Government cracks down on energy greenwashers

The Department for Business is launching a review of energy marketing as companies accuse each other of “greenwashing” – using sneaky marketing to sell fossil-fuel electricity as green.

With nine million UK households now on “green” or “100% renewable” energy products, the potential for deception is massive. 

The review will investigate whether energy companies need to give customers clearer information on what types of renewable energy are going into their tariff, where they were generated and when. 

It will also consider whether third-party intermediaries like price comparison and energy-switching websites, which fall outside the retail market rules, need to be regulated.

Offsetting fossil fuels

One of the main concerns is that suppliers are using “offsetting” certificates to sell fossil fuels as green. 

When a unit of renewable electricity, such as wind power, is generated, energy regulator Ofgem gives the wind power company a Renewable Energy Guarantee of Origin (REGO) certificate to prove the energy’s green provenance.

However, there’s no rule that says the company has to sell the energy and the certificate together. A thriving market in spare REGOs, which cost just £1-2 per customer per year, allows energy suppliers to buy certificates to “offset” the proportion of fossil fuels in their tariffs.

This means suppliers can buy electricity, including from fossil fuels, from the wholesale market and make it look 100% green for a very low price.

British consumers are increasingly keen to switch to green energy – a move the government is encouraging, as home energy use produces 15% of the UK’s emissions – and householders may feel misled that their “green” energy actually comes from fossil fuels. 

Energy campaigners have labelled this “greenwashing” as marketing spin, and there have been calls for Ofgem to stop selling REGO certificates, so only energy from renewable sources can be labelled as “100% green”.

But some industry leaders object that the trade in REGOs actually helps to fund the generation of renewable energy. A British Gas spokesperson said that for its Green Futures tariff, “British Gas matches 100% of the electricity you use with renewable sources… the carbon footprint for 100% of the gas you use is balanced by CO2-cutting projects around the world.”