Greenwashing

Good Energy’s joint report with Scottish Power, using data published by independent consultants Baringa, looking at which suppliers are backing their domestic and business tariffs with renewable power, and which are just greenwashing.

Read our policy paper with a foreword from Dr Jeff Hardy, Senior Research Fellow at the Grantham Institute and Former Head of Sustainable Energy Futures, Ofgem

Find out why the way we procure renewable energy creates additionality and enables more generators to come to market in this article.

Any renewable generator which generates one megawatt hour of electricity is eligibleto receive a certificate for that unit of power from the regulator, OFGEM. They can then sell these certificates with the power, or separately. 

Many organisations want to ‘go green’ by installing renewable technology. This renewable power means reduced bills and a reduced carbon footprint.

That is clearly a good thing that should be encouraged. But the organisation does not need the REGOs associated with the power they are buying. This means they may sell them on, where they are potentially used to greenwash a household ‘green’ energy tariff.

This effectively means that the renewable electricity is being double counted — once by the corporation reporting itself to be ‘powered by 100% renewable electricity’, and once by the customer on the green tariff. 

REGOs are part of a European wide certification scheme, and are what the certificates from UK generators are called. Certificates from elsewhere in Europe are simply called Guarantees of Origin (GoOs).

Thanks to recent policy change in April 2023, European GoOs cannot be used to label UK energy as green, and UK REGOs are not recognised in the EU.

Which? Recently published their list of 2023 eco providers for energy, which you can see here.

You will see on the breakdown that they share the percentage of customers’ usage that is matched directly with renewable generators – this is the thing to look out for.

If your supplier isn’t on this list – it’s worth taking a look at their website. If they talk about how they back your electricity use with REGOs but don’t talk about any agreements with generators, that’s a giveaway. It can still be difficult to tell, so go ahead and ask — ‘how much of the green electricity you supply each year is backed by agreements with renewable generators, and how much is just backed by REGOs?’ If any of it is just REGOs, without also buying the power to go with them, you’re being greenwashed. 

A common argument from the greenwash energy suppliers is that renewable electricity should not be a premium product. Good Energy is a huge supporter of the concept of a just transition. The idea that everyone should play a part in the solutions to climate change is at the very core of our purpose. The problem is that REGO backed greenwash tariffs are not part of the solution to climate change. 

It’s true that renewable generation is getting much cheaper — which is good news for everyone. But at the moment renewable generation is still tied to the cost of gas – and until we move away from fossil fuels, this problem will persist. 

If the market was transparent, those who want to support renewables and can afford to do so would not be misled by fake green tariffs, and we would have much more support for growing renewables. Which will get us to 100% renewable energy system faster, and make electricity cheaper for everyone.  

Firstly it depends who you mean by ‘everyone’. Domestic households only make up just over a third of electricity demand — the rest is industrial and service usage. Coincidentally just over a third of generation is already renewable, so as we covered earlier, feasibly every single household could switch to a REGO backed tariff and it would make no difference to the greenness of the grid. 

This is incredibly unlikely to happen. Less than six million households switch supplier each year. Meanwhile 23% of households, which is millions of people, never change supplier.  

The big difference here is the value to the generators. We calculated the hypothetical value of just REGOs to one of our 5MW solar farms — that’s fairly big farm with three large fields covered in solar panels, producing enough power for around 1,250 homes. The value of the REGOs over a year would just about cover cutting the hedges. You don’t need to be a business expert to recognize that would be a far from sufficient financial foundation to get the solar farm built.  

Meanwhile our dedicated PPA (Power Purchase Agreement) team speak to prospective generators who are creating a business case to get new renewables built all the time. We are able to give them a power price they struggle to find elsewhere, on terms that work for them, because other suppliers are not in the market for PPAs. That price allows them to create that business case, find finance, and get their generators built. Our PPA team are also a crucial source of support to the generators we work with – offering insight into how changes to the energy system could affect them, keeping them up to date on the changing price of power, and making sure they know about new regulations that are coming that might harm their business model. 

Imagine if all suppliers offering green tariffs were doing the same — the market for building new renewables would explode. 

Good Energy moved away from building our own generators several years ago because we can have a much bigger impact enabling others to generate clean power than trying to do it all ourselves.  

We believe in a fairer, democratized, decentralized energy system. Not one where a handful of companies own all the power stations — whether those are power stations are renewable or not. Our long–term goal, as explained in our manifesto, is to enable all of our customers to generate, share, store and use their own clean green power.  

Ofgem’s supply license conditions were not intended to be abused in the way that they are. Our policy document details how the license conditions became out of date once the Climate Change Levy exemption closed for renewables in 2015, which in effect opened up the loophole. This was written with support from Dr Jeff Hardy, who used to oversee the team at OFGEM that wrote these rules in the first place. 

It also explains how suppliers simply buying REGOs to back green tariffs should not be making claims of environmental ‘additionality’. These are marketing messages you might see on supplier adverts or websites that make claims like they are ‘making energy greener’ or ‘helping fight climate change’. These claims are against the regulations right now, and should be stopped. 

In 2023, Ofgem changed the rules about using European GoOs to certify UK energy as renewable. This has made UK REGOs much more valuable, as suppliers are scrabbling to buy what’s left to label their power as green.

At the moment, the loophole to label purely REGO backed electricity as green still exists.

Ofgem is independent from Government, but we know that they work closely with the government’s Department for Business, Energy and Industrial Strategy — BEIS. If government is concerned  about greenwashing in the energy market, Ofgem is more likely to prioritise it. So do write to your local MP — every politician who has this issue on their radar helps.  

If you’ve been a victim of greenwashing, do let us know your story by emailing greenwash@goodenergy.co.uk.  

If you think you have been misled by green claims, complain to your supplier. If their response is unsatisfactory, complain to the Ombudsman.  

If you see marketing claims you believe to be unfounded — bearing in mind that any environmental claim like ‘making energy greener’ or ‘fighting climate change’ from a supplier which does nothing more than buy REGOs is in fact against the existing regulations — complain to the Advertising Standards Agency (ASA).  Although it’s worth being aware that the ASA isn’t an energy specialist. 

Write to the media too. Consumer affairs journalists and shows want to hear about this.