What is Greenwashing?
Greenwashing – claiming something is greener than it really is, has become a thing in the energy market recently, so much so that the regulator OFGEM is considering taking steps to control it - we hope they do.
A number of energy companies claim green credentials for themselves or for some of their tariffs - but scratch the surface and it’s not what it seems.
There are three levels of activity that energy companies engage in - they range from the superficial to the impactful.
Trading Green Certificates
Trading Green Energy
Building new sources of green energy
Level One - Trading Green Certificates
Some companies trade green certificates.
The certificates in question are known as REGOs (Renewable Energy Guarantee of Origin) and their purpose is to authenticate green energy itself - for each unit of green energy made a certificate (REGO) is issued - like a birth certificate.
These certificates can be detached from the green energy and traded separately - the problem comes when taken to the extreme, if this is all a suppler does.
The certificates are cheap - costing about 50p to cover a typical household use for a whole year.
Trading them is easy. And nothing really changes.
Worse still is that they can be attached to fossil fuel energy - in fact companies that only trade certificates and not green energy itself, are attaching these certificates to fossil and nuclear power from the national grid mix – they can’t avoid this, because they have not purchased actual green energy.
If your energy company only trades certificates - you are being greenwashed.
They will be buying pieces of paper for pennies and attaching them to fossil or nuclear fuel and calling it green.
Level Two - Trading Green Energy
Other companies actually supply green energy, they buy it from the people that make it (generators) - or they make it themselves - and they sell it to their customers.
When they do this they also buy the (birth) certificates that come with this green energy. This is better.
But the flaw (which it shares with Level One) is that the green energy is typically from a source that’s already been built, it exists and is part of the national supply. When one company buys this green energy, another one loses it - it’s a transfer of existing green energy. The same transfer happens between customers - today you may have it, yesterday somebody else had the green energy.
The worst aspect of this is re-allocation amongst a supplier’s customers
Scottish Power for example, recently announced the creation of a '100% green tariff’ - but what they actually did was transfer their existing green energy from all of their customers to just some - making some 100% green and the rest 0%.
This is a microcosm of what happens at the national level when green energy from existing sources gets traded.
Trading green energy and certificates has a role to play though - by creating demand that increases the value of green energy and incentivises building more of it. In theory.
Level Three - Building new sources of green energy
This is the only level of activity that makes a difference, that moves the dial.
Britain has about 30% green energy in the national supply mix right now, we need to get to 100% and we can only do that by building more. We can’t trade our way there.
Building new sources of green energy is often done in combination with Levels Two and One.
How much of your energy bill will be spent building new sources of green generation? - that’s the key question.
The more the better - but if the answer is nothing, then nothing is really changing.
Making a greener choice
We were declared “one of the UK’s greenest energy companies” in an independent report from renowned customer watchdog, Which? in 2019. From over 355 tariffs compared - they discovered Ecotricity was just one of a handful of companies that were as environmentally friendly as they appeared.
You can switch to green energy online. It only takes a few minutes.