseeable future to actually power IBM's operations reliably with 100 percent renewable electricity, given the company's vast and diverse presence in over 170 countries along with the need for uninterrupted power usually made possible by fossil fuels.

Our strategy and approach make it clear to our electricity suppliers that we want them to increase the quantity and availability of renewable electricity in their offerings. IBM continues to work with industry peers, utilities, NGOs and other renewable energy industry participants to develop new contracting methods and to identify and capture new opportunities to procure electricity generated from renewable sources. In 2017, we were active in the World Resources Institute's Special Clean Power Council. The Council, comprised of leading U.S. electric utilities and several of their major commercial and industrial customers, began engaging in a two-year effort to facilitate the transition to low-carbon energy supply and enabling technologies to reduce the GHG emissions associated with power generation. We are also members of the Business Renewables Center and the Renewable Energy Buyers Alliance, groups committed to broadening and expanding the availability of renewable electricity to corporate buyers.