Green Electricity Tariffs - Are They Really Green?
Around 5% of electricity in the UK was produced from renewable sources in 2005. Signing up for a green electricity tariff seems like an easy way to support renewable energy, and reduce your impact on the environment. But many claims made by the electricity companies about these tariffs are misleading, so do they actually make any difference?
How do green tariffs work?
Green tariffs offered by the major electricity companies and smaller ‘green' companies come in three main types.
- Green supply - If a company sells you ‘green electricity' it must purchase the equivalent amount of electricity from renewable sources. For example, some companies claim to provide you with 100% of your electricity from renewables.
- Green fund - Some of your tariff goes to fund renewable energy projects.
- Carbon offsetting - Some of your tariff goes to support offsetting of the carbon emissions generated by producing your electricity.
What does 100% renewable energy actually mean?
Some companies claim they will provide you with 100% electricity from renewable sources. This claim conjures up images of ‘green electrons' flowing into your house from the nearest wind turbine, while in fact your electricity supply will still come from the same mixture of coal, gas, nuclear and renewable sources as before.
A green supply tariff really means that the company will generate as much electricity from renewable sources as you purchase from them, theoretically increasing the percentage of renewable electricity in the overall supply. If you don't have the time or money to buy your own wind turbines and solar panels, and therefore provide your own green energy, this seems to be the next best thing.
However, signing up to one of these green supply tariffs may not actually increase the proportion of electricity sourced from renewables, and you have to read the small print to decide whether this is the case.
All companies are obliged to provide some green electricity
The ‘Renewables Obligation', introduced by the Government in 2002, requires that all electricity companies generate a percentage of their electricity from renewable sources. Companies can generate this electricity themselves, for which they receive ‘renewables obligation certificates'.
Alternatively, they can purchase these certificates from companies which have generated surplus renewable electricity.
Companies have to spend extra money to reach these targets, and this money is provided by customers' electricity bills. Essentially, we are all subsidising the development of renewable energy whether we are on a green tariff or not. According to the National Consumer Council, the average contribution to renewable energy was 7 pounds per household in 2005-6, and it's rising.
Green tariffs should fund additional green electricity
If you are signed up to a green tariff, and especially if you are paying extra for it, you want to be sure that your money is paying for the production of green electricity, above and beyond that required by the Renewables Obligation. You should not be paying a premium for green electricity which the company would be producing anyway, to meet its targets.
The smaller, specialist companies may produce mainly green electricity, but the certificates they earn for doing this are often sold to other companies to help them meet their targets. Overall, no more green electricity is being fed into the supply.
So what can companies do to promote green electricity above the legally required targets? Renewables obligation certificates can be ‘retired' rather than sold to other companies, and a company that does this will be putting more green electricity into the grid than they need to.
A report on green electricity by the National Consumer Council in 2006 found that only Good Energy and Scottish and Southern Energy retired any of their renewables obligation certificates.
Green fund and carbon offset tariffs
Some tariffs allow you to support the development of renewable energy sources, or offset your carbon dioxide emissions, by paying a little extra for your electricity. If you decide to go with one of these tariffs, it is vital to find as much information as possible about where your extra money goes. You can then decide whether this is likely to have much impact on the future of renewable energy, or on your own carbon footprint.
Which green electricity tariff?
Energywatch and Green Electricity Marketplace provide details of the various green tariffs on their websites. You can find out how much extra it will cost you, whether the green electricity you pay for counts towards the Renewables Obligation, and whether any of your money is invested in renewables.
Will green electricity tariffs increase our use of renewable energy?
The percentage of electricity required to come from renewable sources is increasing every year, so we should all be receiving greener electricity in the future. The question is, will greater demand from customers speed up this process, and make signing up for a green electricity tariff really worthwhile?
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