Big Six supplier Scottish Power and energy minnow Good Energy are jointly calling for regulatory reform to close “loopholes” that allow for greenwashed tariffs.
As consumers have become more conscious of their carbon footprints, energy suppliers have flooded the markets with deals that provide 100% renewable electricity. But in many cases, energy suppliers are buying power generated by fossil fuels, including coal and gas, and matching them with Renewable Energy Guarantees of Origin (REGO) certificates.
REGO certificates are originally issued by renewable generators but can be traded across the market and bought from Europe. They can be purchased for around £1.45 per customer per year and provide little direct support to UK generators of clean power.
Scottish Power and Good Energy say energy suppliers reliant on REGOs are “misleading” customers. They point to research from consultancy Baringa, published last week, which revealed that around a third of the electricity supplied through “renewable” tariffs is greenwashed—generated by fossil fuels and matched by REGOs.
They also cite a new poll conducted by YouGov for Scottish Power which revealed that 66% of consumers would be concerned about signing up for an electricity tariff that was marketed as green, only to learn it failed to support renewable generation through the direct purchase of clean electricity.
The firms say tariffs should only be labelled as green if all the electricity they supply is directly generated through renewables by the supplier or sourced through Power Purchase Agreements (PPA), long-term deals which give green generators a revenue stream to stay viable and invest in new installations.
As of February 2020, all of Scottish Power’s new domestic fixed price tariffs use 100% renewable energy sourced directly from its own wind farms. Good Energy sources its renewable power through PPAs, with deals with 1600 independent green generators. Similarly, Ecotricity generates around 20% of its green electricity and purchases the rest through PPAs, avoiding REGOs.
Good Energy and Scottish Power both been vocal critics of greenwashed tariffs. In December Good Energy urged Ofgem to update supply licensing conditions to tackle greenwashing.
Last year the supplier specifically called out new energy giant OVO for misleading its customers about its green credentials. OVO sources nearly half (48.1%) of the electricity supplied by its “renewable tariffs” from gas-fired power stations. It sources just 13% through PPAs, but says it wants to increase the proportion to 40% by the end of the year.
Scottish Power recently said it is considering making a complaint to the Advertising Standards Authority about the marketing of these energy tariffs.
Now Good Energy and Scottish Power are jointly calling on energy market regulator Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS) to set minimum standards on what can be classed as green energy and ban non-PPA-based tariffs from wearing the label.
Ofgem and BEIS should also require suppliers to explain the type of tariff they’re selling, to increase transparency in the market. Additionally, suppliers that buy EU-based energy certificates should no longer be exempt from paying “their fair share” of the costs to support the UK’s renewable sector.
Consumers are being “misled by too many energy companies,” Andrew Ward, CEO of Scottish Power Retail said. “More and more people want to play their part in tackling climate change. They think they’re doing so by buying a green electricity tariff. Frustratingly, they’re often not. Snazzy marketing materials can’t make up for the fact that lots of these tariffs aren’t as green as they might seem.”
If greenwashing continues it “risks the UK’s position—hard won—as a world leader in green technologies and tackling climate change,” particularly ahead of COP26, to be held in Glasgow in November, he added.
Juliet Davenport, CEO and Founder of Good Energy, said: “Our new report shows the energy market is in drastic need of reform. Millions of customers are being misled by tariffs which do little to support green power, or tackle climate change.
“The answer is simple: Any supplier which is selling green power should be buying green power for their customers. People rightly expect energy companies to be upfront and honest with them. The industry can’t afford to lose their trust at this crucial time for climate action.”
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