Wednesday, December 20, 2006

How green are 'green' electricity tariffs?

How green are 'green' electricity tariffs - and how honest are energy suppliers about what you get for your money and and what the environmental benefits really are?

We're often told that switching to a green tarriff is on of the simplest ways to cut carbon emissions from houses and workplaces.

But a study by the National Consumer Council shows that most green tariffs don't live up to the environmental benefits claimed.

The best ones are Good Energy and RSPB Energy from Scottish and Southern. Go there and switch now to reduce your carbon load on the planet!

But so only 1% of households have signed up to the renewable energy tarriffs - despite it being simple to do so - anybody can do it - reflecting the complex and confusing publicity and information from the utility companies.

So why don't they want you to join their schemes?

For instance, no supplier, whether 'green' or otherwise, makes it clear that every GB household is already supporting renewable electricity to the tune of £7 a year through their normal electricity bills (via the Renewables Obligation).

Also the complex rules that encourage all energy suppliers to source renewably can mean the electricity's 'greenness' is oversold (sold more than once). Even choosing a green tariff that offers to plant a tree would not contribute anywhere near enough to offset a household's carbon emissions.

Furthermore, good practice 'green supply' guidelines issued by the energy regulator Ofgem in 2002 are being patchily enforced.
The end result is that not enough NEW renewable energy is being installed.

Green Tarriffs examined

There are three distinct types of green tariff:

  • a green electricity supply tariff, where the supplier guarantees that the electricity it sells to customers is covered by the electricity it buys from renewable sources, backed by the necessary contractual evidence; <>
  • a green energy fund tariff, where the supplier invests the premium consumers pay into new renewable energy, or other environemental projects
  • a carbon offset tariff, where suppliers offer to offset the CO2 emitted by the consumers' electricity and gas supply – by planting trees or by investing in other CO2-reducing projects in the UK or in developing countries. These are becoming more common.

Many tariffs are a hybrid of two or more of these types.

There is a cost to suppliers for providing consumers with 'additional' environmental benefits. To reflect this, suppliers will usually charge a premium for their green tariffs over the standard credit tariff. Consumers may also forego certain discounts that other customers enjoy.

Some suppliers will guarantee to match any premium consumers are paying.

In general, green tariffs with premiums can be expected to offer greater environmental benefits than those without.

The table below shows whether tariffs are based on green supply, a green fund or carbon offset, or a combination of these. It also shows whether or not each tariff attracts a premium over and above the standard credit tariff. It sets out the contractual evidence suppliers use to back up the tariff. This evidence is in the form of certificates issued under the various government instruments explained on page four.

Green supplyGreen FundCarbon OffsetPremium rate?Backed by Renewable Electricity Guarantee of Origin?Backed by retired Levy Exemption Certificates?Backed by Renewables Obligation Certificates? (Ie, over the regulatory minimum?
British Gas – Climate Aware xxn/a
British Gas – Green Electricityx x x
EBICo - Equiclimate xxn/a
Ecotricity – New Energyxx x
Ecotricity – Old Energyx xxx
EDF Energy – Climate Balancex xxn/a
EDF Energy – Green Tariffxx xxx
Good Energyxxxxx
Green Energy – UK 100x xxx
Green Energy – UK 10x xx
Npower – Juicexx xx
Powergen – GreenPlanxx xxx
Scottish and Southern Energy – Power 2xx x
Scottish and Southern Energy – RSPB Energyxx xxxx
Scottish Power – Green Energy Fund x xx
Scottish Power – Green Energy H20x x

>> NCC's report 'Reality or rhetoric? green tariffs for domestic consumers' is here

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Mark Brinkley said...

I think green tarrifs are nonsense. In fact, I think they should be banned as they are deceiving consumers. When you buy electricity from the grid, it all comes from the same mix of generators. The idea that you can somehow elect only to buy green electrons is sefl-delusion. And it simply encourages people to use more electricity. Far better to buy it in its normal state and realise that it's a polluting power source.

David T said...

The original idea of green tarriffs was:
1. to stimulate demand
2. to provide finance for more renewable energy generation.
3. to raise awareness in the public.

With the normal tarriff, suppliers agree to purchasse an equivalent amount of renewable electricity to that which they supply to you. With a premium tarriff they invest in new generation.

There was a watchdog which was supposed to keep an eye on what the suppliers got up to with these tarriffs. The Energy Saving Trust ran an accreditation scheme for green tariffs called Future Energy.

Funded by the DTI and participating suppliers, the scheme accredited green tariffs against set criteria. The scheme was discontinued in 2002 after the introduction of the Renewables Obligation.

This was a bad decision. The unscrutinised utilities have covered the schemes with greenwash, not invested in enough new capacity and not promoted them properly. We have even seen hydroelectricity being purchasd from nuclear-powered France to meet demand.

The NCC report concludes, and I agree with this, that:

"All energy suppliers should:

1. sign up to a Consumer Code based on Ofgem’s revised Green Supply Guidelines; undertake to provide full and accurate information about the tariffs they offer; and not make claims that cannot be substantiated.

2. have their tariffs independently audited against a benchmark, and to inform consumers of their household’s likely CO2 reductions if they switch to a green tariff."

Anonymous said...

There's more to this than just tariffs. Good Energy have bloody awful customer service - I ended up reporting them to Energywatch after finding emails about billing probelm went unanswered and the phone was never answered and they call back days later when I was out.