reality or rhetoric? green tariffs for domestic consumers

Äó=sáêÖáåá~=dê~Ü~ã pìãã~êó N ^Äçìí=íÜÉ=~ìíÜçê ^ÅâåçïäÉÇÖÉãÉåíë NK=fåíêçÇìÅíáçå O sáêÖáåá~=dê~Ü~ã=áë=~å=ÉñéÉêí=áå=ëìëí~áå~ÄäÉ qÜáë=k~íáçå~ä=`çåëìãÉê=`çìåÅáä=Ek``F OK=tÜ~í=áë=ÖêÉÉå=ÉäÉÅíêáÅáíó\ P ÉåÉêÖó=~åÇ=ÅçåëìãÉê=éêçíÉÅíáçå=éçäáÅóK êÉéçêí=ï~ë=ïêáííÉå=Äó=sáêÖáåá~=dê~Ü~ãI cçê=íÜÉ=é~ëí=ëáñ=óÉ~êë=ëÜÉ=ï~ë=aáêÉÅíçê=çÑ ïáíÜ=êÉëÉ~êÅÜ=ëìééçêí=Ñêçã=`~ëë~åÇê~ PK=oÉÖìä~íçêó=ÉåîáêçåãÉåí Q båîáêçåãÉåí~ä=^ÑÑ~áêë=~í=íÜÉ=ÉåÉêÖó eáÖÖëI=Ä~ëÉÇ=çå=~=Çê~Ñí=Äó= QK=dêÉÉå=í~êáÑÑë=çå=çÑÑÉê T êÉÖìä~íçêI=lÑÖÉãK=mêÉîáçìëäó=ëÜÉ=ïçêâÉÇ g~ÅèìÉäáåÉ=aáñçåK Ñçê=ÑáÑíÉÉå=óÉ~êë=çå=ÉåîáêçåãÉåí~äI=ëçÅá~ä qÜÉ=k``=ïçìäÇ=äáâÉ=íç=íÜ~åâ=íÜÉ Ó=ÖêÉÉå=í~êáÑÑë=Äó=íóéÉX=éêÉãáìãë=Ñçê=ÖêÉÉå=í~êáÑÑë= NM ~åÇ=ÅçåëìãÉê=éçäáÅó=~í=ÄçíÜ=íÜÉ=br=~åÇ ÑçääçïáåÖ=Ñçê=ÅçåíêáÄìíáåÖ=íÜÉáê=íáãÉ= rh=äÉîÉäëK Ó=Öì~ê~åíÉÉë=çÑÑÉêÉÇ=Äó=É~ÅÜ=ëìééäáÉê=íç=Ä~Åâ=ìé=íÜÉáê=ÖêÉÉå=í~êáÑÑ NN ~åÇ=éÉêëéÉÅíáîÉë=íç=íÜÉ=éêçàÉÅí=ëÅçéáåÖI Ó=ÖêÉÉå=í~êáÑÑë=Äó=ëìééäáÉê NO êÉëÉ~êÅÜ=ÇÉîÉäçéãÉåí=~åÇ=êÉîáÉïW RK `çåÅäìëáçåë=~åÇ=êÉÅçããÉåÇ~íáçåë OO lìê=ïçêâ=çå=ëìëí~áå~ÄäÉ=ÉåÉêÖó pìë~åå~=j~ó=~åÇ=h~íÉ=pãáíÜI=aÉé~êíãÉåí Ñçê=båîáêçåãÉåíI=cççÇ=~åÇ=oìê~ä=^ÑÑ~áêë ^ééÉåÇáñW ëçìêÅÉë=çÑ=áåÑçêã~íáçå=~Äçìí=ÖêÉÉå=í~êáÑÑë OR låÉ=çÑ=íÜÉ=k``Ûë=ëíê~íÉÖáÅ=çÄàÉÅíáîÉë=áë= EaÉÑê~FI=hêáëíá~å=^êãëíêçåÖI=aÉé~êíãÉåí íç=éêçãçíÉ=~åÇ=~ÅÜáÉîÉ=ãçêÉ=ëìëí~áå~ÄäÉ çÑ=qê~ÇÉ=~åÇ=fåÇìëíêó=EaqfFI=a~å kçíÉë=~åÇ=êÉÑÉêÉåÅÉë= OT ÅçåëìãéíáçåK=få=íÜáë=ÅçåíÉñí=íÜÉ=k``=áë pí~åá~ëòÉâI=båÉêÖó=p~îáåÖ=qêìëíI=dáääá~å líÜÉê=éìÄäáÅ~íáçåë OU ïçêâáåÖ=çå=ëìëí~áå~ÄäÉ=ÉåÉêÖóK=qÜÉ=ã~áå `ççéÉê=~åÇ=bÇ=oÉÉÇI=ÉåÉêÖóï~íÅÜI=gçÜå ~áã=çÑ=íÜÉ=éêçàÉÅí=áë=íç=éêçãçíÉ=éçäáÅáÉë `çëíóå=~åÇ=`~íÜ=j~êíáåÇ~äÉI=lÑÑáÅÉ=çÑ=d~ë ~åÇ=éê~ÅíáÅÉë=íÜ~í=ã~âÉ=ëìëí~áå~ÄäÉ ~åÇ=bäÉÅíêáÅáíó=j~êâÉíë=ElÑÖÉãFI=`Üêáë ÉåÉêÖó=ÅÜçáÅÉë=É~ëáÉê=Ñçê=ÅçåëìãÉêëK= g~êÇáåÉI=båîáêçåãÉåí~ä=`Ü~åÖÉ=råáí=~í=íÜÉ qÜáë=êÉéçêí=çå=ÖêÉÉå=í~êáÑÑë=áë=íÜÉ=Ñáêëí råáîÉêëáíó=çÑ=lñÑçêÇI=~åÇ=çíÜÉêëI=áåÅäìÇáåÖ éìÄäáÅ~íáçå=ìåÇÉê=íÜÉ=ëìëí~áå~ÄäÉ=ÉåÉêÖó ÅçääÉ~ÖìÉë=~í=íÜÉ=k``K éêçàÉÅíK=^=ëÉé~ê~íÉ=k``=éêçàÉÅí=~áãë=íç qÜÉ=k``=ïçìäÇ=~äëç=äáâÉ=íç=íÜ~åâ=íÜÉ éêçãçíÉ=íÜÉ=~î~áä~Äáäáíó=çÑ=~å=~ÑÑçêÇ~ÄäÉ ÉåÉêÖó=ëìééäó=Åçãé~åáÉë=Ñçê=éêçîáÇáåÖ=íÜÉ ~åÇ=ëìëí~áå~ÄäÉ=ÉåÉêÖó=ëìééäóK ÇÉí~áäë=çå=íÜÉáê=ÖêÉÉå=í~êáÑÑëK== Summary

In 2004, the average household This report explores the options
In most cases, tariffs with hÉó=êÉÅçããÉåÇ~íáçåë emitted around six tonnes of carbon for consumers who want a green premiums deliver greater All energy suppliers should: dioxide (CO2): 1.7 tonnes from tariff. In it, we look at the green environmental benefits than electricity and 4.3 tonnes from gas. tariffs on offer and assess whether those without.
sign up to a Consumer Code Electricity from renewable sources they meet their suppliers’ based on Ofgem’s revised Green
There is too little clear and is vital in reducing the CO put into environmental claims. Supply Guidelines; undertake 2 accurate information available on the atmosphere, by both households to provide full and accurate most green tariffs, and it is difficult and other users. Domestic consumers information about the tariffs they for consumers to compare, as it is hÉó=ÑáåÇáåÖë= offer; and not make claims that can reduce their CO2 emissions by not in a standard format. cannot be substantiated. signing up to a green tariff, but
Many green tariffs are not
Given the complex legislative and according to the research informing delivering the environmental
have their tariffs independently regulatory framework surrounding this report, less than one per cent of benefits they claim to.As a result, audited against a benchmark, and green electricity, it is easy for households in Great Britain – some consumers may not be making the to inform consumers of their consumers to be misled by 200,000 – have done so. positive contribution they think household’s likely CO reductions suppliers’ claims. 2 A recent poll suggests that there is they are. if they switch to a green tariff.
Suppliers are not making it considerable interest: 64 per cent
Many suppliers are doing clear to consumers that their of respondents said they would little more than meeting legal For a full list of conclusions and electricity bills are already consider switching to a green energy requirements.There is scope recommendations, see section five. supporting increased renewable company. But to fulfill this potential, in the system to count the electricity – by around £7 per consumers must have clear, ‘greenness’ of electricity more household (in 2005/6). unambiguous information about than once. what is on offer, and confidence that
Even the better tariffs on offer green tariffs will deliver what they These findings are worrying.There will only reduce CO emissions promise. Only then will consumer 2 is a danger that consumers will be by around 100 kg a year – just six confidence levels rise to a point alienated from the behaviour change per cent of an average household’s where the market for greener energy agenda.This, in turn, could threaten CO emissions. can succeed. 2 the succes of the government’s sustainability strategy. 1 1 Introduction

The domestic sector is responsible of not reducing global warming to With the Sustainable Development for just under a third of total UK safe limits and underlined the Commission, NCC was a partner CO2 emissions. Each year, the importance of decarbonising the in the Sustainable Consumption average household emits around six energy supply4.The Review has Roundtable. Its final report in tonnes of CO2, the equivalent of provided a new context, not only May 2006, I will if you will, made filling 34 double decker buses1. If the for the UK’s energy policy, but also a range of recommendations to government is to meet its target to for the global response to climate government, regulators, business cut CO2 emissions by 20 per cent change.Taking account of all of and other stakeholders. by 2010 over 1990 levels, households these, the government announced in According to the report, switching must reduce the energy they use, and the Queen’s Speech in November, to a green tariff should be one of there has to be a reduction in the that it will bring forward a Climate the simplest ways for households to amount of CO emitted by the Change Bill in 2007. 2 reduce their environmental impact6. electricity generation process. The UK Sustainable Development However, according to NCC’s This message has been underlined Strategy highlights sustainable research, only some 200,000 several times this year in a series of consumption and climate change as households in Great Britain, or less high-level government reviews and two of the key priorities for a more than one per cent of the total, have reports.The Energy Review Report sustainable future. In the strategy, the already chosen to sign up to such a stressed the importance of meeting government sets out a commitment tariff. In a poll carried out for the the climate change challenge and set to focus on measures that will enable Observer in October 20067, 64 per out a policy context for doing this2. and encourage behaviour change and cent of those questioned said they It will be followed up by a white build on people’s growing awareness would consider switching to a green paper in March 2007.The Climate of environmental concerns5. company for their gas and Change Programme outlined the electricity, which suggests that there individual measures and instruments is considerable unfulfilled potential. that will deliver the government’s 3 CO2 target .The Stern Review estimated for the first time the costs

2 2 What is green electricity? cáÖìêÉ=çåÉW=íÜÉ=éêáåÅáé~ä=ëçìêÅÉë= çÑ=íÜÉ=rh=ÉäÉÅíêáÅáíó=ëìééäóI=OMMR aqfI=OMMS

láä d~ë 1% 37% Green electricity is generated from in the middle of the last century and to contain high amounts of biomass, renewable sources using natural so do not constitute new renewable it will generally be included in the

oÉåÉï~ÄäÉë energy flows of the earth that will capacity. Nonetheless, electricity definition of renewable sources. 5% never be depleted.This is opposed generated from large-scale hydro Figure two sets out the different `ç~ä to ‘brown’ electricity, which is does not result in the emission of sources of accredited renewable 34% kìÅäÉ~ê 20% generated from fossil fuels (such as CO2. Small-scale new and electricity output in 2004/5. coal, oil and natural gas) and from refurbished hydro plants are Landfill gas accounted for one-third nuclear fission. considered to be ‘dark green’. of the total, with on-shore wind accounting for just one-sixth. Figure one sets out the fuel sources Electricity generated from biomass of the UK’s electricity supply, with does involve some form of burning, Due to the complex physical nature renewable sources making up less or ‘combustion’. However, the of electricity it is not possible for than five per cent in 2005.Although emissions from this are considered suppliers to guarantee that a unit of cáÖìêÉ=íïçW=~ÅÅêÉÇáíÉÇ=êÉåÉï~ÄäÉ every electricity generation source to be offset by the CO2 that the renewable electricity they buy from ÉäÉÅíêáÅáíó=ÖÉåÉê~íáçå=Äó=íÉÅÜåçäçÖóI= OMMQLMR will have some form of biomass absorbed during its lifetime. a generating plant actually reaches lÑÖÉãI=oÉåÉï~ÄäÉë=lÄäáÖ~íáçå=oÉîáÉïI=OMMS environmental impact, renewable Therefore it is considered to be the customer’s home.All a supplier sources do not cause CO2 to be carbon neutral and so ‘dark green’. can reasonably be expected to do emitted into the atmosphere or lead Electricity generated from sewage is to ensure that the renewable líÜÉêë 0.5% to the creation of toxic wastes. and landfill gas is also generally electricity it sells is equivalent to `çJÑáêáåÖ pÉï~ÖÉ Äáçã~ëë Ö~ë included within the definition of the renewable electricity it buys. ïáíÜ=Ñçëëáä The principal renewable electricity pã~ääJëÅ~äÉ 2.3% renewable electricity for most The term ‘green electricity’ therefore ÜóÇêç= ÑìÉäë _áçJ sources are wind, solar, wave, tidal 18% 19.5% ã~ëë government programmes. generally refers to a contract for the and geothermal.These sources of 7.6% purchase or sale of electricity from energy are sometimes described Electricity generated from waste is renewable sources, rather than the as ‘dark green’, since they do not generally not considered green at all, låJëÜçêÉ electrons themselves. Only if i~åÇÑáää involve any burning in the since the waste could have been ïáåÇ Ö~ë consumers generate the electricity 15.9% generation process. Electricity from avoided, reused or recycled in the 33.6% themselves from renewable sources lÑÑJ large-scale hydro plants is generally first place. Burning harmful can they be sure that the actual ëÜçêÉ=ïáåÇ considered to be ‘pale green’, as substances can cause toxic emissions. 2.6% electrons used are green. most of the plants were constructed However, if the waste can be shown 3 3 Regulatory environment

Green electricity has been available as industrial and commercial ‘buy out’ instead.The cost of buying EU Renewables Directive to some domestic consumers since consumers through their electricity out of the obligation is set by The EU Renewables Directive aims the mid-1990s, but green tariff bills. In 2005/6 the cost of this was government.The proceeds of the to promote electricity generation options have only been available £600 million and by 2010 it will be ‘buy out’ fund are redistributed from renewable sources across the to all consumers since the £1 billion.This equates to a among those suppliers who have EU11. It sets an indicative target of introduction of competition in contribution of £7 from each presented Renewables Obligation 10 per cent for renewable electricity 2000. Shortly after this, the household in 2005/6 rising to £20 Certificates.The energy regulator, for Member States to achieve by government introduced new in 2010/119. Suppliers can meet Ofgem, is responsible for 2010. How they meet the target is instruments to promote renewable their obligation either through administering the scheme. left to Member States to decide. electricity. In 2002 the Renewables acquiring Renewables Obligation The Directive also requires Member Obligation was introduced; in 2001 Certificates, or by ‘buying out’ States to ensure that a mutually the EU Renewables Directive was their obligation. Climate Change Levy Exemption recognisable guarantee of origin is agreed by Member States and the for Renewables Generators sell the Renewables issued on request in respect to all Climate Change Levy exemption Obligation Certificates to suppliers, The Climate Change Levy is a electricity generated from renewable for renewables was introduced.The usually with the associated tax on non-domestic electricity energy sources.The purpose of these legislative and regulatory framework electricity. Renewables Obligation consumers, requiring them to Renewable Energy Guarantees of surrounding green tariffs is complex. Certificates can also be traded pay 0.43 pence for every kilowatt Origin is to increase transparency between suppliers and other parties. (kWh) of electricity they consume10. for the consumer when buying Suppliers must present the required If they can prove that they have electricity from renewable sources. iÉÖáëä~íáîÉ=Ñê~ãÉïçêâ number of Renewables Obligation bought green electricity then they Ofgem administers the scheme. Renewables Obligation Certificates to Ofgem to comply are exempted from the tax.The way they can prove this is by buying The Renewables Obligation obliges with their obligation. Since the Levy Exemption Certificates from licensed electricity suppliers to obligation is set at a higher level eligible generators, usually with the source a specified and growing than available supply, it will not be associated electricity.The scheme is proportion of the electricity they possible for all suppliers to comply administered by Ofgem. supply from renewable sources8. using Renewables Obligation It is paid for by domestic as well Certificates. Some will have to

4 Table one: technologies qualifying as renewable sources under different government policies

qÉÅÜåçäçÖó oÉåÉï~ÄäÉë `äáã~íÉ=`Ü~åÖÉ br=oÉåÉï~ÄäÉë lÄäáÖ~íáçå iÉîó=bñÉãéíáçå aáêÉÅíáîÉ Ñçê=oÉåÉï~ÄäÉë Fuel mix disclosure oÉÖìä~íáåÖ=ÖêÉÉå=í~êáÑÑë The EU Internal Market in During the past ten years the Electricity Directive requires NCC has worked with the Large-scale hydro (1) 
electricity suppliers to disclose the government on the issue of green Small-scale hydro
(2)
(3)
average composition of the sources claims for products.The 1996 from which the electricity they report, Green claims, showed many of Waste (4)
(5)
(6) sell is derived.They must hold a these claims to be vague and Biomass


Renewable Energy Guarantees of misleading. In 1998 the government Origin for each kWh that they launched the Green Claims Code, a Co-firing of biomass
(7)

claim as renewable in their fuel mix. voluntary code of practice that sets Geothermal


The DTI and Ofgem jointly issued out clearly what a green claim guidance for suppliers on how they should be: specific, accurate and Wind


should calculate and disclose their verifiable and not vague, irrelevant Tidal and wave


fuel mix12.The guidance states that or misleading13. Landfill gas


suppliers may disclose the fuel mix of an individual green tariff they Sewage gas


offer, so long as the company’s total lÑÖÉãÛë=dêÉÉå=pìééäó=dìáÇÉäáåÉë Energy crops


fuel mix is also presented. In 2002, Ofgem developed a set Solar PV


of good practice guidelines for suppliers offering green tariffs in the Coal mine methane 
 Renewable sources domestic market.These were based Table one, left, sets out the different on the principles developed by the definitions of renewable electricity NCC and the government and set used in the various government out the features of green tariffs, and (1) Other than those plants commissioned after (5) So long as it is not waste with an energy content 90% policy instruments. the claims that may be made about 1 April 2002. or more of which is derived from fossil fuel. (2) Up to 20 MW capacity. (6) Biodegradable fraction of industrial and municipal waste. them.According to the guidelines, (3) Up to 10 MW capacity. (7) Limits apply. green tariffs must be transparent and (4) Other than biomass and waste gassified or liquefied using advanced conversion techniques. Source: Relevant Government Statutory Instruments offer consumers additional 5 environmental benefits.Any claims båÑçêÅÉãÉåí=çÑ=íÜÉ=dìáÇÉäáåÉë ^ÅÅêÉÇáíáåÖ=ÖêÉÉå=í~êáÑÑë= provide information on green tariffs made must be transparent and Ofgem does not enforce its The Energy Saving Trust ran an and renewable electricity are listed verifiable.The 2002 guidelines are Green Supply Guidelines. Rather, accreditation scheme for green tariffs in the appendix. being revised and a new version is it designed them as a means for called Future Energy. Funded by the Throughout the past five years expected shortly.The Ofgem setting out minimum levels of DTI and participating suppliers, the there have been calls for more guidelines stipulate the following: good practice which can be used scheme accredited green tariffs against systematic regulation of green tariffs. Transparency: suppliers’ claims for by Trading Standards or the set criteria. The scheme was A report by the Environmental renewable electricity should be Advertising Standards Authority discontinued in 2002 after the Change Institute at the University accompanied by a clear definition (ASA). In practice, action against introduction of the Renewables of Oxford, published in June 200615, of its sources and an explanation misleading claims in this area Obligation. Since then, the suppliers called for a Code of Practice to of how any premium customers has been very patchy, since the have regulated their own green tariffs. be developed, backed by an ASA’s rulings depend on the nature are paying is accounted for. Friends of the Earth also developed independent accreditation scheme. of the complaints they receive from a league table for green tariffs to It cited as justification examples of Additionality: suppliers who claim the public. Nonetheless, they have help consumers distinguish between where this had been implemented that a green tariff is providing an made a number of helpful rulings in the various products on offer.The successfully in other countries. environmental benefit must be able this area. For example, in October major focus was on additionality. to prove that their offer goes beyond 2006, the ASA ruled that Scottish The price-comparison website, what is already required by law. and Southern Energy must not give uswitch.com, also sought to provide the impression in its marketing that Verifiability: suppliers need to be this information. Both found it too planting one tree will effectively prepared to produce evidence for complex and time-consuming to offset the CO emissions from a the claims they make to any 2 assess the different offers without household’s annual gas supply14. accreditation scheme or dedicated funding. energywatch has enforcement agency.This could now started to list all green tariffs on include, for example, details of its website, but does not rank or transactions they have made in the accredit them. Other websites that electricity marketplace or contracts with renewable generators.

6 4 Green tariffs on offer

NCC’s initial research took place The research findings are set
a carbon offset tariff, where offer greater environmental benefits over four weeks in May 2006, out according to the following suppliers offer to offset the than those without. with follow-up work in October framework: CO2 emitted by the consumers’ and November 2006. It involved electricity and gas supply – by several stages: planting trees or by investing in kìãÄÉê=çÑ=ÅìëíçãÉêë= qóéÉ=çÑ=éêçÇìÅí other CO -reducing projects
desk research looking at the 2 The numbers of customers in the UK or in developing information available on a range There are three distinct types of subscribing to green tariffs are still countries.These are becoming of websites; green tariff: relatively low.We have given the more common. numbers where suppliers provided
anonymous telephone calls to
a green electricity supply tariff, Many tariffs are a hybrid of two or them. In other cases, suppliers supply companies using real where the supplier guarantees more of these types, as the table on preferred to keep the figures electricity bills as a basis for that the electricity it sells to page ten shows. confidential, and we have indicated gleaning information about the customers is covered by the this.This is one reason it is difficult tariffs on offer16; electricity it buys from renewable to estimate the total number of sources, backed by the necessary
follow-up telephone calls and mêÉãáìã consumers who have signed up to contractual evidence; emails to suppliers to check the a green tariff. There is a cost to suppliers for information from the mystery
a green energy fund tariff, providing consumers with shopping exercise; where the supplier invests the ‘additional’ environmental benefits. premium consumers pay into fåÑçêã~íáçå
a series of meetings with the key To reflect this, suppliers will usually new renewable energy, or other government, regulatory, consumer charge a premium for their green The principal source of information environemental projects. In some protection and environmental tariffs over the standard credit tariff. for consumers is the supplier’s cases the company matches the group representatives; and Consumers may also forego certain website, its marketing materials and customers’ contributions. Some discounts that other customers its call centre staff.We assessed:
updating, verification and green funds are administered enjoy. Some suppliers will guarantee
peer review. through an independent body how readily available product to match any premium consumers established by the supplier or information was; and are paying. In general, green tariffs through an unrelated charity; and
how complete the product with premiums can be expected to information was. 7 _çñ=çåÉW=~ÇÇáíáçå~äáíó=~åÇ=ÖêÉÉå=ÉäÉÅíêáÅáíó=ëìééäó=í~êáÑÑë Suppliers who claim they are offering additional environmental benefit through their green tariff must hold the relevant certificates to back up their claim. Selling the certificates separately from the electricity can result in the ‘greenness’ in renewable electricity being sold twice or even three times. It is hard to prove additional environmental benefits under these circumstances. First, suppliers must hold the requisite number of Renewable Energy Guarantees of Origins to match the amount of electricity being sold, though these alone do not prove additionality. They should also retire from the system the Levy Exemption Certificates associated with the electricity. This way, they prove that they are not selling them again We also looked at how much See box one, left, for more details to non-domestic consumers who use them to claim exemption from the Climate Change general information was available about how additionality can be Levy. For a supplier to retire the Levy Exemption Certificates for an average domestic about renewable electricity and the proved and some of the problems consumer’s electricity use would cost around £17 per year. However, retiring Levy legislative framework. Suppliers are associated with it. Exemption Certificates is not sufficient to prove that a tariff is additional. Suppliers should required by licence to provide their also retire out of the system the Renewables Obligation Certificates associated with the electricity. This way, they show that they are not being sold on to other suppliers and the domestic customers with information ‘greenness’ in the electricity counted again. on energy efficiency, so we did not lîÉê~ää=~ëëÉëëãÉåí include this in our assessment. Retiring Renewables Obligation Certificates has the effect of obliging other suppliers Taking all of these criteria to pay more into the ‘buy out’ fund to comply with the Renewables Obligation. As a into account, we have assessed result, there will be more money to redistribute. All other things being equal, this should what the available green tariffs drive further investment in renewable energy. However, each Renewables Obligation ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä really offer consumers. Certificate has a value of around £45, while an average household uses 4000 kWhs, ÄÉåÉÑáíë or 4 MWhs, of electricity each year. This means it would cost suppliers around £200 to retire the Renewables Obligation Certificates associated with each household who had One of the key requirements of a signed up to their green tariff. Very few consumers would be prepared to pay a green tariff is that it should offer premium of this size on their tariff. This is the most difficult aspect of additionality. consumers additional environmental Suppliers have to strike a reasonable balance, for example, by retiring a proportion of 17 benefits. If any claimed Renewables Obligation Certificates . However, CO2 savings from these types of tariffs are still relatively modest18. environmental benefits would have occurred anyhow, consumers are being misled. By environmental ^ÇÇáíáçå~äáíó=~åÇ=ÖêÉÉå=ÑìåÇ=L=Å~êÄçå=çÑÑëÉí=í~êáÑÑë benefit, we usually mean a reduction Suppliers offering a fund-type tariff will often claim that the additionality lies within it. in CO2 emissions. For the purposes For example, many funds are used to finance community-based renewable projects. This of this assessment, a green supply can lead to reduced CO2 emissions, though it is very hard to quantify this objectively. tariff will not be considered

Suppliers offering an offset-type tariff need to be clear what proportion of CO2 from additional purely on the basis of their energy use is being offset through the tariff, and what value is being placed on Levy Exemption Certificates each tonne of CO2. In CO2 terms, there is no equivalence between the amount of being retired and Renewable emissions reduced by the planting of one tree and the amount of CO2 emitted by Energy Guarantees of Origins a household for heating, cooking and lighting. There are also questions over how far such tree-planting schemes are truly additional as opposed to ‘business as usual’. being held. What we found

This section provides a The information on each tariff summary of the key is summarised in tables two characteristics of each green and three. Table two shows tariff, categorised by supplier whether tariffs are based on according to the framework green supply, a green fund or described on pages seven and carbon offset, or a combination eight. Where a supplier offers of these. It also shows whether more than one tariff, these are or not each tariff attracts a listed jointly. premium over and above the standard credit tariff. Table three lists only those tariffs that have a green supply element to them, and 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. The more unqualified ticks a tariff has, the more it will generally be offering in terms of additional environmental benefits. Table two: green tariffs by type and premiums for green tariffs (over and above the standard credit tariff)

dêÉÉå=ëìééäó dêÉÉå=ÑìåÇ `~êÄçå=çÑÑëÉí mêÉãáìã\

British Gas – Climate Aware

British Gas – Green Electricity

EBICo - Equiclimate

Ecotricity – New Energy

Ecotricity – Old Energy

EDF Energy – Climate Balance

EDF Energy – Green Tariff


Good Energy

Green Energy – UK 100

Green Energy – UK 10
Npower – Juice

Powergen – GreenPlan


Scottish and Southern Energy

– Power 2

Scottish and Southern Energy


– RSPB Energy Scottish Power –

Green Energy Fund

Scottish Power –
Green Energy H20

10 Table three: guarantees offered by each supplier to back up their green tariff

_~ÅâÉÇ=Äó _~ÅâÉÇ=Äó=êÉíáêÉÇ _~ÅâÉÇ=Äó=êÉíáêÉÇ oÉåÉï~ÄäÉ iÉîó=bñÉãéíáçå oÉåÉï~ÄäÉë bäÉÅíêáÅáíó=dì~ê~åíÉÉ `ÉêíáÑáÅ~íÉë=Eib`ëF lÄäáÖ~íáçå=`ÉêíáÑáÅ~íÉ çÑ=lêáÖáå=EobdlëF ENMM=éÉê=ÅÉåí=ìåäÉëë Eol`ëF=E~í=äÉ~ëí=R=éÉê ENMM=éÉê=ÅÉåí=ìåäÉëë ëéÉÅáÑáÉÇ=çíÜÉêïáëÉF ÅÉåí=çîÉê=~åÇ=~ÄçîÉ ëéÉÅáÑáÉÇ=çíÜÉêïáëÉF íÜÉ=ëí~íìíçêó êÉèìáêÉãÉåíF=ERF

British Gas – Green Electricity

Ecotricity – New Energy
(1) Ecotricity – Old Energy

EDF Energy – Green Tariff

Good Energy


Green Energy – UK 100

Green Energy – UK 10
(2)
(2)

Npower – Juice

(3) Powergen – GreenPlan

Scottish and Southern Energy
– Power 2

Scottish and Southern Energy


(4) – RSPB Energy

Scottish Power –

Green Energy H20

Please note that this table only includes the suppliers that offer a green electricity supply as all or part of their green tariff.As such (1) 22% - estimated figure for 2005/6. this table does not include green energy fund and carbon offset (2) 16.7% - estimated figure for 2005/6. offerings that make up all or part of some green tariffs. (3) 84% - estimated figure for 2005/6. (4) 10% - estimated figure for 2005/6. The more unqualified ticks a tariff has, the more it will offer in (5) The Renewables Obligation target for 2005/6 was 5.5%. terms of CO2 reductions. In 2006/7, it is 6.7%. 11 ‘The Green Electricity tariff is additional because we provide trees – Green tariffs by supplier for every ten customers that sign up to Green Electricity we plant a tree in native forests in the UK.’19

British Gas

British Gas is owned by Centrica and is one of mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=~ëëÉëëãÉåí the big six energy companies. It offers two Climate Aware tariff: £30 a year. The amount of additional environmental It is clear how much consumers are paying for green tariffs. benefits offered by the Climate Aware tariff the Climate Aware tariff, but it is not clear Green Electricity tariff: none. The Climate Aware tariff is a carbon offset will depend on how much of consumers’ exactly what they are getting in return. British product which does not include green electricity household energy use is being offset and the Gas should specify how much of consumers’ supply. It is available to gas only or dual fuel value attributed to each tonne of CO2 household energy use is being offset by the customers who pay a premium above the kìãÄÉê=çÑ=ÅìëíçãÉêë emissions. Neither of these details are provided tariff and the value being attributed to each standard credit tariff. British Gas pays this to the Climate Aware tariff: around 500. by British Gas. tonne of CO2 emissions. carbon offset company, Climate Care, who The additional environmental benefits offered The Green Electricity tariff does not offer invests the money in carbon reducing-projects Green Electricity tariff: around 80,000. by the Green Electricity tariff are very unclear. additional environmental benefits according to in developing countries. Five per cent of British Gas’s electricity supply the definition set out in this report. The only The Green Electricity tariff guarantees to fåÑçêã~íáçå came from renewable sources in 2005/6 so aspect of the tariff that is additional is the supply consumers ‘100 per cent renewable British Gas was not going beyond its legal commitment by British Gas to plant a tree for electricity’. It is available to electricity-only or On the British Gas consumer website there is obligation to supply 5.5 per cent. every ten customers who sign up to it. Given dual fuel customers. British Gas will plant one no general information on climate change, that there is no premium for this tariff, The renewable electricity supplied by British tree for every 10 customers who sign up to renewable energy or the legislative context. consumers may be happy to sign up on this Gas is sold partly to domestic customers the tariff, up to a maximum of 25,000 trees, To find specific information about the green basis. However, the amount of CO emissions through the Green Electricity tariff and partly 2 through an agreement with the CarbonNeutral tariffs, you have to find your way to the energy reduced by the planting of one tenth of a to business customers seeking exemption from offset company. efficiency section of the website. From this tree is not equivalent to the amount of CO the Climate Change Levy. This is backed by 2 there are links to rather brief descriptions emitted by an average household’s gas and Renewable Energy Guarantees of Origin and about both tariffs. electricity use. declared in British Gas’ fuel mix disclosure. However, all the Levy Exemption Certificates associated with the electricity are sold on to business customers: none are retired. This means that the ‘greenness’ in the electricity supplied to domestic customers is being sold twice to two different sets of consumers. No Renewables Obligation Certificates are retired. British Gas considers that the Green Electricity tariff does offer additional environmental benefits on account of tree-planting.

12 EBICo ‘We offer our customers the opportunity to calculate the CO2 impact of their domestic energy use and to offset part of this via our offsetting service.’20

EBICo is a not-for-profit company which aims mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=~ëëÉëëãÉåí to ‘harness the power of the market to tackle £7.28 per tonne of CO offset. This charge EBICo uses a recognised currency to back its If consumers are interested in offsetting real issues of social concern’. EBICo offers two 2 changes from day to day based on the Equiclimate carbon offset option. Although some of their household’s CO emissions, this standard tariffs, Equipower and Equigas, 2 prevailing cost of allowances in the market. only 20 per cent of the total household product is a straightforward way to do it. The through its partnership with Scottish and The Equigas and Equipower tariffs are charged emissions are offset, the methodology it uses amount they are paying corresponds directly to Southern Energy. These are not green tariffs, at a single flat rate with no standing charge. is transparent and robust. In the current round the cost of buying allowances in the market. but EBICo offers their customers a carbon- of the EU Emissions Trading Scheme the value offsetting option, Equiclimate, with either of of allowances may not correspond very closely these tariffs. Equiclimate is now also available to the cost of climate change abatement. to those who are not tariff customers and can kìãÄÉê=çÑ=ÅìëíçãÉêë However, the Scheme provides an be extended to cover travel-related emissions. Around 2,000. internationally recognised CO2 price. Equiclimate offers consumers the option of offsetting a proportion of their household CO2 emissions. Consumers are asked to answer a fåÑçêã~íáçå few questions about how much CO they are 2 The EBICo website provides a useful overview currently responsible for – for example, from on climate change, the Renewables Obligation heating, lighting and cooking. EBICo and the EU Emissions Trading Scheme. It also guarantees to offset 20 per cent of these provides simple, but brief, information on the emissions by buying and retiring allowances Equiclimate carbon offset option. from the EU’s Emissions Trading Scheme.

13 Ecotricity ‘Our customers are buying into a company that will never build polluting forms of generation… Ultimately our customers are helping to contribute to new green build, way above Ecotricity’s actual Renewables Obligation.’21

Ecotricity is a small company that has an mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=~ëëÉëëãÉåí electricity supply arm as well being a windfarm New Energy tariff: none. Ecotricity supplies around 25 per cent of its Ecotricity’s New Energy tariff is not providing owner and developer. Ecotricity offers two total supply from renewable sources. This is customers with 100 per cent renewable green tariffs. Old Energy tariff: a small premium. going beyond its current legal obligation to electricity. Of the 25 per cent of electricity from The New Energy tariff is principally a green supply 6.7 per cent from renewable sources. renewable sources, some of the ‘greenness’ is fund product. It also has a green supply Almost all of this goes to its New Energy being sold three times. The supply aspect of element as customers are offered ‘about 25 kìãÄÉê=çÑ=ÅìëíçãÉêë customers. Ecotricity holds Renewable Energy the tariff is therefore not offering any per cent renewable energy’. Ecotricity buys New Energy tariff: 20,700. Guarantees of Origin in respect of this additional environmental benefits according renewable electricity equivalent to 25 per cent electricity. However, the Levy Exemption to the definition set out in this report. of all the electricity it supplies, mainly from its Old Energy tariff: 300. Certificates associated with it are sold on to Ecotricity’s commitment to invest any profits own windfarms. The remaining 75 per cent of non-domestic consumers; and the Renewables back into its windfarm business and other the electricity Ecotricity supplies comes from Obligation Certificates, over and above what is research could offer some additional coal, gas and nuclear sources in line with the fåÑçêã~íáçå required by law, are sold on to other suppliers. environmental benefits. Consumers may like average national fuel mix. Any profits from In this respect New Energy performs less well Ecotricity’s website provides clear, easy-to- this aspect, particularly given that there is no Ecotricity’s supply arm are invested back into than many of the other tariffs in our survey. understand information on climate change, premium. However, Ecotricity does not state in its windfarm generation business. Ecotricity renewable energy sources and the distinction Where the New Energy tariff could offer some advance how much it will invest on behalf of also plants a tree for each new customer, to between ‘dark green’ and ‘pale green’ additional environmental benefits is through each customer each year. It is therefore very create new woodland near one of their wind renewables. It also provides information on Ecotricity’s commitment to invest any profits difficult for consumers to evaluate the turbines, and contributes £15 to WWF and the each of Ecotricity’s windfarms. However, the into its windfarm business, and through its environmental benefits of the tariff objectively. Soil Association for each new customer website does not make it very clear that New planting a tree for each new customer. It is good practice for suppliers who offer referred by them. The company is also Energy customers will not receive 100 per cent However, these are long-term and hard to green fund tariffs to have them managed investing in research into ‘microgeneration renewable energy as part of the tariff. quantify objectively. independently. Ecotricity does not do this. and personal carbon management systems’. Consumers may also be attracted by Ecotricity’s The Old Energy tariff is based on green supply, commitment to plant a tree for each of its and provides customers with ‘100 per cent New Energy customers. However, the amount renewable energy’. This is part of the total of CO emissions reduced by the planting of of 25 per cent renewable energy supplied by 2 one tree is not equivalent to the amount of Ecotricity. Ecotricity is not actively seeking new CO emitted by an average household’s gas customers for this tariff. 2 and electricity use.

14 EDF Energy ‘The contribution made by our customers is matched pound for pound by EDF Energy... Without this support these [community- based renewable] projects are unlikely to have occurred. [The fund] therefore supports the growth of renewable generation.’22

EDF Energy, one of the big six energy suppliers, mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=^ëëÉëëãÉåí offers two green tariffs. Green Tariff: around £15 per year. The electricity supplied to EDF Energy’s Green The Green Fund Tariff offers consumers the The Green Tariff is a green fund-based tariff Tariff customers comes from renewable chance to contribute to a Green Fund that is Climate Balance tariff: 0.4 p/kWh electricity that also has a green supply element. EDF sources, including onshore and offshore wind, independently overseen. The proceeds are consumed and 0.12p/kWh gas consumed Energy matches the premium paid by landfill gas, biomass, and small scale hydro. invested in community-based renewables (excluding VAT). For average consumption consumers and the whole sum is paid into a EDF Energy holds the Renewable Energy projects. EDF Energy matches customers’ rates this equates to £16 for electricity and Green Energy Fund that supports community- Guarantees of Origins in respect of 100 per contributions. This type of fund will appeal to £24 for gas. based and educational renewable projects. cent of this, and retires 100 per cent of the consumers who wish to support community- A committee within the company assesses associated Levy Exemption Certificates out of based renewables projects. EDF Energy makes applications and the fund is externally audited. the system. This is good practice and means it clear how much consumers are paying and EDF also supplies customers with ‘100 per cent kìãÄÉê=çÑ=ÅìëíçãÉêë that the ‘greenness’ is not being sold to publishes information on the projects renewable electricity’. Green Tariff: 12,000. consumers twice. No Renewables Obligation supported. While the CO2 emissions reductions Certificates are retired out of the system. from these investments are hard to quantify, it The new Climate Balance tariff funds UK Climate Balance: This tariff is too new to have is clear that they have some impact. and global projects that ‘result in reduced CO2 customer numbers available. Overall, EDF Energy does not go beyond its being emitted into the atmosphere’. Examples legal obligation, supplying around 4.5 per cent The supply aspect of the tariff does not offer of the type of project being funded are the of its total supply from renewable sources in additional environmental benefits according to promotion of energy efficient appliances fåÑçêã~íáçå 2005/6. The electricity supplied to Green Tariff the definition set out in this report. EDF Energy and reforestation. customers comes out of this rather than being follows basic good practice but does not go EDF Energy’s website provides limited additional to it. beyond its legal obligations. The tariff would information on renewable energy sources, be better if it concentrated on the Green Fund, As regards the Green Fund, EDF Energy reports climate change or the Renewables Obligation. making it fully independent from EDF Energy that £2.6 million has been raised so far, with It does provide basic details about the Green and increasing the amount invested. £2.1 million having already been awarded for Fund Tariff but no information on the actual either feasibility or installation projects. EDF The new Climate Balance tariff could prove projects it funds. estimates that the amount of additional installed attractive. Again, consumers’ contributions renewable capacity is fairly modest to date at are clear. However, to really understand its around 600KW, with more expected to follow. environmental value, EDF Energy should explain what proportion of CO2 emissions from consumers’ household energy use is being offset and the value being put on a tonne of CO2.

15 Good Energy ‘Good Energy’s supply is additional. We comply with the Renewables Obligation using Renewables Obligation Certificates and we go beyond this to an equivalent to ten percent of our supply. This is an ongoing long-term commitment and it is like making a forward commitment to renewable energy in the future.’23

Good Energy is a small independent company mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=~ëëÉëëãÉåí that offers its customers ‘100 per cent Around 12 per cent over the average standard Good Energy’s green tariff is based on 100 per Good Energy is making a serious attempt to renewable electricity’ sourced from wind farms, credit tariff. cent renewable electricity. Good Energy holds provide additional environmental benefits. small hydro and solar power generators. Their Renewable Energy Guarantees of Origin in By retiring out of the system Renewables major selling point is that they support small respect of this, and it retires out of the system Obligation Certificates equivalent to five per independent, renewable generators by paying all the associated Levy Exemption Certificates. cent of the electricity it supplies, it ensures them a fixed price for their electricity. kìãÄÉê=çÑ=ÅìëíçãÉêë This is good practice and means that the that this electricity is clearly additional to its Good Energy offers a green supply 20,000. ‘greenness’ in the electricity is not being sold legal requirements, and is dedicated to Good tariff with no green fund or carbon to consumers twice. Energy’s customers. Good Energy is the only offset element. supplier to receive three unqualified ticks for its Good Energy also buys and retires Renewables fåÑçêã~íáçå green supply tariff out of those listed in table Obligation Certificates equivalent to five per three. These additional environmental benefits Good Energy’s website is an excellent source of cent of their total supply over and above what are tangible and account for the premium information and explains relatively complex is required by the Renewables Obligation. Good Energy charges. issues in simple terms. It provides a clear So, in 2005/6, Good Energy supplied 5.5 per explanation of the Renewables Obligation and cent of its supply as renewable to fulfil its legal For those consumers who want a green the Climate Change Levy, and provides a useful obligations, and then retired Renewables electricity supply, pure and simple, this is overview on climate change. The website Obligation Certificates in respect of a further probably the closest they will get to it. provides a photo and information on each of five per cent. Good Energy sells the remaining the generating plants it buys its electricity from. Renewables Obligation Certificates to other The website also provides specific information suppliers and so the ‘greenness’ in this part can on its renewable energy tariff, including its be counted more than once. Good Energy individual fuel mix and its own calculation of commissions an independent auditor to verify the CO2 saved by switching to the tariff. the contractual basis of its green tariff.

16 Green Energy ‘There are many definitions of additional, but as the electricity is renewably generated, the Levy Exemption Certificates and the Renewable Energy Guarantee of Origins stay with the electricity, and we as a company supply 58 per cent renewable against a target of 6.7 per cent, we [therefore] believe it is additional. We also support small scale generators assisting them in bringing projects to fruition, both with advice and offering flexible and competitively priced power contracts, hence developing the additional renewable power.’24

Green Energy is a small company specialising mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=~ëëÉëëãÉåí in providing green electricity in partnership UK 100 tariff: around six per cent over the Over both tariffs, Green Energy is supplying 58 Green Energy is making a serious attempt at a with the supplier, Opus Energy. It offers two average standard credit tariff. per cent of its electricity from renewable green tariff with its UK 100. However, while green tariffs. sources. It holds Renewable Energy Guarantees one of the better tariffs in our survey, UK 100 UK 10 tariff: none. The UK 10 tariff is a green supply tariff that of Origin in respect of this renewable electricity. is not offering its customers significant offers ‘10 per cent renewable electricity above This is comprised of 16.7 per cent in 2006/7 additional environmental benefits according to the Renewables Obligation’. It is available to for UK 10, and 100 per cent for UK 100. It also the definition set out in this report. domestic and non-domestic consumers. The retires all Levy Exemption Certificates, other With its UK 10, Green Energy is only supplying balance is made up of electricity generated than those in respect of the electricity sold to kìãÄÉê=çÑ=ÅìëíçãÉêë 16.7 per cent renewable electricity. This is from conventional sources, including coal, gas non-domestic customers. This is good practice considerably less than many other tariffs on and nuclear. Confidential. Domestic customers are fairly and means that the ‘greenness’ in the offer. However, consumers may well be evenly split between UK 100 and UK 10. electricity is not being sold to consumers twice. The UK 100 tariff offers ‘100 per cent attracted by the opportunity to become Green Energy commissions an independent renewable electricity’ generated from small- shareholders in Green Energy, which could auditor to verify this. scale hydro, wind, biomass and solar sources. It fåÑçêã~íáçå provide them with additional financial, as is also available to domestic and non-domestic However, Green Energy does not retire well as environmental benefits in the future. consumers. Green Energy’s website provides a good Renewables Obligation Certificates above its overview on climate change, but limited legal obligation, but sells them on to other Green Energy is offering the first 100,000 UK information on different renewable energy suppliers. The ‘greenness’ in this element of 10 customers the chance to become a sources and nothing on the Renewables the electricity is therefore being sold twice. company shareholder. Each customer, domestic Obligation. The website provides very little and small commercial, receives 400 shares. information about the actual tariffs themselves. Green Energy has made a commitment to invest 50 per cent of its company profits in new renewable projects but it has not yet managed to carry this out.

17 Npower ‘As Juice is a non-premium green tariff, and it is Npower that funds the £10 per customer per year and not the customer, which is subsequently used to support the research and development of new renewable energy projects, it is clear that Npower Juice is additional.’25

Npower is owned by the German utility group mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë= viability of wave and tidal technologies. RWE and is one of the big six energy suppliers. This is very hard to quantify objectively at None. Npower aims to purchase sufficient electricity It offers one green tariff. the present time. to supply all Juice customers from its North Juice is a hybrid green supply and a green Hoyle off-shore wind farm. Where there is a fund-based tariff. It provides its customers with kìãÄÉê=çÑ=ÅìëíçãÉêë shortfall this is made up from either on-shore lîÉê~ää=~ëëÉëëãÉåí= ‘100 per cent renewable electricity’. wind or large-scale hydro. Currently, around 16 53,000. per cent of the supply comes from ‘pale green’ The supply element of Juice does not offer Once a customer has been signed up to Juice large-scale hydro sources. consumers any additional environmental for a year Npower promises to donate £10 for benefits. Npower does not go further than each additional year (up to a maximum of Npower holds Renewable Energy Guarantees of fåÑçêã~íáçå its legal obligations under the Renewables £500,000) to its renewables fund. The fund Origin in respect of the 84 per cent renewable Obligation supplying a total of just five per supports research and development into new Npower’s website does not provide any electricity it supplies, and retires all the cent of its total electricity supply from and emerging renewable technology projects, information about different renewable energy associated Levy Exemption Certificates. (Large- renewable sources. Part of this five per cent is mainly wave and tidal. The Renewable Fund is sources or the Renewables Obligation. It scale hydro is not eligible for Levy Exemption supplied to its Juice customers; the rest is sold managed by independent experts. provides basic information on the Juice tariff Certificates.) This is good practice and means to business customers. Npower needs to make and the projects it has funded through its that the ‘greenness’ in the electricity is not being it very clear to consumers what additional renewables fund. sold to consumers twice. However, Npower does environmental benefits Juice is offering. not retire any Renewables Obligation Certificates out of the system over and above the legal The fund element of Juice might offer some requirement. Npower has the contractual basis additional benefits, though these are long-term of Juice independently audited. and difficult to quantify objectively. Since there is no premium, consumers may well be happy As a company, Npower does not exceed its to sign up to Juice – for example, if they want legal obligations, supplying only around five to be associated with the North Hoyle off- per cent of its electricity from renewable shore wind farm. Npower makes it very clear sources. This means that, while Juice customers exactly how much it will invest in the are receiving electricity from renewable Renewable Fund for each consumer each year, sources, this is part of the overall five per cent. and has the offering audited. This aspect of the The supply aspect of the Juice tariff therefore tariff is transparent. does not offer any additional environmental benefits according to the definition set out in this report. Npower’s Renewables Fund might contribute to some additional environmental benefits from new renewable capacity in the long term. However, this will depend on the future

18 Powergen

Powergen is part of the German utility mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=~ëëÉëëãÉåí company E.ON and one of the big six energy Around £24.60 a year more than the standard Powergen holds Renewable Energy Guarantees The fund-based element of GreenPlan gives suppliers. Powergen has one green tariff. credit tariff. of Origin for all the electricity supplied to consumers the chance to invest in community- GreenPlan is a hybrid green supply and GreenPlan customers. It also retires all the Levy based renewables projects through its trust green-fund based tariff. It offers consumers Exemption Certificates associated with it. This fund. Powergen makes it very clear how much ‘100 per cent renewable electricity from kìãÄÉê=çÑ=ÅìëíçãÉêë is good practice and means that the it is investing on behalf of consumers each small-scale hydro and some wind’. ‘greenness’ in the electricity is not being sold year, and how much is being donated to WWF. 5,000. to consumers twice. Powergen does not retire It could, however, provide more information on For each GreenPlan customer, Powergen invests any Renewables Obligation Certificates out of how the Fund is administered and which £18 per year into a trust fund to support new the system. projects are being supported. While emissions community-level renewable energy projects. In fåÑçêã~íáçå reductions from these funds are hard to addition, for every customer who signs up to Overall, Powergen currently supplies around quantify objectively, they will certainly have GreenPlan, Powergen donates £3 to the WWF Powergen’s website provides limited general four per cent of the electricity it supplies from some impact. Climate Change Campaign. information about renewable energy sources renewable sources. The electricity supplied to or the Renewables Obligation. It only provides GreenPlan customers comes out of this. The supply-based element follows good brief information about the environmental Powergen is therefore not going beyond practice in holding Renewable Energy projects that the GreenPlan Trust Fund its legal obligations. The supply aspect of Guarantees of Origin and Levy Exemption supports. It would be useful to know how GreenPlan therefore does not offer additional Certificates in respect of 100 per cent of the the Fund is administered and which projects environmental benefits according to the electricity supplied to GreenPlan customers. are supported. definition set out in this report. However, this element of the tariff does not offer additional environmental benefits, over The GreenPlan Trust Fund could be said to and above Powergen’s legal obligations. offer additional environmental benefits to Consumers may well decide that this tariff GreenPlan customers, since the funds are used offers them something worth paying a to invest in new renewable capacity at the premium for on the basis of Powergen’s community level. The extent of this is hard to investment in the trust fund and its donation quantify objectively. The donation to WWF is to WWF. On the other hand, the premium additional, although the environmental benefits more than covers the investment in the fund of this are hard to quantify objectively. and the donation to WWF, and they may prefer to donate to WWF directly.

19 Scottish and Southern Energy ‘The energy is generated from our large-scale hydroelectric plants.’26

Scottish and Southern Energy is one of the big mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=~ééê~áë~ä six energy suppliers. It offers two green tariffs. RSPB Energy: around five per cent over the Scottish and Southern Energy holds Renewable Scottish and Southern Energy’s RSPB tariff is a RSPB Energy is a hybrid tariff comprised of a standard credit tariff. Energy Guarantees of Origin in respect of the genuine attempt to offer something different fund-based element, along with ‘100 per cent electricity supplied to its RSPB customers. to consumers. For a premium, consumers can Power 2: none. renewable electricity’ for those who are signed Ninety per cent of the supply is made up contribute to the RSPB’s renewable energy and up. For each new customer, Scottish and of ‘pale green’ electricity from large-scale environmental activities. In addition, ten per Southern Energy donates £10 to the RSPB. hydro which does not qualify for Renewables cent of Renewables Obligation Certificates are For each year that a customer remains with the kìãÄÉê=çÑ=ÅìëíçãÉêë Obligation Certificates or Levy Exemption retired over and above Scottish and Southern scheme, Scottish and Southern Energy donates Confidential. Certificates. So these cannot be retired. Energy’s legal obligations. Retiring additional a further £5. For customers who buy both gas However, Scottish and Southern Energy has Renewables Obligation Certificates ensures that and electricity from Scottish and Southern committed to retiring ten per cent of the this part of the ‘greenness’ cannot be double Energy the contributions are doubled, and fåÑçêã~íáçå Levy Exemption Certificates and Renewables or triple-counted. On the other hand, customers forego any ‘dual fuel discount’. Obligation Certificates associated with the consumers might decide to contribute directly Proceeds are used to help buy and manage Scottish and Southern Energy’s website other ten per cent of the electricity. to the RSPB. land for nature reserves. provides very little information about Scottish and Southern Energy holds Renewable Scottish and Southern Energy’s Power2 renewable energy sources or the Renewables The Power 2 tariff guarantees its customers Energy Guarantees of Origin in respect of the tariff does not offer consumers additional Obligation. Through its Southern Energy and ‘100 per cent renewable electricity generated electricity it supplies to Power 2 customers. environmental benefits, other than its Scottish Hydro websites there are links to a from large-scale hydro electric plants’. Scottish As this is entirely comprised of ‘pale green’ commitment to plant trees. Consumers may specific RSPB Energy website. This is useful, and Southern Energy also plants six trees electricity from large-scale hydro, it does not be quite happy to sign up, knowing that large- although it does not provide any information annually for each customer signed up to Power qualify for Renewables Obligation Certificates scale hydro generation emits no CO . They on how the Climate Change Fund is managed. 2 2. The aim of this is to absorb the CO created or Levy Exemption Certificates, so none of need to be made aware of the distinction. 2 The link to the RSPB brochure gives details by an average household for a year. these can be retired. Consumers may well also be attracted by the of the projects already in place. There are tree-planting element of Power 2. It is also links to the Power 2 website. This The tree-planting element of the Power 2 tariff important to recognise, however, that the clearly explains that Scottish and Southern is an additional element of the tariff. amount of CO emissions reduced by the Energy cannot guarantee that the actual 2 planting of six trees is not equivalent to the electrons it generates will reach an individual amount of CO emitted by an average customer’s home. 2 household’s gas and electricity use.

20 Scottish Power

Scottish Power is one of the big six energy mêÉãáìã ^ÇÇáíáçå~ä=ÉåîáêçåãÉåí~ä=ÄÉåÉÑáíë lîÉê~ää=~ééê~áë~ä suppliers. It offers two green tariffs. Green Energy Fund: £10.50 per customer per The Green Energy Fund could be said to offer Scottish Power’s Green Energy Fund is a serious The Green Energy Fund is a fund-based tariff. each year. This takes the form of the dual fuel additional environmental benefits to GreenPlan attempt to run a green trust fund, and to It is only available to dual fuel gas and discount foregone. customers, since the contributions are used to invest in some independently-assessed, electricity customers. Foregoing the ‘dual fuel invest in new renewable capacity at the community-based renewable energy projects. H2O tariff: none. discount’ of £10.50, customers instead see this community level. However, the extent of these Consumers can decide whether they consider amount invested by Scottish Power in its Green are hard to quantify objectively. this investment to be a good use of their Energy Trust, an independent charity that money. Scottish Power’s website could provide Scottish Power holds Renewable Energy supports community-based renewable energy kìãÄÉê=çÑ=ÅìëíçãÉêë more details of the activities of the Fund. The Guarantees of Origin in respect of its H O projects with an educational element. 2 website could also make it clear that this is a Confidential. tariff. Since the electricity supplied does not fund-based tariff that does not offer renewable Projects supported range from wind turbines, qualify for Renewables Obligation Certificates electricity to its customers. solar PV, thermal energy, biomass and landfill or Levy Exemption Certificates, these are not fåÑçêã~íáçå gas. The Board of Trustees includes four retired out of the system. Scottish Power Scottish Power’s Green Energy H20 tariff does external trustees and environmental experts. does not go beyond its legal obligations under not offer customers additional environmental Scottish Power’s website provides no They meet three times a year to decide on the the Renewables Obligation. Therefore the H O benefits. The information on the website could information on renewable energy or anything 2 applications. The electricity supplied on this tariff does not offer additional benefits make this much clearer. However, since there is about the Renewables Obligation. The website tariff is in line with Scottish Power’s average according to the definition set out no premium, consumers may still be quite provides links to the Green Energy Fund and fuel mix. in this report. happy to sign up to the tariff, knowing that the H O tariffs, as well as offering to set up a 2 that electricity from large-scale hydro does not The Green Energy H 0 tariff guarantees ‘carbon account’ for customers. It provides 2 cause CO to be emitted into the atmosphere. customers ‘100 per cent renewable electricity’. links to Green News, a newsletter which 2 This electricity is mainly sourced from existing provides information on each of the projects large-scale hydro plants. supported by the Green Energy Trust Fund. In particular, it should be made clearer that Green Energy Fund customers do not receive electricity from renewable sources.

21 5 Conclusion and recommendations

Signing up to a green tariff is Of the new breed of carbon offset For the word ‘organic’ to be used in qÜÉ=ï~ó=Ñçêï~êÇ one way consumers can take products, EBICo’s Equiclimate uses relation to food, the supplier has to For the past five years, green responsibility for reducing some of a methodology that is transparent be accredited against one of the electricity tariffs have been left the CO emissions from their home. and robust. recognised schemes. Otherwise 2 to suppliers as part of the However, the main finding from our consumers have no way of knowing The debate on climate change competitive supply market. research is that many of the green whether or not the food has been and global warming has reached The result is that consumers tariffs offered by suppliers are not produced organically.The same tipping point. Individual households are being misled about what delivering the environmental principles apply to green electricity. are well aware of the need to reduce environmental benefits green benefits they claim to.While there Many consumers are keen to reduce CO emissions, but they look to tariffs bring.This risks alienating are some innovative tariffs on offer, 2 their CO emissions and help government and industry to provide 2 them from the behaviour change many suppliers are doing little more combat global warming.Yet they them with a framework within agenda and will not be helpful for than repackaging their legal have no way of knowing whether which they can act. Energy suppliers achieving the government’s long- obligations. Of the twelve green they are buying additional renewable are well-placed to take advantage of term policy targets. supply-based tariffs listed in table electricity or not. In order for them consumers’ willingness to change three, only two are actually going to have certainty, there needs to be a The government and Ofgem should their behaviour.The bottom line further than they are required to more objective standard against recognise that green tariffs have a for consumers now is the amount of by law.The only tariff with three which green tariffs can be judged. role to play in reducing household CO they can save.Yet our research unqualified ticks is Good Energy’s 2 CO emissions, and in increasing the shows that even the tariffs that go In conclusion, consumers must 2 green supply tariff. amount of renewables in the overall beyond their legal obligations will have clear, unambiguous generation mix. Of the green tariffs with a fund only save a relatively small information about what is on element, a good example is EDF proportion of an average household’s offer, and confidence that the Energy’s Green Tariff. EDF Energy CO2 emissions – six per cent. tariffs will deliver what they matches the premium paid by promise. Only then will consumers consumers and the whole sum is have confidence that switching paid into its Green Energy Fund, to a green tariff will make a real which is externally audited and difference, allowing the market supports community-based and for greener energy to take off. educational renewable projects. 22 _ÉåÅÜã~êâáåÖ=í~êáÑÑë qê~åëé~êÉåÅó ^ìÇáíáåÖ båîáêçåãÉåí~ä=ÄÉåÉÑáíë Ofgem’s Green Supply Guidelines Suppliers are not making it clear Suppliers should be required to have Suppliers should also be required should continue to be the basis for that consumers are already their green tariffs independently to calculate the amount of reduced regulating green tariffs.They form supporting increased renewable audited each year against an agreed CO2 emissions they will provide to a good basis against which suppliers electricity through their electricity benchmark.This is a low-cost an average household, for each green can benchmark their tariffs in terms bills, by around £7 per household in option for suppliers that would tariff they offer.They should publish of transparency, additionality and 2005/6, rising to £20 in 2010/11. provide reassurance for consumers. this figure on their website, on all verifiability. Ofgem will shortly Consumers should be made aware The audit report should confirm marketing materials and on the be issuing revised Green Supply of this.This will make the situation the contractual basis for any contract they sign with customers. Guidelines.These will need to take far clearer for suppliers who design environmental claims made for the In this way, consumers will have an account of developments in the green tariffs and for consumers who tariff in question. Information objective basis on which to compare market over the past three years and sign up to them. Suppliers should should be provided for each aspect the various tariffs on offer. set out clear minimum standards of also produce an individual fuel mix of a tariff when there is more than The figure for reduced CO good practice for green tariffs. On disclosure chart for each of their one, including green funds and 2 emissions should be calculated their own, however, the guidelines green tariffs, within the context of carbon offset-type tariffs.The in a standardised way using a are not enough to ensure good the supplier’s overall fuel mix. Both requirement should be contained methodology agreed by government practice, since they are not charts therefore need to be shown. in the electricity supply licence, and a panel of stakeholders and rigorously enforced. Over the past The official guidance on fuel mix and the benchmark set out in contained in Ofgem’s revised five years, self-regulation has not disclosure provides for this, and it Ofgem’s revised guidelines.The guidelines.Any assumptions made delivered an effective market in could be helpful for consumers to audit reports should be made in the calculation need to be made green tariffs.The guidelines should have visual representation of the publicly available and posted on clear.The figure should make therefore form the basis of a green tariff and total fuel mix in the suppliers’ websites. reference to total household CO consumer code which suppliers this way. 2 emissions from electricity for are required to actively sign up to. comparison purposes and should be independently audited.

23 Finally, suppliers must provide clear, Looking further ahead, there is oÉÅçããÉåÇ~íáçåë detailed information on their tariffs. increasing interest in the potential

The principal place for this will be for home generation, whether båÉêÖó=ëìééäáÉêë=åÉÉÇ=íçW their website.They need to explain powered by wind, solar, ground or the sources and amount of air-source heat, or combined heat
Sign up to the Consumer Code based on Ofgem’s Green Supply Guidelines and abide by its terms, undertaking to: renewable electricity being supplied and power. Some of these can across the piece, and how this is export electricity back onto the – provide full and accurate information about environmental benefits from the green tariffs they offer. verified.They should also provide distribution system.There is more general information on potential here for suppliers to think – guarantee not to make claims that cannot be substantiated. renewable electricity and the various more innovatively about the role of
Agree to a supply licence condition on green tariffs. policy instruments that exist to fund green electricity in the packages
Provide individual fuel mix disclosure charts for each green tariff they offer, it, particularly those paid for by they offer consumers. For example, as well as for their total fuel mix.

consumers through their bills. they could combine green tariffs
Develop innovative packages that assist consumers in reducing their household with home generation and energy Suppliers must ensure that sales and CO2 emissions. efficiency into low-carbon packages. marketing materials contain clear and accurate information, and that lÑÖÉã=åÉÉÇë=íçW

all claims are substantiated and
Set out minimum standards in its revised Green Supply Guidelines, with particular verifiable. Our research found it reference to guaranteeing transparency and additionality.

particularly difficult to obtain
Require suppliers through a condition in the supply licence to: accurate and complete information from call centre staff.As the first – sign up to a consumer code based on its revised Green Supply Guidelines. port of call for many consumers, – have any green tariffs they offer independently audited by accredited auditors call centre staff need to be provided against a benchmark. with sufficient information on the – calculate the CO2 reductions a household will achieve by switching to their green green tariffs on offer so that they tariff, according to an agreed methodology, and have this independently audited. can advise callers accurately.

24 Appendix Sources of information about green tariffs

Our research found that it is not Before deciding to switch to a green energywatch Electricityinfo.org always easy for consumers to obtain tariff, it is very important to check The energywatch website has a Electricityinfo.org is a website information about green tariffs, or the company website, and to follow complete listing and explanation owned and operated by IT Power. to assess their overall contribution to this up with a telephone call. of all available green tariffs for It has capitalised on the legal the environment. Company sales Consumers need to make sure all domestic consumers on requirement on UK electricity assistants are not always well enough their questions have been answered, its website. It also provides some suppliers to disclose their fuel mix, informed to help consumers make a and that they understand exactly general information about green by reproducing each company’s fuel proper decision.We found that the what they are signing up to. tariffs, and some guidance on what mix. In this way, consumers can get smaller, niche suppliers were better to look out for, but it leaves an overall, big-picture view of each at directing us to one person who consumers to make the choice as company’s supply activities. It also knew enough to help us. tÉÄJÄ~ëÉÇ=ëçìêÅÉë=çÑ=áåÑçêã~íáçå to which is the best tariff for them allows consumers to calculate their Our researcher summarised the As well as individual company (www.energywatch.org.uk). annual household CO2 emissions situation as follows: websites, there are a variety of other and nuclear waste on the basis of web-based sources of information their electricity supply company’s ‘Those we spoke to, while very available.They aim to help Green Electricity Marketplace published fuel mix friendly for the most part, knew consumers make better choices (http://electricityinfo.org). the absolute basics but not much Green Electricity Marketplace is when switching to a green tariff. more. In some cases they would an independent website with no They are a useful first stop in even contradict what had been indirect links to energy supply researching what is on offer. It is uswitch.com and unravelit.com said by someone elsewhere in companies.We found that it provides important that consumers check the company. In one particular case good basic information on each of uswitch.com and unravelit.com are that the source used is objective, we were passed around to four the green tariffs on offer, particularly comparative websites.They are and not linked to any of the different people and still did not focusing on price and the sources of primarily engaged in providing supply companies. manage to gain sufficient renewable energy.The site is comparative energy prices for information on the product.’ recommended by Friends of the electricity and gas suppliers for Earth (www.greenelectricity.org). switching purposes.They do not concentrate specifically on green tariffs, though they do provide

25 details in a roundabout way. pìééäáÉêëÛ=ïÉÄëáíÉë Powergen www.powergen.co.uk Consumers must input their British Gas electricity and gas consumption www.house.co.uk Scottish and Southern Energy details before being able to access www.scottish-southern.co.uk EBICo details of the various green tariffs www.rspbenergy.co.uk www.ebico.co.uk on offer. www.power2.co.uk Ecotricity www.ecotricity.co.uk Scottish Power WhichGreen? www.scottishpower.com EDF Energy The WhichGreen? comparison www.edfenergy.com website is sponsored by Ecotricity, though this is not immediately Good Energy obvious at the outset. Its www.good-energy.co.uk recommendations need to Green Energy be seen in that light www.greenenergy.uk.com (www.whichgreen.com). Npower www.npower.com

26 Notes and references

bills explained 1. Energy Saving Trust: www.est.org.uk. 9. Ofgem Factsheet 66, Household energy 17. Two suppliers have decided to do this 22. E-mail correspondence with EDF Energy, , 08.11.2006. by retiring a proportion of Renewables October 2006. 2. HMEnergy Government, Review Report The Energy Challenge: Obligation Certificates equivalent to at , 2006, Cm 6887. 10. As set out in Regulation 47 of the Climate 23. E-mail correspondence with Good Energy, least five per cent of their supply in Change Levy (General) Regulations 2001, October 2006. 3. HMThe Government,UK Programme Climate Change: addition to the 5.5 per cent they were SI 2001/838, based on the Finance Act , 2006, Cm 6764, already obliged to submit under the 24. E-mail correspondence with Green Energy, 2000. (The Energy Review Report this year SE/2006/43. Renewables Obligation in 2005/6. September 2006. announced that the buy-out price would 4. Cabinet Office and HM Treasury, be frozen in the future.) 18. The simplest way to quantify CO2 25. E-mail correspondence with NPower, Stern Review on the Economics of savings is that, for every kWh used November 2006. 11. Directive 2001/77/EC of the European , 30 October, 2006. that is offset by retired Renewables Climate Change Parliament and the Council of 27 Obligation Certificates (over and above 26. E-mail correspondence with Scottish and Delivering the UK’s Sustainable September 2001 on the promotion of 5. HM Government, Securing the Future: the prevailing Renewables Obligation Southern Energy, November 2006. Development Strategy electricity from renewable energy sources limit), assume that these are zero carbon. in the internal electricity market [OJ L283 , 2005. Then multiply by the average electricity of 27.10.2001]. 6. Sustainable Consumption Roundtable, emission factor: 0.44kg CO2/kWh. So, I will if you will, 2006. The report uses the 12. DTI, Guarantees of Origin of Electricity someone using 4000kWh a year on a Produced from Renewable Energy Sources term green tariffs to describe the range of tariff that retires five per cent Renewables green electricity supply, green energy fund (REGOs), 2005. Obligation Certificates above the legal and carbon offset tariffs currently on offer obligation would save 88 kg CO2 a year. 13. NCC, The Green Claims Code: Is it by energy suppliers. We use the same working?, 1999. Given that a household emits 1.7 tonnes definition here. of CO2 from the electricity it uses, even 14. Advertising Standards Authority: 7. A poll carried out by ICM Research for the this is a relatively modest saving of less www.asa.org.uk/asa/adjudications/Public/T Observer on 6-8 October 2006 than six per cent of the total CO2 emitted F_ADJ_41817.htm. questioned a fully-weighted sample of by an average household. 1,013 people. 15. Environmental Change Unit, University of 19. E-mail correspondence with British Gas, Oxford, Green electricity accreditation 8. The Renewables Obligation Order 2002, scoping study October 2006. , 2006. SI 2002 No 914, based on the Electricity 20. E-mail correspondence with EBICo, Act 1997, as amended by the Utilities Act 16. NCC’s research covers companies November 2006. in 2000. In Scotland it is known as the operating in Great Britain. As there is no Renewables in Scotland Obligation (ROS) competition in the domestic electricity 21. E-mail correspondence with Ecotricity, and in Northern Ireland as the Northern supply market in Northern Ireland, we did September 2006. Ireland Renewables Obligation (NIRO). not include Northern Ireland Electricity in our research.

27 Other publications

The following publications on the pìëí~áå~ÄäÉ=Åçåëìãéíáçå mìÄäáÅ~íáçåë=Ñêçã=íÜÉ=pìëí~áå~ÄäÉ subject of sustainable consumption éìÄäáÅ~íáçåë=Ñêçã=íÜÉ=k``= `çåëìãéíáçå=oçìåÇí~ÄäÉ=Ek`` ~åÇ=pìëí~áå~ÄäÉ=aÉîÉäçéãÉåí can be downloaded at the NCC
Greening supermarkets (2006) website (www.ncc.org.uk/ `çããáëëáçåF
Desperately seeking sustainability? responsibleconsumption/
I will if you will: towards sustainable (2005) publications.htm). consumption (2006)
16 pain-free ways to help save the Hard copies are also available on
Business Dialogue report (2006) request from the NCC offices: planet (2005)
Looking back, looking forward: lessons
Green choice: what choice? (2003)
020 7730 3469 in choice-editing for sustainability
[email protected] (2006)

National Consumer Council Double dividend? Promoting good 20 Grosvenor Gardens nutrition and sustainable consumption London SW1W 0DH through healthy school meals (2005) United Kingdom
Seeing the light: microgeneration brings energy to life (2005)

28