IKEA Accelerates Transition to Renewable Energy in Production

How IKEA is pioneering global supply chain decarbonization with major renewable electricity initiatives.

By Medha deb

Created on Sep 27, 2025

How IKEA is pioneering global supply chain decarbonization with major renewable electricity initiatives.

IKEA Accelerates the Shift to Renewable Electricity in Production

As climate change intensifies and global expectations for corporate responsibility rise, IKEA stands at the forefront of a transformative movement: the rapid decarbonization of its global supply chain. By targeting the energy consumption of its vast network of suppliers, IKEA is setting a new standard in driving the adoption of renewable electricity—especially wind and solar power—across both its own operations and those of its partners. This article explores IKEA’s expanded renewable electricity program, milestones achieved, key strategies, and its broader impact on the climate agenda.

Why Focus on Supplier Energy Use?

Manufacturing the products IKEA is known for generates significant greenhouse gas emissions, with production representing around 7% of the company’s total climate footprint.^* Of these production-based emissions, electricity consumption accounts for approximately 36%—making the shift to clean power especially impactful.^* Recognizing that most of its emissions occur in its extended value chain, IKEA has set ambitious climate goals that prioritize supplier engagement.

IKEA’s Pathway to 100% Renewable Electricity

IKEA has charted a clear pathway to power its own operations exclusively with renewable electricity by 2025 and reach 100% renewable energy—including electricity, heating, cooling, and fuel—across its entire value chain by 2030. This vision is rooted in the latest science and aligns with international agreements such as the Paris Agreement.

2030 Target: 100% renewable energy use in production and supply chain
2025 Milestone: 100% renewable electricity in IKEA’s own operations
Focus Areas: Electricity, heating, cooling, and fuels used by IKEA and all suppliers

Decarbonizing the Supply Chain: The Supplier Renewable Electricity Program

Launched in 2021, IKEA’s Supplier Renewable Electricity Program is designed to make clean energy accessible, affordable, and practical for its global supplier base. It eliminates common barriers such as lack of access, high market prices, and complicated contracts.

Pre-negotiated prices: IKEA works with energy vendors to secure low fixed rates for renewable power, passing these benefits to suppliers.
Market expansion: The program is rolled out in countries and regions where suppliers face challenges in accessing renewable grids.
Flexible participation: Suppliers can join if the commercial terms fit their business needs.
Bulk purchasing power: IKEA leverages its scale to arrange bundled agreements or power purchase agreements (PPAs) that lower costs.

Recent Expansion: 2024–2025 Milestones

In 2025, IKEA announced a major expansion of its program, rolling out support for suppliers in an additional 14 countries, including the US and Japan, bringing the total to 27 markets. With this step, the initiative now covers over 91% of CO₂ emissions from electricity used in IKEA’s production.

Year	Market Coverage	Renewable Electricity in Production (%)
2020	Initial (China, India, etc.)	—
2023	13 countries	71
2024	27 countries	75
2030 (target)	Global supply chain	100

Some remarkable country-level milestones:

China: 92% renewable electricity in production (2024); 87% decrease in CO₂ emissions from electricity at supplier sites since 2020.
India: 69% renewable electricity in production (2024); 49% decrease in CO₂ emissions at supplier sites since 2020.
Vietnam: Share of renewable electricity use by suppliers increased by 40 percentage points between 2023 and 2024, reaching 84%.

How the Program Works: Strategies and Tools

IKEA’s approach is both practical and scalable; it focuses on removing obstacles for suppliers of all sizes.

Key Strategies

Pre-negotiated renewable energy contracts: Suppliers can access fixed-price deals for wind or solar power, avoiding exposure to volatile energy markets.
Power Purchase Agreements (PPAs): IKEA arranges large-scale PPAs, enabling suppliers to tap into new renewable projects with guaranteed offtake.
Technical and financial support: IKEA offers guidance and, in some markets, financial incentives for on-site solar or wind installations.
Standardization: The program establishes consistent renewable electricity procurement processes, simplifying compliance for suppliers.
Transparency: Emission reductions are tracked and reported for full accountability.

Progress and Impact: Demonstrated Emissions Reductions

As of 2024, 75% of the electricity used in IKEA’s production was sourced from renewable sources, up from 71% in 2023. The most dramatic results have been witnessed in China and India, where early program rollouts have helped local suppliers dramatically lower emissions:

In China, CO₂ emissions from electricity usage dropped by 87% between 2020 and 2024.
In India, CO₂ emissions fell by 49% over the same period.

By leveraging these results and expanding to more markets, IKEA expects even greater emission reductions, further aligning the company with a 1.5°C climate scenario.

Beyond the Supplier Program: IKEA’s Comprehensive Climate Agenda

IKEA’s commitment to sustainability goes beyond supply chain energy use. The company has updated its climate strategy to the “Net Zero and Beyond” framework, which involves not only halving direct and indirect emissions by 2030 (compared to 2016), but also removing and storing carbon through forestry, agriculture, and in its own products.

Science-Based Targets: IKEA’s emissions targets have been validated by the Science Based Targets initiative (SBTi).
No Reliance on Offsets: IKEA aims to achieve absolute (real) reductions instead of relying on carbon offsets.
Nature-Based Solutions: Carbon removal will be achieved within the IKEA value chain – such as through sustainable forestry management and regenerative agriculture.
Empowering Consumers: IKEA encourages customers to make sustainable choices, for example by offering solar panels for homes in select markets.
Advocacy and Policy: IKEA is active in industry collaboration and climate policy advocacy, seeking to accelerate the low-carbon transition beyond its own business.

Challenges and Solutions: Making Clean Energy Accessible Globally

One of the most persistent challenges in global renewable energy adoption is accessibility and affordability, particularly in developing markets. IKEA’s supplier program is distinctive for directly addressing these barriers, making renewable electricity easy, accessible, and affordable for production partners worldwide.

Market Hurdles: Many markets have underdeveloped renewable infrastructure; IKEA helps suppliers navigate complex regulatory, financial, and grid integration issues.
Financing Models: By financing on-site generation and enabling clean grid purchases, IKEA ensures all suppliers, regardless of location or size, can make the switch.
Collaboration: The program and its expansion rely on close cooperation, knowledge-sharing, and technical support between IKEA and thousands of suppliers.

The Broader Impact: Leading Corporate Climate Action

IKEA’s supplier-focused renewable electricity strategy represents a blueprint for global supply chain decarbonization. It demonstrates the power of corporate demand for renewables in driving grid transformation, lowering costs for all sectors, and accelerating emissions reductions at scale.

Industry Involvement: Other corporates are taking note, with IKEA’s strategic approach to supplier engagement quickly becoming a case study in effective decarbonization tactics.
Societal Impact: By going beyond its own footprint—helping suppliers, advocating policy, and empowering customers—IKEA amplifies its positive effect on climate action.
Measurable Results: Early data shows dramatic drops in supplier emissions, particularly in countries where renewable access has been a historical challenge.

Frequently Asked Questions (FAQs)

Why is IKEA prioritizing renewable electricity for its suppliers?

Supply chain energy use—especially electricity—is among the largest contributors to IKEA’s total greenhouse gas emissions. Targeting suppliers multiplies the impact of renewable energy adoption compared to focusing solely on IKEA-branded operations.

How does IKEA make renewable electricity affordable for suppliers?

IKEA leverages its large purchasing power to secure pre-negotiated, fixed-price contracts and PPAs, reducing costs and making clean energy more predictable financially for suppliers of all sizes.

What are the biggest results IKEA has already achieved?

Significant emission cuts at supplier locations in China and India: 87% and 49% reductions in CO₂ emissions from electricity use since 2020, respectively. The overall proportion of renewable electricity in IKEA’s global production rose to 75% in 2024.

Does IKEA’s renewable energy target include all types of emissions?

Yes. IKEA’s climate agenda covers scope 1 (direct operations), scope 2 (energy use), and scope 3 (suppliers and logistics) emissions. By 2030, IKEA aims to halve GHG emissions across these scopes, moving toward net zero by 2050 without relying on external offsets.

Is IKEA only focusing on electricity in its supply chain, or does it address other sources of emissions as well?

While the current program spotlights electricity use, IKEA’s long-term strategy also targets heating, cooling, fuels, materials, packaging, waste, logistics, and product design.

How can other companies follow IKEA’s example?

By actively supporting suppliers through purchasing, technical aid, and market engagement, while working toward transparent reporting and industry collaboration. IKEA’s supplier-centric blueprint and advocacy efforts are already influencing best practices globally.

Key Takeaways

IKEA’s renewable electricity program is a global model for accelerating supply chain decarbonization and supporting international climate goals.
Expanding from 13 to 27 markets in 2024–2025, the initiative now covers over 91% of emissions from electricity used in production.
Major achievements include an overall 75% renewable share in production, with standout emission reductions in China (92% renewable share, 87% emissions drop) and India (69% renewable share, 49% emissions drop).
2030 Target: 100% renewable energy use across production and the entire IKEA value chain.
Broader commitment: IKEA’s “Net Zero and Beyond” agenda paves the way for leading climate action industry-wide.

References

Author

medha deb

Medha Deb is an editor with a master's degree in Applied Linguistics from the University of Hyderabad. She believes that her qualification has helped her develop a deep understanding of language and its application in various contexts.

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