Is Shell Energy’s green offer really as good as it looks?

Analysis: The firm bought First Utility last year and is switching all its 700,000 plus customers over to renewables in what appears to be a major policy shift

Going green? Shell is switching nearly a million customers to renewables (Shutterstock)

Oil company Shell powered up its arrival in the home energy market this morning by rebranding First Utility, the “challenger” supplier it somewhat surprisingly bought last year, as Shell Energy.

But there’s more: the newly renamed outfit, which has just over 700,000 customers, will also switch the whole lot over to 100 per cent renewables.

That’s something its research suggests a lot of us want.

Shell has been trying to bolster its environmental credentials for some time now, including linking part of its CEO’s bloated remuneration to meeting climate change targets.

But is this genuine or just another example of what environmentalists describe as “greenwashing” – an attempt to make a company and its products look more environmentally sound than they really are?

The renewable part of Shell Energy’s offer will be fulfilled courtesy of it taking out Renewable Energy Guarantees of Origin (REGOs).

These certificates ensure that each unit of electricity Shell’s customers use will be matched to a unit of renewable electricity that has been put into the grid by green generators in the UK.

They’re also used by the likes of Bulb and Octopus, rival energy providers set up to challenge the dominance of the sector’s “Big Six” firms (British Gas, E.On, EDF Energy, npower, Scottish Power and SSE).

But doesn’t Shell’s move just mean that, say, an E.On customer will get less of their power from renewable sources?

In theory, yes. But the idea is that as demand for the certificates grows, the market for energy from renewable sources will grow, creating new opportunities for generators and drawing further investment into a market that’s started to take off.

Shell’s involvement could, in theory, deliver a fresh shot in the arm. It has a much bigger brand than its renewable rivals and while it’s offer isn’t market leading, it is competitive. There are some people who might feel more comfortable about buying from Shell than they do about signing up with a company they haven’t heard of, all the more so given the financial difficulties faced by some energy market entrants in recent times. So the rebranding matters.

Shell also says it is very interested in securing its own renewable generation capacity, and was in on the bidding for the last set of wind farms the government announced. Although it didn’t win, I’m told it will be back.

So far so good.

Now the sting in the tail: it’s not entirely clear how all this works with Shell’s pledge of cheaper petrol, which is part of the offer being extended to those who sign up.

When I put this to the company, it pointed to its efforts to expand charging points for electric cars at its forecourts, and said that there will be a similar offer made available to electric car users who join Shell Energy. In the meantime, the oil giant says, this simply gives energy customers with petrol cars a reward for buying fuel from us that they were going to buy anyway.

That’s logical, but still a little cynical, and all the more so when you consider this. Despite the green power move, and Shell’s other public statements regarding climate change, the InfluenceMap think tank recently found oil majors (also including ExxonMobil, Chevron, BP and Total) have invested over $1bn of shareholder funds in the three years following the Paris Agreement into what it described as “misleading climate-related branding and lobbying”.

A report “Big Oil’s Real Agenda on Climate Change” argued that positive messaging about environmental issues was countered by an enormous investment in lobbying designed to “control, delay, or block binding climate-motivated policy” either by the oil companies directly or via the trade bodies they fund. Shell was in second place in terms of money spent, and although, along with Total, it did achieve a better overall grade than its rivals it still managed only a “D” on an A to F scale.

Shell has said it rejects the report’s premise, arguing that it has been clear about its "support for the Paris agreement, and the steps that we are taking to help meet society’s needs for more and cleaner energy”.

“We make no apology for talking to policymakers and regulators around the world to make our voice heard on crucial topics such as climate change and how to address it,” it adds.

Nevertheless, if there has been a conversion to the cause of fighting climate change in the halls of Shell’s London Lubyanka, the jury remains out on whether it is more than skin deep.

The firm’s confused messaging – buy green fuel and get cheap petrol too – could be seen as a symptom of that.