A few years ago, Regen shone a spotlight on the issue of greenwashing in the energy sector. Our thought piece then, “We Need to Talk About Green Energy Tariffs”, produced a huge response from across the industry with strong views being expressed both for and against the practice of “greening-up” electricity tariffs. Since then, the topic has received widespread media coverage to the point where the alleged misuse of Renewable Energy Guarantees of Origin (REGOs) and misleading marketing has featured on Good Morning Britain and across national radio and media coverage. 

Three years later, Regen has this week responded to the BEIS call for evidence on green tariffs and steps to increase the carbon transparency of green energy products. 

The policy position paper and call for evidence response can be found here

Our message is essentially the same as it was in 2018: the huge increase in demand for green energy products shows that there is tremendous consumer support for the energy transition and plenty of domestic and commercial energy users who want to do their bit to accelerate the drive towards net zero.  There is an urgent need, however, to address the issue of greenwashing which could undermine consumer trust, and even jeopardise future support for new energy solutions, from smart meters and dynamic tariffs to the basics of energy efficiency and heat decarbonisation.   

The BEIS call for evidence should also be a call to action. A positive response by the industry and regulator, based on transparent reporting and honest communication, could lead to a far stronger engagement with consumers, as well as ensuring that the true value of “greenness” is recognised in the market. The aim now should be to create energy products, including smart green tariffs and Power Purchase Agreements (PPAs), that encourage active consumer participation and behavioural change. This will enable consumers to take meaningful steps to reduce their own carbon footprint, while also helping to channel additional investment into renewable energy and other low carbon solutions. 

As an immediate step, Regen is calling for BEIS and Ofgem to work with the industry to improve the transparency and content of the Fuel Mix Disclosure, restoring its original purpose to provide clarity as to the source and carbon intensity of energy supply. Our response paper includes an illustrative mock-up of what a more transparent fuel mix disclosure could look like.  

Picture1

Regen is also calling for an urgent review of marketing standards to improve the language and messaging used to convey the true additionality of green tariffs. We believe that both the fuel mix disclosure and marketing reforms could be implemented very quickly within the existing framework.  

Improving the timeliness of the fuel mix disclosure is also critical and will require Ofgem and BEIS to redesign the process of REGO assignment, accreditation and disclosure checking. The limitation of an annualised fuel mix disclosure, that can only be produced 6 months or more after the year-end, is not acceptable in a modern smart energy system.   

Regen has made some suggestions of how the time lag between energy supply and carbon reporting could be reduced, including proposals to allow provisional transaction data to be used. Looking ahead, the full tracking of the provenance of the supply of energy is ripe for digitalisation, and a process that allows far more integrated tracking of the carbon content at a transactional level. This point has also been made by the Energy Systems Catapult and Elexon in their recent paper on tracking carbon in electricity markets. 

There are two types of carbon tracking that need to be considered:  

  1. the carbon content of energy products offered in the supply market to enable consumers to choose an energy product that meets their aspiration and budget for greenness 
  2. the carbon intensity of actual energy consumption. Providing consumers with a real time and forward view of carbon intensity could be aligned with the use of smart meters and dynamic tariffs, to enable and incentivise consumers to actively reduce their carbon footprint through energy efficiency and by shifting demand to low carbon periods.  

Regen is not suggesting that there can be only one type of green energy tariff that is 100% renewable. Far better to have a range of energy products with different shades of greenness and offering different forms of additionality including, for example, support for local and community energy schemes, energy efficiency and other societal and environmental benefits. The important point is that there should be transparency as to what is being offered and clarity as to the source of additionality. 

Ultimately, the majority of customers choose a green energy product because they want to do something to accelerate the transition to net zero. Making this real, increasing the demand for green energy products will in turn allow renewable generators to capture value through growing PPA markets and higher REGO prices. In a post-subsidy market, the ability to capture and trade the value of greenness will be critical to help secure the investment needed to reach net zero. 

No doubt the debate about what to do about green energy tariffs will continue. We hope, however, that the industry and policy makers are motivated to act quickly to put consumer trust first. 


We welcome feedback and questions on our response paper – please contact Johnny Gowdy at jgowdy@regen.co.uk.

Click here to read the full position paper

 

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