Blog Post

Energy suppliers join forces to demand a legal requirement to put an end to ‘misleading’ green tariffs

Richard Simmonds • May 5, 2021

Energy suppliers Scottish Power and Good Energy have teamed up to put pressure on the government and energy regulator Ofgem to do more to get rid of the loopholes in the energy retail market that allow ‘greenwashing’.

What is Greenwashing?

The issue of Greenwashing has become increasingly important in the energy retail market as suppliers try to appeal to environmentally minded consumers. Currently suppliers can ‘show’ how green they are by utilising renewable energy certificates.

The issue with this is that suppliers can use the certificates without having to prove a direct connection to the source via the Power Purchase Agreement or prove their investment into green energy.

Good Energy was one of the first energy suppliers to raise concerns over green tariffs after they approached Ofgem last year.

As almost all electricity is added to the grid, regardless of its source, it is not possible to trace the energy generated from one particular source to a home or business, something that makes it impossible to verify whether a company is 100% green or not.

Good Energy and Scottish Power believe that many ‘green tariffs’ being advertised by other energy suppliers are in fact misleading to the consumer as they are not truthful about where the energy advertised is actually sourced.

Also read: ‘Green’ Tariffs to come under increased government scrutiny over growing ‘Greenwashing’ concerns

New Research

A recently released research paper by consultancy Baringa showed that nearly a third of the electricity supplied via green tariffs or renewable tariffs is in fact greenwashed.

Following the release of the report Scottish Power and Good Energy have called on the Department for Business, Energy, and Industrial Strategy (BEIS) and Ofgem to increase transparency and add a legal requirement for energy suppliers to clearly explain to customers the tariffs they are selling.

“Consumers are being misled by too many energy companies. If greenwashing is allowed to continue it risks the UK position- hard won- as a world leader in green technologies and tackling climate change particularly ahead of COP26, set to be held in Glasgow in November,” said Andrew Ward, CEO of Scottish Power Retail.

Also read: Ofgem to increase monitoring of Green tariffs and put an end to ‘Greenwashing’

An end to EU exemptions

The two suppliers also want Ofgem and BEIS to put an end to them exempting energy suppliers who buy EU-based energy certificates from paying what they call a ‘fair share’ of UK renewable costs. They also want an outright ban on non-PPA tariffs from being labelled green.

As well as these demands Good Energy and Scottish Power also want minimum standards to be introduced on green energy, with detailed guidance to go along with it.

The issue of greenwashing looks set to continue to be a controversial issue with many energy suppliers in disagreement with Good Energy and Scottish Power. Many purchase renewable certificates but pressure is growing on the regulator to act.

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