The UK energy sector is undergoing a profound transition. Technologies such as wind turbines and solar photovoltaics, first deployed at scale 20 years ago, now account for over 40% of the UK’s electricity mix. Either contributing to or shadowing this transition (and opinions do sharply differ) energy retailers have increasingly offered ‘green electricity’ or ‘100% renewable’ tariffs to their customer base. Seen as an easy climate action for households and businesses, concerns have been raised regarding the transparency of tariffs and whether they truly support decarbonisation.
This is the context behind a recent BEIS Call for Evidence, to help understand challenges and consider the case for reforms. Drawing on relevant practice and surveys, IEMA has responded and raised some key issues. One issue is to understand how organisations are themselves using green tariffs and their influence (positive or negative) on transition decision making by organisations, especially in the growing context of net zero.
The process of ‘matching’ renewable generation to supplier tariffs is facilitated by the REGO Scheme (Renewable Energy Guarantee of Origin). For smaller organisations, green tariffs can provide an opportunity for ‘action’, for example where a tenancy arrangement might not allow for on-site renewables. However in some situations, green tariffs and REGOs can be used in association with too simplistic carbon accounting or could disincentivise some initiatives to reduce energy consumption. Context is everything and practice differs between sectors.
Climate change practice surveys by IEMA have included questions on approaches and green tariffs and how they are used within organisational carbon (GHG) accounting and reporting. Over a decade, responses indicate a continuing variation in practice. Whilst the overall use of green tariffs has increased by around 23%, it is also clear that corporate reporting practice is mixed and there is confusion between some approaches and reporting schemes and of course, concerns around claims and greenwashing.
IEMA’s response to the call for evidence proposes that improved consumer information is required and should be updated to reflect changes in the market and also the context of net zero. More specific guidance is proposed regarding the types of green purchasing options available and the UK’s environmental reporting guidance for organisations should be updated. For transparency purposes, location based as well as market based GHG accounting should both continue to be used by organisations in their annual reporting (market-based ‘zero carbon’ approaches should not be used in isolation).
BEIS describe their Call for Evidence as “our first step to help us understand the challenges in this area and consider the case for reforming the regulatory framework which underpins green electricity tariffs and some wider environmental carbon accounting schemes”. It notes the context today has changed to an economy where renewable and low carbon generation have become the predominant form of energy in the grid mix. In separate international developments, the growth of organisational net-zero approaches is highlighting a need for clearer standards for organisations (non-state actors) even mentioned by the UN Secretary General in his closing statement at COP26.
In this formative period of new standards and developing approaches, green tariffs and other component contributions within net zero carbon accounting require careful use. IEMA has already provided explainer guidance and updated principles to support professionals navigating the net-zero landscape. We look forward to contributing to further developments in 2022 and working with IEMA members to build understanding and share good practice.
To learn more you can view the IEMA response here.
Posted on 8th December 2021
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