As consumers and industry become increasingly determined to play their part in the fight to slow, if not reverse, climate change, doing the right thing has never been more important – or more difficult. We’ve all been there, we’ve made a conscious decision to take steps – sometimes the little things, other times a completely new approach to our daily routine – only to find that our decision isn’t as green as we’d hoped.
The energy sector is no different. “With an increasing number of green tariffs in the market, it’s important that consumers understand how ‘green’ their tariff is in terms of supporting the UK renewables industry,” said ScottishPower CEO Keith Anderson. It’s a valid point; there is much confusion over what green really means, and in truth it means different things to different people.
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By GlobalData
What is green energy?
In the simplest terms, green energy is that produced without the use of fossil fuels. Wind, solar, hydro, tidal, geothermal and biomass all fall under this. Although a little contentious, nuclear too sometimes finds itself under the banner.
Suppliers are currently offering a mix of green tariffs, from deals that commit to providing a percentage of your power via renewable sources to a 100% green tariff ScottishPower introduced in February 2020, said to be the first in the UK.
What is a 100% green tariff?
A 100% green tariff is a commitment to customers that the energy they consume is all generated through renewable sources. That means no coal-fired power plants, nor anything else that could have a detrimental impact on the environment, often known as “brown energy”.
Glasgow-based ScottishPower is arguably in a better position than many to provide 100% green energy to its customers. Serving more than five million households and businesses across the UK, it is the only end-to-end energy provider according to Anderson. This means it not only sells energy, it produces it too, giving it total control of the energy going through its supply chain.
What are the differences in green energy suppliers?
There are a number of different green tariffs on the market, all very much dependent on the supplier and their ability to procure. Unlike ScottishPower, many providers don’t actually produce their own energy, buying it instead. According to ScottishPower there are four types of green supply, ranging from the 100% it provides to what it calls “greenwash tariffs”.
The tier down from 100% is a renewable supplier, providing energy sourced from all renewable sources. In these cases, the supplier will make a concerted effort to purchase all of its supply from providers it knows to be green. The next offering comes from suppliers that have committed to having an element of green energy, meaning customers’ supplies include a mix of renewable and non-renewable sources.
Does green energy cost more?
It’s fair to say that in its infancy it did cost more. Today, however, that has changed significantly, at least in the UK. In 2018, UK-based comparison and switching services provider uSwitch declared that making the decision to move to green was “no longer an expensive luxury for those who can afford to pay for their principles”.
It said that thanks to the increasingly plentiful supply of green energy and growing competition among providers, the cost of green had fallen dramatically. At the time, it found five of the 10 cheapest tariffs were what it described as “eco-friendly”. It further added that years of investment in renewables had started to filter through.
How can you be sure green means green?
Knowing whether green really does mean green has long been a challenge, even for the most environmentally minded. The large majority of green tariffs are not what ScottishPower announced; in other words, they are not 100% green. In fact, some of them may not be green at all, mostly using fossil fuels to generate power.
There are three types of green tariff. Some suppliers commit to matching the power the customer uses to producing renewables, essentially offsetting brown power with green as you use it. Others say they will invest in renewable energy infrastructure, while the finalpossibility is for your supplier to offset the carbon they produce on your behalf. Often this is done through environmental programmes such as tree planting.
However, there are concerns that not all tariffs are exactly what they say they are. Terms such as “greenwashing” and even “pale green” are becoming increasingly common, and, more crucially, increasingly important. Only recently, consumer group Which? warned that some suppliers were taking advantage of a loophole giving them access to cheap renewable energy certificates while not actually providing green power.
Seeing through jargon and understanding what a supplier is actually doing is vital. The UK’s Energy Saving Trust says: “We’d recommend taking a close look at how your supplier operates when it comes to putting together your green tariff. Some are definitely greener than others in terms of how much they support the renewables industry in the UK.”
What is “greenwashing” and does it apply to renewable energy certificates?
In 1986, the term “greenwashing” was first spoken of by environmentalist Jay Westerveld. Today, it is widely recognised as meaning companies and other organisations speak of their environmental credentials much more than acting on them.
Examples of greenwashing include energy providers who offer green tariffs with little or no green energy. They have been accused of purchasing unused Renewable Energy Guarantees of Origin (REGO) certificates in a bid to appear sustainable. The certificates are the UK’s version of similar schemes across the EU which aim to certify energy that is generated from renewable sources.
Power generation companies submit data for every eligible megawatt hour of renewable electricity generated; these are issued as proof to energy suppliers and their customers that the product they are buying is renewable. However, some suppliers claim they use renewable sources but are simply purchasing certificates.
At the beginning of 2020, UK regulator Ofgem said it was aware of growing concerns surrounding the issue. In a report detailing its plans for the next 18 months it said: “We expect suppliers to be transparent about what constitutes a ‘green tariff’ and we will undertake work to ensure that consumers are not misled.”
What are government and industry doing about greenwashing?
Over the last decade or so, much has been done to invest in infrastructure, secure supply, and promote renewable power across the industry. However, some energy suppliers continue to sail close to the wind when it comes to their green claims and the real source of their supply.
Regulators are becoming much more savvy when it comes to such claims, with further action anticipated in the future. The UK Government already has requirements in place, meaning suppliers are obliged to have energy sourced from renewables as part of their mix.
At the beginning of the last decade, the UK Government embarked on a push to support green energy but that began to fall away a few years later. This dwindling support has, according to the trade union representing the sector, resulted in a significant fall in the workforce, matched by a similar drop in infrastructure investment.
Prospect’s (the trade union) senior deputy secretary general, Sue Ferns, said: “Without a proper industrial strategy from government that promotes low carbon generation like renewables and new nuclear, we will be unable to secure the future of our energy supply, which is under threat in the coming decade.”
For its part, Anderson said ScottishPower invests over £7m every working day to deliver cleaner, smarter power for customers. “As well as cleaning up the environment, we want to clean up how green energy is sold. My concern is that too many customers think they’re buying renewable electricity, when all they’re buying is a renewable certificate. Today, we’re calling time on this so-called ‘greenwashing’.”
