As highlighted last week, finding any sort of corporate green energy tariff is currently proving a major challenge for many firms, but according to some experts finding a good green tariff is even harder still.
Not only is there a huge shortfall of renewable energy but there is also a growing concern that some green energy tariffs are not having the environmental benefits customers may expect.
According to Dale Vince, founder of green energy specialist Ecotricity, the main problem with existing green tariffs lies in the difference between old and new green energy. He argues that many green tariffs rely on old renewable energy sources and that firms that buy green energy from these existing renewable sources - some of which are 50 years old - are having no net impact on UK carbon emissions.
Vince argues that new renewable energy sources provide the only truly green energy, as it is they that result in a net reduction in overall carbon emissions. He claims Ecotricity seeks to address this problem by reinvesting more per customer than rivals in building new wind farms.
Larger rivals counter that they too are committed to building new capacity and that Ecotricity can only spend more per customer on these new sites as it is a relatively small company investing in smaller scale projects.
"For the major energy suppliers it comes down to the capacity of the country to support renewable energy capabilities," explains Simon Wallwork, SME energy products manager at British Gas Business. "[Ecotricity] can [invest more per customer] because it is a niche player working on smaller projects. The major players simply don't have the ability [to invest the same level per person] because there are issues with the overall capacity, but we are investing a lot more in total."
Other experts are concerned about what types of energy sources are being used to fulfill suppliers' green tariffs. A wide range of so called low carbon energy sources are exempt from the climate change levy and as such have been tied into many suppliers green tariff schemes. But while energy sources such as biomass are far cleaner than traditional fossil fuel-based power stations some critics claim they still produce some carbon emissions.
"One of the problems with green tariffs is that there are a lot of definitions of renewables," says Juliet Davenport, chief executive of Good Energy. "Energy from waste for example is often deemed reneweable, but you tend to be incinerating plastics which are made from oil so is it truly renewable? Customers often don't get the distinction and will go to the supplier and say we want renewable energy but don't specify what type. That's fine if you just want the climate change levy exemption, but if you are doing it for CSR reasons then you need to ask what renewable energy you are actually getting."
Jim Butler, head of marketing strategy at EDF, said that the supplier had attempted to clarify where it is sourcing its energy from by offering genuinely renewable sources under a green tariff and Combined Heat and Power (CHP) sources under the label low carbon.
Some other suppliers have taken a similar approach and offer distinct green and low carbon tariffs, but there are no clear standards governing what can and cannot be included under the label green tariff and rumours abound that some customers are unwittingly signing up to green tariffs that they believe are zero carbon but in fact rely heavily on low carbon technologies.
The legal requirement for energy suppliers to keep track of which energy is climate change levy exempt means the situation for business customers is not as bad as that found in the consumer market, where a controversial recent National Consumer Council report claimed that some green tariffs are providing pretty negligible environmental benefits. But several commentators maintain that greater transparency is required and firms need to be made more aware of the green credentials of the energy they are buying.
Similarly there are also fears that some green tariffs are effectively slapping a premium on renewable energy that suppliers are legally forced to generate under the government's renewable obligations programme. "Some companies are offering green tariffs and they aren't doing anything beyond their current renewables obligations [of 5.5 percent of energy coming from renewable sources]," says Nigel Cornwall of energy market analysts Cornwall Energy Associates. "They are charging extra for something they are already obligated to deliver."
Ofgem did attempt to tackle these problems back in 2002 with a set of guidelines insisting that green tariffs should be fully transparent and rely on green energy that "goes beyond what is already required by law". However, these guidelines were entirely voluntary and have since lapsed.
A spokesman for Ofgem said that it was currently working on a new set of guidelines and considering whether or not to make these legally binding. But Cornwall is in no doubt that a formal certification scheme for green tariffs is urgently required. "Green tariffs are a sensitive area at the moment and there really should be someone accrediting them," he says.
In the meantime firms signed up to green tariffs are being advised to keep a close eye on their supplier and ask for proof of their energy's green credentials. "It is always prudent to verify your suppliers' claims down the line," recommends Davenport. "It is up to you as a customer to make sure you get reports at the end of the year and proof of where your energy has come from."
However, according to Wallwork not all customers are taking these basic precautions. "Demand is outstripping supply and some customers aren't looking at the tariffs closely enough," he observes. "Any supplier you talk to I'd advise finding out about how the product works. Just saying I want to buy green and signing up to the first tariff you see is not good enough."
Alongside all this confusion perhaps the biggest concern surrounding the stampede towards green energy is the fear that some large firms are misguidedly trying to use green tariffs as a silver bullet for all their environmental problems.
"What firms should be doing is putting their green tariff purchasing into the context of a broader sustainability agenda," says Butler. "The number one priority should be energy efficiency. The next step could be installing turbines or other renewable energy technology on site to reduce the amount you take from the grid. Then the third step should be to buy renewable energy, and even then to do it in a responsible manner, by setting reasonable targets for purchasing and not demanding all your energy from green sources."
Green energy tariffs may be the latest must-have for many environmantally conscious businesses, but despite their undoubted environmental benefits firms must be careful to remember the old truism that the greenest unit of energy is always the one saved.
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