Green electricity in the United Kingdom
There are a number of suppliers offering 'green' electricity in the United Kingdom, either supplying electricity from existing environmentally friendly energy sources, promising to invest a proportion of profits into new renewable energy generating capacity, carrying out carbon offsetting, or some combination of these approaches.
Care needs to be taken in selecting a green energy supplier. A National Consumer Council report in December 2006 concluded that many green tariffs are not delivering the environmental benefits they claim to, and that consumers may not be making the positive contribution they think they are.
Shades of green
In the United Kingdom, suppliers are legally obliged to purchase a proportion of their electricity from renewable sources under the Renewables Obligation and there is a danger that energy suppliers may sell such green electricity under a premium 'green energy' tariff, rather than sourcing additional green electricity supplies. In addition to selling the green electricity to the consumer, it is also possible for the supplier to sell the associated Renewables Obligation Certificates to another supplier who has failed to meet their quota, rather than 'retiring' the certificate from the marketplace.
Climate Change Levy
Non-domestic consumers can avoid paying the Climate Change Levy by acquiring Levy Exemption Certificates from renewable energy suppliers. Since these are not required by domestic consumers, it is possible for the supplier to sell the certificates to the non-domestic sector, as well as selling the renewables obligation certificate and the electricity.
In other cases green energy tariffs may involve carbon offsetting, rather than purchasing or investing in renewable energy, a practice that does not meet with universal approval. George Monbiot, an English environmentalist and writer, has compared carbon offsets to the practice of purchasing indulgences during the Middle Ages, whereby people believed they could purchase forgiveness for their sins (instead of actually repenting and not sinning anymore). Monbiot also says that carbon offsets are an excuse for business as usual with regard to pollution.
In June 2008, Defra announced that with effect from the current financial year (2008/9), Green Electricity is to be treated the same as average grid electricity for CO2 reporting purposes. Previously, it was treated as if there were no CO2 emissions associated with it.
Explaining the change, the Minister responsible (Hilary Benn) said "I want to make sure that the green tariff market, which has grown rapidly over recent years, is clear for consumers and businesses about the precise benefit their tariff brings. Many energy suppliers offer green tariffs to businesses and domestic customers who want to make a contribution to environmental projects or help tackle climate change, but these differ in what they deliver." He added "It is increasingly difficult to demonstrate that buying a renewable electricity tariff is offering additional carbon emissions reductions compared with what suppliers are required to source to meet the Renewables Obligation. I have therefore decided that we will change the voluntary corporate reporting guidelines to bring them into line with current best practice and provide coherent carbon accounting. This will mean that for the reporting year 2008-9, best practice is expected to be for businesses to use a grid average rate - average rate of carbon emissions associated with electricity transmitted on the national grid - unless their supplier can prove the carbon benefits are additional." This does not affect green electricity generated on site (e.g. from photovoltaics or a micro-wind turbine), which can continue to be reported as producing zero emissions.
In 1999 the Future Energy national certification scheme for green electricity was launched, however it was closed in 2002, apparently because too few suppliers were prepared to accept the proposed revised requirements.
In the absence of a replacement national scheme in the UK, the international Eugene Network, whose main purpose was to give accreditation to national green energy schemes, supported Ecotricity and indicates that Good Energy would be ready for accreditation should a Eugene Standard compliant scheme be introduced in the UK. The Eugene standard was discontinued in February 2009, leaving no internationally recognised means of comparing green electricity.
Ofgem's 2007-8 Proposals
In an attempt to end some of the premium priced offerings by suppliers which were doing no more than repackaging electricity that they had to buy under the Renewables Obligation, the UK Government's Office of Gas and Electricity Markets Ofgem proposed a voluntary scheme for independently verified energy ratings for electricity suppliers. Initially this was intended to include a detailed analysis of the carbon content of the supply, but some critics felt that this lacked sufficient emphasis on additionality, and the actual energy used by consumers from the grid was always a mix of brown and green sources.
After running a series of workshops in early 2008, their proposals turned away from a focus on the source of electricity (and its associated carbon dioxide emissions), to look instead at whether an environmental benefit is demonstrated. Essentially, Ofgem suggest that this can only be done if the supplier invests part of payment received into one of the following activities:
- installation of energy efficiency technologies (outside of the Carbon Emission Reduction Target - CERT programme);
- other consumer behaviour measures, such as active demand management or voluntary smart metering;
- support for renewable heat installations;
- additional investment in smaller-scale (e.g. community based) renewable electricity projects - a limit of 1MW has been suggested for wind farms - or in other low carbon sources including CHP and nuclear;
- retirement of EU allowances under the EU Emissions Trading Scheme (EU ETS);
- purchase of carbon offsets in line with Defra’s Quality Assurance Scheme for Carbon Offsetting, typically offsets from developing countries under the Clean Development Mechanism;
- research and development into emerging renewable technologies; or
- contribution to an environmental charity.
The Green Energy Supply Certification Scheme
After consultation, Ofgem introduced modified Guidelines in February 2009. These placed a greater emphasis on the matching principle, requiring that all electricity sold under the Scheme had to be matched by supplies from renewable sources (and excluding other low-carbon sources such as CHP or nuclear). The additionality criteria were simplified slightly to comprise:
- carbon offsets accredited either under the UK Government's Quality Assurance Scheme (QAS) or under the Gold Standard
- green energy schemes, mainly those that donate money to charities or to trust funds established to invest in new renewable projects – generally at a community level, and required to be independent of the suppliers
- energy efficiency schemes, making savings above those from CERT including savings in customers' premises through lower energy use
- unspecified other measures, producing equivalent carbon savings
Certified tariffs are subject to an annual audit, to ensure that the matching and additionality criteria have been met. Consumers must also be given information on the suppliers overall fuel mix at the point of sale. Although aimed mainly at domestic consumers, the scheme can also certify tariffs aimed at small businesses with an annual energy consumption below 50,000kWh.
The Scheme was launched in February 2010, with the six big UK energy suppliers as members as well as Good Energy. Ecotricity elected not to join the scheme citing concerns about the additionality rules. All suppliers offer domestic tariffs, but only some have offered small business tariffs under the scheme.
- Energy use and conservation in the United Kingdom
- Green energy
- Energy conservation
- Renewable energy
- Renewable heat
- National Consumer Council: Reality or rhetoric? Green tariffs
- Association for Environment Conscious Building: The Green Electricity Illusion
- Energy Saving Trust
- CO2 calculator identifying green tariffs from the National Energy Foundation
- Fuel Mix electricity source table
- Ethical Consumer Magazine's electricity supplier list
- Justin Rowlatt's (Newsnight's ethical man) investigations into green electricity including Professor Tim Jackson's analysis of macro economic issues
- 21 November 2007, Ofgem: New energy ratings to help cut through green customer confusion
- "Reality or rhetoric? Green tariffs for domestic consumers" (PDF). The National Consumer Council. Dec 2006.
- Green Electricity... Are you being conned? The Ecologist, published 2005-06-01, accessed 2007-06-07
- Why Friends of the Earth no longer produces a green electricity tariff league table, Friends of the Earth, published July 2005, accessed 2007-06-13
- "Reality or rhetoric? Green tariffs for domestic consumers" (PDF). The National Consumer Council, UK. Dec 2006.
- GRÁINNE GILMORE (January 6, 2007). "Grey areas with green energy". London: The Times.
- "The trade in carbon offsets is an excuse for business as usual" by George Monbiot, The Guardian, October 18, 2006. A reprint of the article may be accessed at on Monbiot's website. Also see "Carbon Offset Business Takes Root" by Martin Kaste, NPR, Nov. 28, 2006.
- Defra Press Release: Green Tariffs: Check what yours delivers 16 June 2008
- Consumers left in the dark over green electricity, Friends of the Earth, published 2002-11-06, accessed 2007-06-08
- Ecotricity - committed to new renewable energy Eugene, accessed 2007-06-07
- Case Study: UK market lacks information Eugene, accessed 2007-06-07
- Eugene Standard - Letter from Board about dismantling, Eugene, accessed 2010-02-26
- New energy ratings to help cut through green customer confusion (press release), accessed 2007-11-07
- http://www.ofgem.gov.uk/Sustainability/Environmnt/Policy/Documents1/Green%20supply%20guidelines%20-%20proposals%20July%2008.pdf Ofgem: Green supply guidelines - proposals July 2008
- Final Green Supply Guidelines, Open letter dated 4 February 2009
- Green Energy Supply Certification Scheme website accessed 16 December 2010
- Ecotricity Press Release, 'New green energy guidelines from Ofgem are feel good but not do good says Ecotricity'