Lyft Inc (Lyft) is a provider of Transportation-as-a-Service (TaaS) that offers ride-sharing, bikes and scooters rental, access to autonomous vehicles, and various transportation options through its platform and mobile-based applications. The company operates as a peer-to-peer marketplace, connecting drivers and riders, and provides tools and solutions to businesses for managing the transportation needs of their customers and employees. Lyft operates in various markets across the US and Canada, serving a wide range of customers with its innovative and sustainable transportation solutions.
In 2018, Lyft made a commitment to achieve full carbon neutrality and 100% renewable energy. The company announced that it would purchase enough carbon offsets to neutralize its emissions and commit to purchasing enough renewable energy to cover the electricity consumption of every Lyft office space, driver hub, and electric vehicle mile on its platform. To achieve its renewable energy goals, Lyft has employed two methods. First, they worked with CleanPowerSF to buy green energy from their local utility provider. Second, they committed to buy unbundled renewable energy credits (RECs) to cover the remaining electricity consumption. Since then Lyft has successfully sourced 100% renewable electricity to reduce its scope 2 emissions.
But, Lyft does more. In 2020 they also committed to convert the vehicles driven on its platform to 100% electric vehicles. Co-founder and President, John Zimmer said at the time that “[n]ow more than ever, we need to work together to create cleaner, healthier, and more equitable communities,” He added that “[s]uccess breeds success, and if we do this right, it creates a path for others. If other rideshare and delivery companies, automakers and rental car companies make this shift, it can be the catalyst for transforming transportation as a whole."
To accomplish this transition and signify their commitment, Lyft joined the EV100 the Climate Group’s global initiative with forward looking companies to accelerate the transition to EVs. But they also need to actively engage both drivers and riders in a way that helps encourage drivers to use more EVs on the platform, and get riders to request more EV based rides on the platform. This program is called “Green Mode,” which was expanded in April of 2023. According to Paul Augustine, Lyft’s Director of Sustainability “[e]lectrifying our transportation network is a crucial step in helping reverse the negative impacts of climate change. We know many drivers on Lyft want to switch to EVs, which is why we’re focused on addressing the biggest barriers they face in transitioning: upfront costs and access to charging. These offerings are the latest in many steps we are taking to support drivers in switching to an EV on Lyft.” As a result, it’s here that Augustine sees a huge emissions reduction opportunity, “[i]f someone’s driving three to five times as much as a regular person whose car is sitting idle 95% of the time… that means we’re getting three to five times the emissions reduction.”
But even as they encouraged more sustainable trips between drivers and riders, Lyft also needed to address emissions created by these trips. So, they decided to create the “Green Cities” program which uses both carbon offsets and RECs to mitigate trip emissions. Based on their 2022 ESG Report, Lyft's total electricity consumption in 2021, including renewable electricity (MWh), was 20,674 MWh. This is the estimated electricity consumption across over 100 office facilities using a location-based methodology and actual consumption at Lyft’s San Francisco headquarters, which is their largest facility. To mitigate thet, Lyft’s tota purchased renewable electricity consumption for 2021 was 27,869 MWh, covering both their facility energy consumption described above and the estimated electricity consumption by EVs on the Lyft platform (7,195 MWh). Of this, 4,299 MWh was consumed through renewable electricity products from our electricity suppliers, and 23,570 MWh was the total volume of U.S.-origin Green-e certified renewable energy credits (RECs) retired. That means Lyft accounted for EV emission on the platform with RECs as the offset mechanism.
When one thinks about that last part, you immediately see an additional, and equally huge challenge - as more and more drivers switch to EVs, the emissions for those trips, while not being powered by fossil fuel, will still increase based on the need for electric charging. In a December 2022 blog Lyft alluded to “the enormity of this pledge…” According to their own assessments, 2022 was a record-setting year for electric vehicle sales in the U.S., EVs still comprised only about 6% of all new vehicles sold. Because most drivers on the Lyft platform utilize their own vehicles, you might expect their EV ownership to be roughly in line with the national market share. That means there is not only a very long way to go to get drivers to convert their vehicles to EVs, but once they do, there will be an even higher amount of electricity emissions to offset from those new EV trips. Looking at it this way presents a problem of both scale and quality when it comes to offsetting these new electrified trips. According to the Green Cities program one of the main factors was to meet a standard of environmental integrity based on “additionality.” This where RECs with additionality could offer a great deal of support to Lyft’s efforts and progress.
The Impact of RECs with Additionality on Lyft's Progress
While Lyft has made significant progress in sourcing 100% renewable electricity, the inclusion of RECs with additionality in its strategy could further enhance its sustainability efforts. RECs with additionality are a type of renewable energy certificate that goes beyond the standard environmental benefits of renewable energy generation, providing additional support for the development of new renewable energy projects and the expansion of the renewable energy market.
By including RECs with additionality in its procurement strategy, Lyft could:
Provide scale to its emission reduction strategies: As Lyft's business continues to grow, the company will need to cover increased consumption of megawatt hours (MWh) of electricity caused by more EVs being used on the platform with a higher amount of EV based trips. S, procuring RECs with additionality can provide the scale needed to support its current emission reduction strategies.
Increase the speed at which the grid can change to renewable energy: Given that Lyft has set a high bar to make “additionality” a core component of its “environmental integrity” approach, RECs with additionality would support this by directly subsidizing the development of new renewable energy projects. Thus helping to accelerate the transition to a cleaner and more sustainable energy system.
Make a more impactful marketing claim for sustainability purposes: Currently, Lyft sources Green-e Certified RECs which means they probably come from “newer,” but already existing and generating renewable energy projects. The inclusion of RECs with additionality in its procurement strategy would allow Lyft to make a stronger and more credible claim about its commitment to sustainability because RECs with additionality would only come from new projects yet to be commercially operational. Thus furthering Lyft’s positive impact from its renewable energy procurement efforts.
In conclusion, Lyft has made significant progress in sourcing 100% renewable electricity to reduce its scope 2 emissions. However, the inclusion of RECs with additionality in its strategy could further enhance its sustainability efforts, and help them achieve their long-term goals while continuing to reduce their overall environmental impact and contribute to a more sustainable future.