Warnings over energy greenwashing as households switch to eco tariffs en masse

80 per cent of gas and electricity switchers picked green energy tariffs in 2020. But just how green are they?

The Hywind Scotland wind farm off Peterhead in Aberdeenshire (Equinor)

Energy suppliers touting green tariffs are being accused of ‘greenwashing’ in a bid to tap into a boom in eco energy switching, experts have warned, as bill payers try to be more environmentally responsible.

More than 80 per cent of all households that switched the supplier of their gas, electricity or both in 2020 selected a green energy tariff.

The figure represents a huge increase in consumer appetite for eco energy compared with just 43 per cent in 2019 and barely a fifth in 2018, comparison site comparethemarket.com has found.

But few bill payers realise that an energy tariff can be labelled as green/renewable if an energy supplier purchases Renewable Energy Guarantee of Origin certificates for a small fee. The supplier, incredibly, is not required to purchase power directly from renewable generators.

Around nine million households currently have a ‘green’ deal with their energy supplier, separate figures from Uswitch.com suggest. But over a quarter think a green tariff means that the energy directly provided to their home is 100 per cent renewable, and a further 42 per cent don’t know.

The latest Government fuel mix disclosures for the last tax year - the figures that reveal what proportion of the energy being received in our homes comes from different kinds of sources - shows that less than 40 per cent of energy is directly sourced from renewables.

“On the surface, 81 per cent of households choosing green tariffs seems really encouraging, but the reality is that not all these tariffs are as “green” as people may hope,” says Peter Earl, head of energy at comparethemarket.com. 

“Understandably, there has been growing demand from customers to be able to make a difference by switching their energy supply to a more sustainable source. Providers have been quick to latch on to this emerging trend, with the majority of tariffs on the market now labelled as green. However, environmentally conscious households might not be getting exactly what they had hoped for.”

Since the level of power directly sourced from renewable energy appears to track behind the level of tariffs that claim to be green, some suppliers seem to be generously marketing tariffs to consumers as green or renewable, when in fact the fuel is not sourced sustainably.

“More needs to be done collectively by the industry to make the fuel mix of tariffs more transparent for customers, and we need stricter criteria before a tariff can be labelled "green" or "renewable",” Earl adds.

Uswitch.com has this week launched a Green Accreditation for green tariffs, to help consumers understand the different approaches suppliers are taking on renewable energy tariffs. 

It is designed to explain and show the differences between energy tariffs, how far suppliers go to support renewable energy generation, and debunk myths like the belief that burning gas is ‘green’, and that wind generated energy is not.

The figures come as the government announced it was scrapping its £1.5bn Green Homes Grant scheme, launched just six months ago as a key part of the ‘build back better’ promise against the backdrop of the pandemic.

Originally expected to create thousands of jobs and demonstrate the government’s commitment to reducing households’ carbon footprints ahead of the UN climate talks, known as COP26, which the UK will host in Glasgow in November this year.

Instead, from more than 123,000 applications for grants of up to £10,000 for energy efficiency improvements including double glazing and insulation, fewer than 6,000 projects have been completed.

Not only has the abandonment left the UK without a plan to tackle one of the largest sources of greenhouse gases, but households with inefficient systems like single glazing will now have to find the full amount to improve their homes, reduce their emissions and cut their bills.

But these aren’t the only problems plaguing bill payers.

Earlier this month, energy industry regulator Ofgem reported that 18 suppliers had failed to correctly protect customers’ tariff prices when they decided to switch supplier or tariff.

They failed to implement price protection rules which protect a customer’s tariff price when they decide to either switch suppliers or tariffs after a price increase.

Most of the failures were down to suppliers not having adequate arrangements in place to make sure the protections were applied in full when customers decided to switch, and several self-reported to the regulator.

But the mistakes mean more than one million customers were overcharged by more than £7.2m.

The customers affected included those on standard variable and fixed term tariffs who switched suppliers or tariffs. Most of the failures were down to suppliers not having adequate arrangements in place when customers decided to switch.

Most of the failures were down to suppliers not having adequate arrangements in place to make sure the protections were applied in full when customers decided to switch.

The suppliers have since agreed to refund all affected customers, and in some cases make goodwill payments, to the tune of £10.4 million.

Ovo Energy, British Gas, Shell, Scottish Power and SSE have the largest numbers of cases to settle, at between 132,000 and 240,000 each.

Where it has not been possible to process refunds, the suppliers have agreed to make payments to the energy redress fund.

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