A UK electricity supplier has been prohibited from claiming its biomass energy has “0g of CO2” by the UK’s Advertising Standards Authority (ASA), with the ASA requiring the supplier to state the entire life-cycle CO2 of the fuel rather than the net carbon emissions from burning it.
An advert for Good Energy, seen in September 2017, claimed “An average unit of electricity in the UK (a kilowatt hour or kWh) results in 360g of carbon dioxide (CO2) emissions and 0.007g of radioactive waste. But the electricity we supply contains 0g of CO2 and no radioactive waste.”.
A complainant, who understood that Good Energy made use of biomass energy, which they understood produces more CO2 than coal when burnt, challenged whether the claim that the electricity supplied by Good Energy contained 0g of CO2 was misleading.
Good Energy said consumers would understand the claim “the electricity we supply contains 0g of CO2” to mean that the net emissions of C02 from the generation was zero. The firm, for which biomass accounts for 18% of its fuel mix, stated its approach to calculating CO2 emissions was consistent with the recommendations of the World Resources Institute (WRI), and stated it used a greenhouse gas protocol (GHG protocol) recommended by the UK’s Department for Food and Rural affairs (Defra) as the best way to understand, quantify and manage greenhouse gas emissions. The firm further provided a fuel mix disclosure table compiled by the UK’s Department for Business, Energy and Industrial Strategy (BEIS) which stated renewable energy sources produced 0g/kWh of CO2 compared to coal which produced 925g/kWh of CO2. Good Energy therefore believed that the claim was in line with government guidance and the GHG Protocol and was the most appropriate way to present this information.
However, these explanations were rejected by the ASA, which considered that, in the context of an electricity firm web page, consumers would interpret the claim “contains 0g of C02” to mean that all of the energy that Good Energy bought and generated was from sources which did not produce any net CO2 over their full life cycle. The ASA considered the claim therefore went further than the other statements on the advert that stated that they supplied energy from renewable sources only.
According to the ASA, the advertising code requires environmental claims to have been based on the full life cycle of the advertised product, unless the marketing communication stated otherwise, and must make clear the limits of the life cycle. “We understood that although the level of carbon emitted would vary, in general over its full life cycle, biomass energy production was not carbon neutral,” said the ASA.
Direct or indirect emissions?
In its decision prohibiting the advert, ASA makes a supply chain distinction, applying different rules to electricity suppliers (even those which purchase their electricity rather than generating themselves) and firms which purchase electricity for their own use. “Whilst we acknowledged [WRI’s GHG Protocol Scope 2] did allow for the exclusion of “indirect emissions” (such as those from transportation) from the calculation, we understood that Scope 2 was aimed at companies who wanted to report on the consumption of electricity purchased by them, i.e. to calculate their own company’s carbon footprint. The Protocol guidance stated that production and transportation emissions might [then] instead be placed under the electricity generator’s inventory where they were likely to be classed as direct emissions. Whilst we acknowledged that Good Energy purchased energy produced from biomass rather than producing it themselves, we considered that consumers would consider the CO2 produced across the full life cycle of their entire fuel mix to be equally relevant to this claim. We therefore considered that the full life cycle of carbon emissions from all of the energy supplied by Good Energy should have been treated in the same way in regards to the CO2 claim.”
In applying this approach, ASA concluded the advert was misleading. The ad breached CAP Code (Edition 12) rules in “Misleading advertising”, “Substantiation” and “Environmental claims”, and ASA has warned it is not to appear again in its current form.
Market confusion over “renewables”
For its part, Good Energy has been active in raising awareness of the facts behind renewable energy in the UK, highlighting some common schemes whereby consumers might be misled into the “renewable-ness” of the energy they purchase. A survey conducted by Good Energy and YouGov last year found that whilst over 8 in 10 (84%) of the UK consider ‘renewable energy’ to be important to them, 58% do not have a very good understanding of what it actually means.
The research paints a picture of confusion in a market in which there are a growing number of renewable energy providers, indicating that many are failing to be fully transparent with consumers.
According to Good Energy, Ofgem’s Renewable Energy Guarantee of Origin (REGO) scheme provides certificates for each unit of electricity generated by a renewable source. However, these certificates can be purchased without the energy they are associated with at very low cost, which several suppliers are taking advantage of in order to offer low cost ‘renewable’ tariffs which do not encourage any additional renewable energy generation. This is leading to a perception that you no longer need to pay more for 100% renewable electricity, yet customers are unaware of how their energy bills go back into funding renewable generation.
Good Energy conducted some industry research asking suppliers which provide a ‘100% renewable’ electricity tariff how they do so, and found the following:
|Company A||Owns and operates its own wind and solar farms, from which it sources around a third of its energy. The rest is from the National Grid, with cheap REGO certificates purchased separately in order to call it ‘renewable’.|
|Company B||Purchases 20% directly from renewable generators, with the REGOs to show for it. But the remainder is REGO only.|
|Company C||Offers a ‘100% renewable electricity’ tariff with a £5 a month (£60 a year) premium, promising to buy the REGO certificates to account for your usage. Purchasing the REGO certificates to cover an average household’s annual usage costs about 47p.|
|Company D||Focuses on a digital strategy to drive costs down for customers, and offers ‘100% renewable electricity’ as an additional benefit. But admits 100% of its electricity is covered by REGO certificates purchased independently of the energy, stating ‘we’re a retailer, not a generator’.|
Juliet Davenport, founder and CEO of Good Energy, said “There are some positives to take out of our research, not least how many people value the importance renewable energy. We’ve seen a big surge of interest in the market in the last two to three years, which is great, but it’s also why it’s so important that people know what they’re buying and investing in.
“You choose a renewable energy provider because you want to make a difference in combatting climate change. We don’t believe customers would be happy if they knew that their ‘100% renewable’ tariff was making effectively zero impact on renewable energy generation, and by extension any efforts to move towards a cleaner, greener future. This is also against a backdrop of reduced government support, which is translating into a huge drop off in renewable investment.”