The great green electricity con

In his first of his weekly Greenwash columns, Fred Pearce finds that "green" electricity tariffs are often far from what they seem

Fred Pearce
guardian.co.uk,
Thursday October 23 2008 00.01 BST

The offers are tempting for any self-respecting green. For a small premium, or sometimes no premium at all, you can make sure that only clean, green, renewable electricity comes down the grid into your home. But what do you get for your money? Does the planet really benefit? Is this greenwash?
Most of us are not foolish enough to suppose that our electricity supplier specially packages up "green energy" for us, and shoves it down the wires. We just get regular electricity, of course. But most of us would suppose that if we pay a green tariff, someone somewhere generates more renewable energy – and burns less fossil fuel - than they would if we hadn't done our bit for the environment.
But no. In fact, we are usually subsidising the power companies to do what they are required by law to do already. Worse, despite us paying through our green noses, they still can't meet their targets. Then they rub our noses in it by selling what "green electricity" they do produce over and over again. This is all within the law, of course. But that is because the government's green laws are a mess. In many cases, buying green electricity is not so much greenwash as a full-scale green con. Certainly, that's the view of Virginia Graham, who six years ago drew up the first set of guidelines on green tariffs, for the industry regulator Ofgem. She is now wiser and more cynical. "It suits the companies for people to think they are getting green electricity if they sign up to green tariffs," she says. "But in most cases they are not, and people are being misled."
Let me explain how the system works. Under government rules, electricity suppliers have to make sure that a certain percentage of their electricity is generated from renewable sources, like wind turbines, solar panels and burning wood or plants. This is called the renewables obligation.
The percentage rises each year. For the year ending March 2007, the most recent for which there are published stats on how the companies performed, the obligation was 6.7%. But the companies collectively only managed to generate 4.7% of their electricity from renewables.
Most of the big companies missed the target by a country mile. EDF managed 5%, E.On 3.6% and British Gas 4%.This may not all be the fault of the suppliers. It would take another article to explain what has gone wrong with rolling out British renewables. But the fact remains that the suppliers are selling green energy, often at premium prices, to green-minded customers as if this were on top of their existing commitments.
Npower's juice tariff offers "clean green energy at no extra cost to you or the planet". The company says it gets sufficient power from offshore windfarms to supply its juice customers. Maybe so. But according to its fuel-mix declaration, only 3% of its overall supplies were renewable last year – less than half its obligation.
To shed some light on this mess, Ofgem, the industry regulator, has been talking to suppliers for over a year now about setting up a mandatory system of labelling and an independent auditor for green tariffs.
But insiders say the industry has been watering down the proposals, and no amount of fussing over the detail is going to get round the central point. Power companies that do not meet their legal renewables obligations are telling porkies if they suggest that when you sign up for their green tariff, they will deliver more green electricity. It just isn't so.
To be fair, some tariffs do offer something a bit more certain. They promise to plant a tree for you, or put money into research into renewables. The EDF green tariff, which advertises that it "lets you choose renewable energy for your home", funds solar panels on school roofs and similar projects.
But until they meet their existing renewable obligations, and demonstrate that people buying green tariffs will push them beyond the legal minimum, they won't get an extra penny out of me.
The story doesn't end there, however. You see, green electricity is not just for greens. Not even mainly for greens. The biggest buyers are companies. When their electricity comes with a green label, they have taken to going around calling themselves "carbon neutral". Which is good PR. BT has made great play of having cut its carbon emissions by more than half by buying green electricity.
So levy payers have been very willing to pay premium prices to buy "green electricity". So keen, in fact, that they buy more green electricity than is being generated in the first place. It is hard to believe that this is possible within the law, but I am told it is. An electricity supplier that has access to, say, two gigawatt (GW) hours of renewable electricity, can sell 4GW-hours labelled as renewable, says Graham. "Renewable electricity is often being sold twice, perhaps more. Double counting is enormous."
The government may be starting to get a handle on all this. In August, the environment secretary, Hilary Benn, announced plans for a crackdown on companies making dodgy claims about their carbon neutrality.
At this point, you might shrug your shoulders and walk away from this green fantasy land. But not so fast. Because it turns out we have been paying for it all. All electricity customers, regardless of what tariff they are on, pay an average premium on their bills of £10 a year specifically to help pay the electricity suppliers meet their renewable obligations.
We know they don't fully meet those obligations. But surely every scrap of green energy that they do produce is ours, paid for with our £10. But instead they are selling it to others, several times over. In the end, the biggest con seems have been perpetrated not on the buyers of green electricity, but on the rest of us.
• How many more green scams, cons and generous slices of wishful thinking are out there? Please send your examples of greenwash to greenwash@guardian.co.uk or add your comments below