When's a Green Tariff Not a Green Tariff? ...

... When Ofgem sets the guidelines for a Green Tariff.Philip Sellwood, Chief Executive of the Energy Saving Trust has hit out at Ofgem at the weekend;

"If Ofgem's guidelines progress as proposed then green tariffs cannot make a meaningful contribution towards increased renewable energy supply in the UK. What the public needs is clear and simple information so that they can make informed choices about the energy they use. They'll end up being misled and buy something which will not have a direct impact on their carbon emissions. Welcome to Greenwash. The world needs to reduce CO2 emissions by up to 80 per cent by 2050 in order to avoid dangerous climate change. Personal carbon emissions - the emissions from homes and travel - account for around 43 per cent of the UK total, or around 235 million tonnes of C02 a year. A low carbon lifestyle means using energy responsibly and efficiently - it also means choosing energy we do need from renewable, low-carbon sources. A million people each year contact our advice line for practical help in reducing their carbon footprint. We would not be able to advise those people to buy the Ofgem version of green tariffs as these will make no meaningful difference to whether the energy they buy in renewable or not."

The Energy Saving Trust & we at Energy Saving are not supporting Ofgem's expected proposals on Green Tariffs because:

1. They are misleading. Consumers presume that green means that the energy produced comes from a renewable source. A study commissioned by Ofgem shows that for most, 'green' in energy terms means the same thing as renewable energy. The study goes on to say that most expect all of the electricity included in the tariff to be from renewable sources. The Energy Saving Trust's own research shows that over one third of all households were interested in signing up to a green tariff, once the concept had been explained to them. In Ofgem's proposals, green can mean offsetting or giving cash to environmental charities which would not have any impact on energy sources.
   
   
2. No increase in energy from a renewable source. If the consumer buys a Green Tariff it does not result in more renewable energy being produced. The energy companies have an obligation to produce 9.1 per cent renewable energy anyway. Consumer demand would have to exceed this obligation for there to be an overall increase. But Ofgem are taking the decision to deny customers the chance to use their buying power to drive more demand for renewable energy in the long term. More customer demand would lead to more investment in renewable energy.
   
   
3. No transparency. Ofgem is proposing that the suppliers will not need to provide information about how much renewable energy is included within the individual tariffs they are selling. The suppliers are only required to make public their overall fuel mix eg renewable, nuclear, gas or coal. How can consumers know what they are buying? It is like if a supermarket was selling a range of sandwiches and on the labels for each sandwich was the overall mix of ingredients in all its sandwiches.
   
   
4. They are not independently certified. Ofgem has appointed the Energy Retail Association to appoint an independent certifier. The accreditation process should be fully independent from suppliers and overseen by the regulator.
   
   

Views from The Carbon Challenge blog;

OFGEM yesterday published a press release along with a consultation piece which was headed up "OFGEM Clears Up Green Tariff Confusion". Unfortunately I wish it were so, as I believe there is every possibility that if the guidelines to customers OFGEM are proposing are adopted, this could lead to even greater confusion in the market itself. There have been numerous studies commissioned, amongst them one by OFGEM, which consistently show that for most people "Green" in terms of "Green Tariff" is synonymous with renewable energy. Therefore, most customers expect that all electricity included in a Green Tariff should come from renewable sources and we know that is simply not the case at the moment.

Under OFGEM’s proposals suppliers will be able to launch a series of options which will illustrate additional environmental benefits - such as proposals around demand management, renewable heat, or offsetting. All of these I have no problem with, but they are environmental benefits and not what people expect of a Green Tariff. The whole purpose, from a customer’s point of view, is that buying a Green Tariff should result in more renewable energy being brought to market. However, and to be fair to OFGEM they do make this clear, just re-packaging what is already an obligation under Government plans is not likely to bring forward any additional renewable energy capacity to the Grid. If these tariffs were offered as Environmental Tariffs that’s one thing, but to call them Green Tariffs means customers will not be able to exercise their buying power to drive even greater demand for renewable energy in the medium term.

One of the key reasons for the consultation and for OFGEM taking action was that customers consistently tell us they need to be able to understand the attributes of each tariff on offer. However, under OFGEM’s proposals suppliers will not need to provide information about how much renewable energy is included within individual tariffs only that they declare their overall fuel mix, which includes renewables, gas, coal even nuclear.

So how do customers know what they are buying? It’s as if Marks and Spencer were to label all of their sandwiches with the mix of ingredients contained in all the varieties of sandwich sold within its range, rather than the ingredients specific to that sandwich. What the customer wants is clear and simple information so that they can make informed choices about the sort of energy they buy. I cannot see how this scheme will deliver on that aspiration. We will not doubt see this one run and run. I am all in favour of giving the public an increasing choice around environmental benefits, but that is not the same as clearing up the confusion around Green Tariffs, far from it.