A review into how green electricity tariffs are marketed by suppliers is to be launched tomorrow (16 August) the government has announced.
The Department for Business, Energy and Industrial Strategy (BEIS) said it would issue a call for evidence in the retail strategy following concerns over the way suppliers market their green electricity tariffs. Specifically, there are worries some may be overstating the environmental impact of their green credentials.
Currently 9 million households in Britain are supplied by a green tariff, with more than half of all new electricity tariffs launched now badged as “100 per cent renewable” or “green”.
The review will explore the extent of alleged greenwashing in the retail energy sector, whether the current system is suitably transparent and whether the rules around what can be called a “green” tariff remain fit for purpose.
It follows a long-running debate surrounding the use of renewable energy guarantees of origin (REGO) certificates in green tariffs. The subject has been a source of contention in the sector, with some arguing the certificates do not create a demand for renewables.
Options being explored in the review include looking at whether the system around these certificates needs to be smarter, as well as whether suppliers need to provide clearer information to households about their green tariffs, including type of renewable energy used, where the renewable power was generated and when.
Energy minister Anne-Marie Trevelyan, said: “Millions of UK households are choosing to make the green switch and more and more of our energy comes from renewables. But I want people to know that when they sign up to a green tariff, they are investing in companies that make a conscious choice to invest in renewable energy.
“Part of that is ensuring companies are being as transparent as possible on where their power comes from. That way, every family in Britain can rest assured their choices are helping to contribute to our world-leading target of eliminating our contribution to climate change by 2050.”
Head of regulation at Uswitch.com, Richard Neudegg, said: “Transparency is key to bring consumers on the journey to net zero. Households want to do their bit to help the environment, so it’s vital to make it as simple as possible for them to confidently pick the tariffs that actually help to support renewable energy.
“More and more people are purchasing green tariffs but it’s been difficult for bill-payers to know exactly what’s under the hood of these deals. We support any measures that aim to demystify green tariffs for households.”
Last year former Good Energy chief executive Juliet Davenport said an investigation by the Competition and Markets Authority (CMA) into misleading claims about eco-friendly products should be broadened to include energy retailers.
“This is an important investigation which the CMA should absolutely broaden to include greenwashing within the energy retail market,” she said.
Third-party intermediaries
Additionally the government is publishing a separate call for evidence on third-party intermediaries in the energy retail market, such as price comparison sites, auto-switching services, and non-domestic brokers.
Although around half of households use them when engaging with the energy market, they currently operate outside of the retail market rules, and ministers will seek views on whether a general regulatory framework is needed.