Suppliers’ green tariff claims should be independently audited

Claims by energy suppliers regarding the environmental impact of their green tariffs should be audited, either independently or by Ofgem, a new report has recommended.

Renewable power retailer Good Energy’s Renewable Energy Tariffs: The Problem of Greenwashing report delves into the issue of greenwashing in the energy retail sector.

Greenwashing is where suppliers purchase renewable energy guarantee of origin (REGO) certificates without buying the power they relate to. The subject has been a source of contention in the sector, with companies such as Good Energy arguing the certificates do not create a demand for renewables.

It highlights a licence condition which requires suppliers to show that a domestic customer’s choice to join a green tariff “results in an additional benefit to the environment”, above and beyond existing obligations created by the government’s various environmental schemes.

Ofgem currently does not define what this could look like and Good Energy says without any form of enforcement or audit, suppliers have been able to offer very loose interpretations such as making a one-off donation to an environmental charity or by planting a small number of trees, for example.

As a result, the supplier is calling on the regulator to enforce the clause by requiring any environmental claim to be “audited by either an independent body or Ofgem, outlining what qualifies as additionality”.

This, it believes, will create a clear threshold for compliance in a similar way to the exemptions under the price cap for green tariffs.

Additionally, Good Energy believes no tariff should be marketed as 100 per cent renewable unless the supplier is buying that power from a renewable generator.

In a foreword to the report Jeff Hardy, Ofgem’s former head of future consumers, said: “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.”

Tom Steward, Good Energy’s senior policy manager, and the report’s lead author, said: “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.”

Last month the Competition and Markets Authority (CMA) launched an investigation into misleading claims about eco-friendly products.

In response to the investigation Good Energy’s chief executive Juliet Davenport said the report should be broadened to include energy retailers.

She said: “There are more suppliers than ever offering ‘100 per cent renewable’ tariffs, but we know most of them do not even buy renewable power, or offer products which have additional environmental benefit. Recent reports in the media have shown this is an issue that consumers care about, and we know that Ofgem is investigating solutions.

“If the CMA wants to restore consumer trust in green products taking a closer look at the claims of energy companies should be top of the list.”