Are green energy tariffs really that sustainable?

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Across the UK, growing demand from households for sustainable energy is pressing energy companies to offer green energy tariffs. Established providers like EDF are being challenged in this regard by upstarts like Bulb and Octopus Energy. Greenwashing occurs when an institution exaggerates their environmental credentials to improve their public image. With this problem in mind, the authenticity of these claims is up for debate.

A huge challenge for companies in a range of sectors is to prove to the consumer that their product is sustainably made. A sizeable proportion of UK emissions comes from our homes and therefore those energy companies should make a transition to sustainability as well. That transition requires renewable energy to become cheaper on a huge scale. The cost of wind energy in the UK has decreased massively in recent years but there are still concerns associated with the cost of sustainable power for our homes. The protests of the ‘gilets jaunes’ in France in 2018 against green fuel taxes show how efforts for a transition to sustainable energy can provoke public outcry.

If the entire UK population switched to renewable energy tariffs, there would not be enough supply

Concerns of greenwashing further hang over energy companies. Shell Energy is offering 100% renewable energy to homes in the UK. However, the company itself has a long history of avoiding responsibility for a transition away from fossil fuels. Recently it was found guilty in a Dutch court of underperforming in its decarbonisation duties. This landmark case shows how institutions masquerade as environmentally friendly but are not putting the effort in for transition.

The price of renewable energy is already decreasing which has helped increase demand. However, if you sign your house up to 100% renewables, what are you actually getting? It is impossible to ensure that the electricity delivered to your home is renewable in the current system. Once renewable energy is generated onto the grid there is no way to separate it from electricity produced from fossil fuels. The only way to be sure of directly receiving renewable energy would be to install your own solar panels or wind turbines.

A green energy tariff gets around this problem by offering the customer an alternative. Instead of directly supplying a house, the energy company monitors the household energy usage per hour and supplies the National Grid with an equivalent amount of renewable energy. Instead of buying renewable energy for their home, the customer is spending money for that energy to be put onto the grid.

The energy companies need a certificate called a Renewable Energy Guarantee of Origin (REGO) in order for this transaction to occur. These REGOs are given by the market regulator to the source (for example wind farm or hydroelectric plant) of the renewable energy and are then up for sale along with the energy itself. The issue is that these REGOs can be bought cheaply in a completely separate market without the need to buy the actual energy derived from wind or solar. Companies have the ability to exaggerate their support for renewables, buying the certificate and not the green energy. The market regular Ofgem as well as the brand Which? have reported on the dangers of this occurring.

The only way to be sure of receiving renewable energy would be to install your own solar panels

Energy providers like Good Energy and Ecotricity make additional funds available for renewable energy or other projects as well as having direct contracts with sustainable generators. However, this authentic green conduct comes at a higher price. The issue is that currently there are different levels to a company’s green label. Some may be genuine and others may achieve sustainability through carbon offsets or simply greenwash their product.

The ultimate difficulty is that the National Grid is not totally sustainable, we still use some coal and a great amount of gas. Both are harmful to the environment. If the UK population in its entirety switched to renewable energy tariffs, there simply would not be enough supply.

All of this shows that demand is key. As a desire for sustainable energy in houses increases, energy suppliers should work to meet that demand. If desire for sincere green labelling increased, and, better still, demand for private and public investment in renewable energy grew further, then the grid would be much better prepared for transition.

Image: Anna Jiménez Calaf via Unsplash.

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