Track carbon from generator to consumer to stop greenwashing

Carbon emissions should be tracked through the electricity system from generators to consumers to prevent the greenwashing of energy tariffs and accelerate the decarbonisation of the power sector, the Energy Systems Catapult (ESC) and Elexon have argued in a new report.

Sarah Keay-Bright, senior policy and regulation advisor at the ESC, said without granular carbon tracking “it is impossible to advise consumers of the environmental benefit of their energy choices.”

“Currently the industry is not accurately tracking any given unit of electricity from the generator to the consumer,” she explained.

“For example, energy suppliers can claim they are supplying green electricity to customers on a windless winter’s day because they hold a certificate for wind energy produced in the previous summer.

“However, the British energy market can now harness the power of digitalisation to accurately track carbon across the system at a granular level in time and space.

“This could open up significant opportunities to align power market reform with the implementation of ambitious net zero carbon policy, as well as responding to increasing consumer demand for zero carbon electricity – ridding the market of greenwashing tariffs.”

She said: “The government’s commitment to decarbonise the electricity system by 2035 will require a range of interventions – be they incentives or regulations – to shape the behaviour and choices of buyers and sellers of electricity to deliver Net Zero.

“These mechanisms will be much more effective in reducing emissions and attracting both the innovators and investors needed if they are based on accurate data about the actual carbon content of the electricity in real time in real locations.”

The report said when renewable energy generation is plentiful, the electricity system sometimes has difficulty in absorbing the electricity due to grid congestion and a lack of flexibility that can be provided by cross-border trading, demand-side response and storage.

This issue is exacerbated by the fact that the price signals emanating from the current market design are not as cost-reflective and granular by time and space as they could be, significantly increasing the need to use high-carbon energy resources at times of system stress through balancing and ancillary services.

The report cited figures from the Department for Business, Energy and Industrial Strategy (BEIS) that showed fossil fuel generators accounted for more than 99% of turn-up in the Balancing Mechanism and more than 80% of flexible capacity in tenders by distribution network operators.

Source: Energy Systems Catapult, BEIS figures

By increasing the granularity of market signals in time and space, combined with equally granular measurement of the actual carbon intensity, the report said the market would be enabled to identify and reward the types and scale of technology needed to integrate renewable energy generation under all system conditions.

These improvement would simultaneously deliver more efficient dispatch and system operation, as well as investment in the low carbon resources with the right blend of capabilities.

The report highlighted evidence from research and trials that found residential consumers can be strongly motivated by factors other than price, with one study suggesting that information on carbon emissions may actually be more impactful than price signals in generating demand-side response.

It said the rollout of smart meters and the implementation of half-hourly settlement by 2025 will open up the opportunity to provide consumers will accurate information about their carbon consumption and along with energy services to help them minimise their emissions.

Angela Love, director of future markets and engagement at Balancing and Settlement Code administrator Elexon, said: “As it stands, the existing industry rules that govern the retail and wholesale electricity markets do not require consistent and widespread carbon emissions tracking and reporting.

“However, we believe that established rules, processes, and systems that support the power system may be easily extended to support carbon tracking. This is likely to be more cost effective than building entirely new processes and systems.”

The report urged the policymakers to undertake a study into the feasibility of measuring and reporting carbon emissions across the electricity system and carry out a detailed assessment of potential options.

It said they should seek to establish a coordinated approach to data tracking, working with existing voluntary initiatives such as EnergyTag, and ensure the management and governance of data follows best practice as recommended by the Energy Data Taskforce.