15 August 2021
•
3 min read
Greater transparency would help consumers make 'climate conscious' choices, Minister argue
The government is to crackdown on energy companies that overstate the environmental benefits associated with the energy they provide, as part of reforms designed to tackle alleged "greenwashing" across the sector.
Energy Minister Anne-Marie Trevelyan said how energy retailers market 'green' electricity tariffs to consumers would now be reviewed by the government, amid concerns that the definition of a "green" tariff may no longer be fit for purpose.
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".
However, 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 (REGO) to cover their customer base.
Critics of this approach, including a number of green energy providers that invest directly in their own renewable energy capacity, have argued purchasing REGOs delivers limited emissions savings benefits, as companies are purchasing certificates from renewables projects that are already providing clean power to the grid.
The government said it will now look at whether the current system needed to be "smarter", as well as whether suppliers need to provide clearer information to households about how their green tariffs operate, including data on which type of renewable energy is used and where and when it is generated.
Announcing the review, Trevelyan 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."
Richard Neudegg, head of regulation at price comparison site Uswitch.com, said his firm welcomed plans to strengthen the definition of green tariffs.
"Transparency is key to bring consumers on the journey to net zero," he said. "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."
Separately, the government is also calling 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. The sector currently operates outside of the retail market rules, and ministers will seek views on whether a general regulatory framework is needed.
Earlier this year, consultancy giant EY published research showing 40 per cent of under 35s would pay a premium for sustainable energy.
Growing numbers of UK energy consumers are taking sustainability into account when choosing products or services, with over 60 per cent more likely to choose sustainable options, the survey found, while 51 per cent told researchers they would switch to a sustainable energy company if suppliers made the process simpler and easier to understand.
The survey, which canvassed the views of 2,000 UK energy consumers, also found a strong interest in supporting the local economy, with just over three-quarters of respondents saying they would rather buy and use sustainable energy generated in their own community.
