Government plans crackdown on greenwashing claims from energy providers
The UK Government has outlined plans to review how energy firms use the environmental credentials of their tariffs to market them, amid concerns that some providers are overstating the green benefits.
The Department for Business, Energy and Industrial Strategy (BEIS) has today (16 August) launched a review to assess the extent of greenwashing in the retail energy sector. In a statement, the Department outlines that while renewable electricity generation has more than quadrupled in the UK over the past decade, it has heard evidence that many energy providers are not doing enough to ensure that consumers know where their ‘green’-branded electricity comes from.
At present, energy firms are legally allowed to describe tariffs as ‘green’, even if a portion of the energy supplied to customers is from fossil fuels. They can do this by ‘offsetting’ fossil-based generation through the purchase of Renewable Energy Guarantees of Origin (REGO) certificates. For several years, green groups, investigative journalists and consumer groups have questioned whether the REGO figures add up.
BEIS has stated that it will assess whether the way in which REGO certificates are issued and counted needs to be improved. It will also consult on whether suppliers should be required to provide more – and clearer – information to households about the origin of their electricity. Firms could be required to disclose simply the type of generation (e.g. offshore wind, onshore wind, solar), or to also document where and when the electricity was generated.
Separately, the Department has called for evidence on potential new mandates for price comparison website and tariff auto-switching services, which currently operate outside of the energy retail market rules. Ministers will assess whether they should be classed as ‘inside’ the market rules or whether a separate general regulatory framework is needed.
It is unclear, at this stage, whether tariffs provided to businesses and other non-domestic customers will be included in this review.
“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,” USwitch.com’s head of regulation Richard Neudegg said.
“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.”
The launch of the review follows on from the publication of the Energy White Paper last year. The White Paper is designed to put the UK on course for an “overwhelmingly decarbonised power sector in the 2030s” on the road to net-zero across the whole economy by 2050.
It also comes after the Competition and Markets Authority (CMA) set out recommendations on avoiding greenwashing for several other consumer-facing sectors, including health and beauty products, home cleaning products, food and drinks and fashion. A CMA review of corporate sustainability claims online in these sectors found that 40% are potentially misleading.