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Mixed response to marketing guidelines on green tariffs

Guardian Environment 4th February 2009

Marketing guidelines for green electricity tariffs published today by the energy regulator have received a mixed response.

Six big electricity suppliers welcomed the guidelines launched by Ofgem today, while environmental groups expressed caution and a leading green electricity supplier refused to sign up to the scheme, dismissing it as "greenwash".

Ofgem published the guidelines on how companies can market their offering of "eco-friendly" schemes in response to long-standing concerns about confusing claims.

Around 319,000 households have signed up to green tariffs, often in the belief that they are helping to reduce carbon emissions and boost renewable power generation.

But environmental campaigners have argued that some green tariffs are little more than a repackaging of electricity from renewables that suppliers were already required to purchase by law.

Under the Renewable Obligation, all electricity suppliers must buy a proportion of their power – currently 9.1% and rising each year – from renewable sources such as wind and biomass. This is funded by a levy on all electricity bills.

Customers often pay a premium for a green tariff without any guarantee that the additional money paid for the "clean" electricity goes towards producing more renewable electricity than they are already obliged to do.

In the new system suppliers can sign up for Ofgem accreditation for their green tariff. To be endorsed, the supplier must invest in additional environmental activities, such as carbon offsetting or community energy projects.

Carbon offsetting must equate to saving one tonne of CO2 per customer per year. This is around half the electricity-related emissions of a typical British household and, for the verified offset projects permitted, is worth approximately £8.

All six of the big electricity suppliers have signed up to the guidelines, along with specialist green supplier Good Energy. However, Ecotricity, another green specialist, claimed that the guidelines allow offsetting instead of increasing renewable electricity supply and has refused to sign up.

"This is greenwash and we simply won't be party to it," said Ecotricity's Dale Vince. "Ofgem has sidelined the consumer by excluding real green electricity from their definition of so-called 'green tariffs'."

Bryony Worthington of environmental campaign group Sandbag said: "A shift towards offsetting is probably sensible now that electricity emissions are capped, and because one of the main barriers to new renewable capacity is planning, which green tariffs can't really tackle directly."

Electricity companies can also invest in community based renewables or energy efficiency schemes to qualify for Ofgem endorsement. But the watchdog's guidelines released for these schemes are vague. Ofgem only stipulates that CO2 savings must be "material" and has not yet specified how the schemes will be audited.

Independent renewable energy expert Virginia Graham explained that "it will be very difficult for suppliers to prove beyond reasonable doubt that any projects they fund would not have gone ahead anyway, particularly in the context of the UK's stringent 2020 renewable energy and energy efficiency targets."

Friends of the Earth, which has lobbied for tighter regulation of green tariffs for some years, said guidelines were a step in the right direction but called for more drastic reform of energy policy.

FoE's energy campaigner, Mary Taylor, said that a voluntary scheme for green consumers was "not nearly strong enough to implement the major changes that are urgently needed across the system to reduce our emissions and tackle climate change".

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