Regulator sets tougher green energy guidelines
LONDON (Reuters) - Energy suppliers must abate carbon emissions by at least a tonne for every residential customer signed up to "green" electricity tariffs under new guidelines set by energy regulator Ofgem on Wednesday.
Suppliers in Britain are already obliged to produce some electricity from renewable sources, for which they receive a subsidy.
Some have marketed "green" tariffs to environmentally-concerned customers, often at a premium to standard price plans, without doing more to combat climate change than the legal minimum.
Britain's big six energy suppliers and green energy retailer Good Energy have signed up to the Ofgem scheme which means they have to show environmental benefits, beyond those they are already required to achieve, for each residential customer they sign up.
"Good Energy has been calling for more formal guidelines on green supply for several years to allow customers to differentiate between genuine green tariffs and mere 'greenwash'," Good Energy founder and CEO Juliet Davenport said.
Ofgem has now asked them to start work immediately on setting up an accreditation scheme that will enable householders and small business customers to easily compare green offerings based on the carbon emissions they reduce.
If the environmental measure is carbon offsetting, suppliers must pay for someone else to reduce their emissions by at least one tonne a year for every household account and will have to offset more carbon for small businesses, according to energy use.
Other environmental activities that could qualify include investments in community-based renewable energy projects and suppliers helping improve energy efficiency.
Britain's biggest energy suppliers are Centrica (CNA.L), ScottishPower (IBE.MC), RWE npower RWEGn.DE, EON UK (EONGn.DE) Scottish and Southern Energy (SSE.L) and EDF Energy (EDF.PA).
Smaller independent green energy company Ecotricity, which aims to get about half of the electricity it sells this year from renewable sources, has not signed up to the voluntary scheme which could mean it makes less money from selling clean energy credits.
"In these guidelines Ofgem are accrediting everything you can imagine except the thing that really counts -- green electricity," Dale Vince, director of the company that gets four times as much of its energy from carbon-free sources than required.
Companies that produce more renewable electricity than they are required to can sell the resulting Renewable Obligation Certificates (ROCs) to generators who have fallen short of their targets.
They can also apply to Ofgem to have their output exempted from Britain's Climate Change Levy, which has to be paid by all businesses, and get Levy Exemption Certificates (LEC) which they can also sell.
Under the new guidelines both these potential sources of income for green energy producers is under threat.
"If you want to show that something is additional you will have to retire the LECs associated with that extra renewable output," a spokesman for the regulator said.
Ecotricity, which gets most of its power from wind, argues that getting rid of LECs would harm wind power generators, forcing them to pass on the cost of the retired LEC to customers.
(Reporting by Daniel Fineren, editing by Anthony Barker)
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