- Government to review green electricity tariffs amid concerns
energy companies could be exaggerating their environmental
benefits
- Ministers will consider whether there is currently sufficient
clarity around where energy on bills comes from
- Review comes as poll shows 75% of consumers believe suppliers
should be more transparent over their green tariffs
How energy retailers market ‘green’ electricity tariffs to
consumers will be reviewed by the Government, amid concerns that
some are overstating how environmentally friendly their products
are, Energy Minister
has announced today (16 August).
Nine million British households are now on green tariffs, with
over half of all new electricity tariffs launched now badged as
"100% renewable" or “green”.
With more and more consumers looking to make a green switch and
reduce their carbon footprint and the UK having more than
quadrupled its renewable electricity generation since 2010, the
Government wants to ensure consumers signing up to a green tariff
know their energy is coming from green sources of electricity
generation.
The review launched today will explore the extent of
“greenwashing” in the retail energy sector, whether the current
system is suitably transparent and whether the rules around what
can be called a “green” tariff remain fit for purpose.
Energy companies are currently able to market tariffs as “green”
even if some of the energy they supply to customers comes from
fossil fuels, as long as this is offset by purchasing enough
certificates called Renewable Energy Guarantees of Origin to
cover their customer base. These determine the proportion of
electricity that they source from renewable electricity
generation.
Options being explored include looking at whether the system
around these certificates needs to be smarter, as well as whether
suppliers need to provide clearer information to households about
their green tariffs, including type of renewable energy used
(such as wind or solar), where the renewable power was generated
and when.
The Government is also publishing a separate call for evidence on
third-party intermediaries in the retail energy market, such as
price comparison sites, auto-switching services, and non-domestic
brokers, with around half of households using them when engaging
with the energy market. They currently operate outside of the
retail market rules, and ministers will seek views on whether a
general regulatory framework is needed.
Minister of State for Energy and Clean Growth, ,
said:
“Millions of UK households are choosing to make the green switch
and more and more of our energy comes from renewables. But I want
people to know that when they sign up to a green tariff, they are
investing in companies that make a conscious choice to invest in
renewable energy.
“Part of that is ensuring companies are being as transparent as
possible on where their power comes from. That way, every family
in Britain can rest assured their choices are helping to
contribute to our world-leading target of eliminating our
contribution to climate change by 2050.”
Nearly two thirds (62%) of UK energy consumers say their
purchasing decisions are influenced by how eco-friendly an energy
tariff is. However, 75% believe suppliers should be open and
transparent about their tariffs, including how much of their
renewable energy they buy from other companies.
Consumer protection advocates and price comparison services have
also called for greater transparency around suppliers who market
their tariffs as green.
Head of Regulation at Uswitch.com, Richard Neudegg,
said:
“Transparency is key to bring consumers on the journey to net
zero. Households want to do their bit to help the environment, so
it's vital to make it as simple as possible for them to
confidently pick the tariffs that actually help to support
renewable energy.
“More and more people are purchasing green tariffs but it’s been
difficult for bill-payers to know exactly what’s under the hood
of these deals. We support any measures that aim to demystify
green tariffs for households.”
Editor’s notes
- The Call for Evidence on Designing a Framework for
Transparency of Carbon Content in Energy Products is available
here and was
promised in the Energy White Paper. It seeks to gather
information from consumer groups, energy suppliers, generators
and industry bodies, about the need for reform to the green
tariff framework, and presents options on how things could
change to become more transparent for consumers.
- The Call for evidence on Third-party intermediaries can be
found here.
- Research of consumer attitudes comes from a YouGov poll,
featuring in a Scottish Power and Good Energy report “Come Clean on
Green” (2020)
- Renewable Energy Guarantees of Origin (REGO) are issued to
energy generators by the energy regulator Ofgem to certify that
electricity has come from a renewable source. For a tariff to be
badged as ‘green’ or ‘100% renewable’, a supplier must be able to
show evidence that they are in possession of enough REGO
certificates to cover the energy consumed by customers on that
tariff.
