DEPARTMENT FOR
ENVIRONMENT, FOOD AND RURAL AFFAIRS News Release (187/08) issued by
The Government News Network on 16 June 2008
The Department for
Environment, Food and Rural Affairs (Defra) is today advising how
consumers and businesses can establish what benefits their green
electricity tariff delivers above and beyond the supplier's
existing legal obligation to provide electricity from renewable sources.
Environment Secretary Hilary Benn said:
"I want to make sure that the green tariff market, which has
grown rapidly over recent years, is clear for consumers and
businesses about the precise benefit their tariff brings.
"Many energy suppliers offer green tariffs to businesses and
domestic customers who want to make a contribution to
environmental projects or help tackle climate change, but these
differ in what they deliver."
To help make the situation clearer, Mr Benn has:
* asked Ofgem to provide detailed guidelines for suppliers of
green tariffs with a view to developing a rating system that will
distinguish between the different environmental potential of green tariffs;
* written to the Chief Executives of energy suppliers to ask them
to provide the clearest possible information about the benefit
their green tariff brings for the environment; and
* announced that Defra will change its guidance on corporate
reporting so that it reflects the latest evidence on the benefits
of green tariffs.
He said:
"This market is changing rapidly, partly because we have
committed to the largest expansion of renewable electricity in our
history. We will shortly be consulting on a range of measures that
will encourage energy suppliers to increase their investment in
renewable energy.
"I want to be sure that people and businesses who buy green
tariffs have clear information about what environmental benefits
they are getting linked to renewable electricity and whether this
is in addition to that which energy suppliers must provide anyway.
As with any product in the marketplace, we need to know what we
are paying for, particularly as in some cases, choosing the tariff
may cost more."
Defra's Best Practice Voluntary Reporting Guidelines advise
business on how they should calculate their emissions from their
energy use. When the guidelines were produced in 2005, the
department advised that green tariff electricity could be reported
as zero emissions, with the intention that increased demand for
renewable energy would draw through increased supply.
Mr Benn added:
"It is increasingly difficult to demonstrate that buying a
renewable electricity tariff is offering additional carbon
emissions reductions compared with what suppliers are required to
source to meet the Renewables Obligation. It is now clear that
businesses signed up to green tariffs based on the evidence
available at the time but their choices have been producing only
limited additional renewable generation capacity. This also means
individuals opting for green tariffs may not have been generating
the environmental benefits they anticipated their actions would encourage.
"I have therefore decided that we will change the voluntary
corporate reporting guidelines to bring them into line with
current best practice and provide coherent carbon accounting. This
will mean that for the reporting year 2008-9, best practice is
expected to be for businesses to use a grid average rate - average
rate of carbon emissions associated with electricity transmitted
on the national grid - unless their supplier can prove the carbon
benefits are additional. This is to reflect the existing evidence
that the additional carbon benefit of green tariffs is not
transparent. However, we do recognise that some existing and
future green tariffs may well deliver broader environmental
benefits and we will consult on how these benefits should be treated."
In support of Defra's announcement The Carbon Trust has
issued specific guidance to business on the issue of green
tariffs. Tom Delay, Chief Executive of The Carbon Trust said:
"We strongly support the move made by Defra today as the
green tariffs market currently lacks transparency, delivers
minimal additional carbon savings and suffers from significant
double counting problems. Renewable power is key to delivering
the UK's carbon reduction targets. However, a coordinated
approach is required to ensure that green tariffs deliver genuine
carbon reductions and that the benefits of renewables can be
accurately reported by businesses towards their carbon reduction targets"
Ofgem Chief Executive, Alistair Buchanan, said:
"Ofgem is eager to clear up the confusion among consumers
over green tariffs. We have worked for some time on revising our
guidelines on how suppliers should market their green tariffs and
last November we proposed an accreditation system that will make
clear which tariffs offer real environmental benefits.
"We have since worked on a revision of the proposal based on
consultation with stakeholders on the complex issues surrounding
green tariffs and we intend to publish a revised accreditation
scheme proposal in July, consistent with Defra's position on
carbon reporting."
The expansion of the green tariffs market reflects the fact that
more and more people want their energy use to have benefits for
the environment. This growth in green tariffs has sent a clear
signal to energy suppliers that people want them to do more on the
environment, and promote renewables. It has also supported the
Government in mandating energy companies to produce an ever
greater share of renewable energy.
Notes to editors:
1. Some existing green tariffs may well deliver broader
environmental benefits. Following the publication of Ofgem's
guidance to suppliers later this year, Defra will consult on how
any broader environmental benefits, possible long term carbon
benefits and any genuinely additional carbon benefits of green
tariffs could be treated in its voluntary reporting guidelines.
2. Tariffs from different suppliers can offer electricity
produced from renewable sources, electricity from low carbon
sources such as combined heat and power, carbon offsets from
accredited schemes or wider environmental benefits such as
planting trees.
3. The revised Defra Greenhouse Gas Conversation Factors,
including the guidance on the treatment of green tariffs can be
found at: http://www.defra.gov.uk/environment/business/envrp/conversion-factors.htm
4. In 2005, Defra produced 22 Environmental Key Performance
Indicators to help businesses address their most significant
environmental impacts, and report on them. Many companies use the
guidelines to help produce their voluntary Corporate Social
Responsibility reports.
5. One of the KPIs covers greenhouse gas emissions. This is
supported by conversion factors, provided by Defra, that help
companies convert their energy use, for example from electricity
or air travel into greenhouse gas emissions. The conversion
factors have since 2005 suggested that companies could convert the
emissions from the purchase of green tariff electricity as zero emissions.
6. The way that the conversion factors recommend companies treat
green tariffs will now be changed to say that:
* For reports for the reporting year 2007-8 - if organisations
have used a zero rate, they should, where practicable, include a
footnote to explain that they are using a green tariff.
* For the reporting year 2008-9, the guidance will outline that
Government expects that for most green tariffs, businesses use a
grid average rate to reflect the existing evidence that the
additional carbon benefit of green tariffs is limited.
7. Ofgem will consult on their proposals for revised guidance to
suppliers on green tariffs next month for conclusion in the Autumn.
8. Following this, Defra will consult on how any broader
environmental benefits, possible long term carbon benefits and any
genuinely additional carbon benefits of green tariffs could be
treated in the Defra voluntary reporting guidelines.
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