Royal Caribbean Cruises Ltd. is partnering with a utility company in a novel plan to strengthen its claim to leadership in the emerging corporate response to global warming.
As part of the deal, RCCL will provide a financial guarantee to the developer of a wind turbine electric plant in Kansas for renewable energy that is intended to offset up to 12% of the carbon emissions from RCCL's ships.
The project, near Emporia, Kan., will be developed by Southern Power, which will sell the electricity it generates to retail customers.
Royal Caribbean's role will be to provide an up-front guarantee that the power will be sold at a certain price, through a financial instrument called a power purchase agreement.
The set price, which was not disclosed, provides financial certainty that enables the project to be financed and built.
The format has gained popularity as big corporations seek to offset the greenhouse gas emissions that can be attributed to their goods or services. Other companies that have power purchase agreements with renewable energy producers are Microsoft, General Motors, Google and General Mills.
The agreements enable the sponsor companies to claim credit for any carbon emission reductions.
RCCL officials said they believe theirs is the first company in the travel industry to use a power purchase agreement, which, RCCL chairman and CEO Richard Fain said, "complements our long-standing strategic initiatives to reduce the company's emissions and become a more sustainable operator."
RCCL ships emit more than 4.2 million tons of greenhouse gases per year, mostly carbon dioxide (CO2), the combustion byproduct that scientists say traps heat in the atmosphere, thereby raising global temperatures.
To counter the impact, RCCL plans to sponsor the Reading Wind Facility, which would use 62 wind turbines with blades up to 230 feet long to generate 760,000 megawatt-hours of electricity per year.
The offset is equivalent to the CO2 emissions from energy used by 55,400 average U.S. homes, according to RCCL.
In 2016, RCCL adopted a goal of slashing greenhouse emissions by 35% in the period between 2005 and 2020.
"We are constantly looking for new ways to reduce our environmental footprint, both in the short and long term," Fain said. "And thanks to our partnership with Southern Power, this is the latest step in our journey."
RCCL's 2017 Sustainability Report said propulsion accounts for 60% of the energy RCCL ships consume. Ships also burn fuel to make electricity for onboard use.
To date, RCCL's major greenhouse strategy has been to reduce fuel consumption through myriad energy-saving initiatives at sea.
Fain said those initiatives will continue and RCCL had already been on track to reach the 35% reduction goal without the wind farm agreement.
RCCL's 12-year agreement to buy electricity from Southern Power would begin with the start-up of the Reading plant in 2020 and run through 2032.
Although RCCL has a call center in Wichita, Kan., Fain said he did not expect it would use electricity from the wind farm.
He said that although no regulations yet require RCCL to offset carbon emissions, the company's constituencies are eager to see it do so.
"We have a number of stakeholders," Fain said. "Our guests expect us to meet our social responsibilities. Our employees expect us to meet our social responsibilities. And if we do that, it will allow us to attract the best employees. And if we attract the best employees, we will produce the best product."