EDF warns against green tariff hype

Senior exec warns that the benefits firms gain from green tariffs could be being overstated

Firms buying electricity through green tariffs should be careful not to overstate their environmental credentials, according to a senior executive at energy giant EDF.

Addressing delegates at this week's Corporate Climate Response conference in London, EDF's head of marketing strategy Jim Butler warned that a number of " myths" had developed around green tariffs that had led some firms to overstate the impact that support for such tariffs has on UK carbon emissions.

He said many firms were clinging to the misconception that by signing up to a green tariff they are "encouraging more renewables" to be built. However, the reality is that with demand for green energy already outstripping supply it is the government's Renewable Obligation Certificate (ROC) that is the primary driver behind renewable energy expansion plans.

Butler explained that for a typical wind farm, energy suppliers can sell one Megawatt hour of power for between £40 and £60, and raise a further £40 to £45 from the ROC subsidy. However, they will only charge a premium of £4 to £5 for the energy through a green tariff.

Consequently, the ROC is worth about 10 times more to the supplier than the green tariff and, according to Butler, it is this that is encouraging investment in renewables. He said that any firm buying a green tariff could not credibly claim that it is helping to reduce overall UK emissions, adding that the failure to accelerate the development of renewable energy capacity is a direct result of planning issues rather than any concerns among suppliers over customer demand for green energy.

He also warned that firms should be careful to ensure that any marketing they undertake to promote their use of renewable energy does not overstate their green credentials, adding that while Defra guidelines said that firms buying in energy under certain green tariffs could promote the practice as zero carbon, it has not always been consistent in this position.

Butler advised that energy purchasers should also investigate the exact details of any green tariff closely and ensure that they are aware of which type of renewable energy they are buying, noting that there was a distinct difference between zero-carbon energy sources such as wind and solar power and low-carbon options such as biomass.