New report urges action on ‘fake green’ energy tariffs
New report urges action on ‘fake green’ energy tariffs
Good Energy calls on the regulator to close loophole which allows greenwashing
Former Ofgem sustainability lead backs Good Energy’s campaign
Good Energy, the 100% renewable power provider, is today releasing a new policy paper into the state of greenwashing in the energy retail market.
The report exposes the widespread problem of how energy suppliers can sell green tariffs and not have to buy any green power for their customers.
A loophole in the rules has allowed many suppliers to mislead millions of consumers into joining “100% renewable” tariffs while providing close to zero support for renewable generators in the UK. Instead of buying renewable power, suppliers are able to buy second-hand certificates for as little as 10p. A typical household’s energy consumption for an entire year can be covered for less than £1 by purchasing these certificates and not the power itself. By contrast, buying the power can cost up to 100 times this price.
Good Energy’s new report was supported by Dr. Jeff Hardy, who previously acted as Ofgem’s Head of Future Consumers and provided expertise on how suppliers should market green tariffs. Dr. Hardy is clear the current system is in urgent need of reform.
He writes in the report’s foreword: “As a consumer, I think it is reasonable that if I choose a green electricity tariff, the company should be able to point to the renewable power plants from which it buys its power. That way, I know my hard-earned cash is supporting renewable power and incentivising more of the same, and the economic growth and jobs that come with it.” “I think the market for green tariffs should be simple, transparent, and trustworthy; and that is why I’m supporting Good Energy in their campaign on this.”
In recent years, the greenwashed option has exploded in popularity among new and existing energy companies. The loophole is deeply damaging to consumer trust and is harming the shift to clean energy. The regulator, Ofgem, has already promised to investigate the issue and “ensure consumers are not being misled” by green tariffs which have little or no environmental benefit. An expose is also being shown on BBC Morning Live this week.
Dr. Tom Steward, Good Energy’s senior policy manager, and the report’s lead author, commented: “Consumers are being sold down the river. Most people would expect a supplier claiming to offer green power to actually be buying green power however, often that is not the case at all. Many companies are using a loophole in the rules to claim they are supporting renewables when, in fact, all they are doing is luring in customers with misleading claims whilst doing little to fight against climate change.”
One former customer of Shell Energy has already complained to the Energy Ombudsman and ASA. Shaun Jordan, from Bristol, said:
“How can they possibly be allowed to get away with telling customers that they supply them with 100% renewable energy, when the energy they supply actually comes from fossil fuels? This is simply false advertising and blatant greenwashing that misleads the public.
“There are millions of customers now on these fake green tariffs. That means millions of people that have been duped into thinking they are helping renewable energy when they are not, like I did.”
Good Energy’s report provides two key recommendations to Ofgem:
- Update the licensing condition to reinstate the link between Power Purchase Agreements and customers. No tariff should be marketed as 100% renewable unless the supplier is buying that power from a renewable generator.
- Enforce the additionality clause by requiring any environmental claim to be audited by either an independent body or Ofgem, outlining what qualifies as additionality, and creating a clear threshold for compliance in a similar way to the exemptions under the Price Cap for green tariffs.