Green tariffs: what's the extra cost and where does the money go?

You don't have to put up a wind turbine to get clean power - just pick a green tariff. Martin Hickman gives the lowdown

A A A

Want to do your bit to counter climate change? You can feel powerless when it comes to energy. About two thirds of the electricity in our homes is generated by burning coal and gas in power stations, which pump out two tons of carbon dioxide per home each year.

Much has been made of the potential to replace this dirty "brown" energy with the clean "green" power of the sun and wind.

But lavishing up to £15,000 installing solar panels or a wind turbine in your home is not always a viable option; planning or financial constraints and the hassle of changing the boiler can deter people.

So what can you do to switch to cleaner power?

One simple way is to buy "green energy". All the big energy companies and a few specialist renewables operators offer green energy tariffs. Under these schemes, in return for your business, your energy supplier will make a contribution to an environmental cause, or buy carbon offsets or renewable energy.

Environmentalists say such tariffs drive the market in renewable power, which comprises only 4.2 per cent of British electricity generation, despite the UK's enviable location for wind and hydro power. Gas accounts for 37 per cent, coal 34 per cent and nuclear 20 per cent.

Switching from dirty fuels to cleaner energy takes a few minutes online and does not require any new pipes, wires or a new meter. The electricity entering the home is the same, but your bills help the environment.

The only disadvantage is the extra cost (about £100 a year), though the pale green tariffs can be cheaper than your existing supplier.

So why, despite the spectre of climate change, and the fact that 64 per cent of people say they would consider switching to "green" energy, have only 1 per cent of the UK's 25 million households done so? Maybe they don't know about it. The six big companies - British Gas, Powergen, npower, EDF, Scottish Power, and Scottish and Southern - barely advertise their schemes.

The power industry does not seem keen to draw attention to the pollution presently emitted by the way we power our homes.

More worryingly, the power companies have been accused of misleading customers about the greenness of their green tariffs. Critics saygreen tariffs often amount to no more than a "repackaging" of the companies' legal obligation to buy a minimum amount of renewable energy.

Friends of the Earth, Greenpeace and the National Consumer Council claim the sleight of hand is linked to the operation of the Government's scheme to increase clean power, the 2002 Renewable Obligations Order.

Under the order, power companies must buy a certain amount of their energy from renewable sources, such as wind and solar power. The rate is currently 7.9 per cent but will rise annually to 10.4 per cent in 2010.

If the companies don't manage to supply enough power from renewable sources - and most don't - they can buy credits (Renewable Obligations Certificates) to make up the shortfall from companies that do.

Critics complain this allows big power companies to put a green gloss on their grudging adoption of their legal obligations. By offering a green option, they can appear to be virtuous without buying more wind or wave power to supply these "green" customers. They have to buy the energy anyway and in fact are buying less than the Government stipulates, and some of them are charging customers more for the privilege.

Another little known side effect of the system: some of the renewable power sold by green providers is effectively re-sold to the Big Six.

Take the case of Ecotricity. This renewable company generates 17 per cent of its energy from wind parks, and then sells this clean energy on to its eco-customers.

But this wholesome company legally can - and does - sell certificates for its excess renewable energy, that which surpasses the Government quota. Its customers are big conventional power companies thatare trying to fulfil their quotas.

Renewables companies say that if they did not sell on some of their credits, they would have to hike customers' bills. Critics insist that these loopholes tarnish the emergingmarket for green energy.

The National Consumer Council (NCC) is perturbed that companies play up their green credentials, despite only meeting their legal obligations. In a report in December, the watchdog criticised the majority of schemes - especially cheap ones offered by big energy companies.

British Gas, for instance, was singled out for not going beyond its legal duty; the environmental benefits to its 80,000 green-tariff customers were "very unclear".

The company's new managing director, Phil Bentley, acknowledged the problem at a recent press conference. "We will soon be announcing a new green tariff, which is even greener, as opposed to some other tariffs, which are a bit grey," he said.

Ofgem, the electricity regulator, . will soon issue new guidelines to companies. A spokesman said: "Suppliers really must demonstrate that their green tariffs go beyond the Renewables Obligation."

Greenpeace agrees that companies should improve their behaviour. "Sometimes they charge more for 'green' tariffs than for 'brown' electricity; sometimes they would have had to do it anyway but try to make themselves look green," said climate change campaigner Jim Footner.

Despite the confusion, environmentalists say that green energy is the key to Britain's sustainability.

According to utility website Uswitch, the UK has just 1 per cent of the world's population yet produces 2.3 per cent of the world's CO2, with more than a quarter (27 per cent) of these carbon emissions coming from UK homes.

Greenpeace says householders must go green on energy if the Government is to meet its target for cutting CO2 emissions from 1990 levels by 20 per cent by 2010.

For home-owners who want to harness green power, there are a few tariffs that offer "additionality" - the supply of extra renewables on top of the Government minimum.

Ten of the 12 green supply tariffs the watchdog examined did not surpass their legal obligations, but two did - Good Energy's and Scottish & Southern's RSPB Energy.

Scottish & Southern makes a £10 donation to the Royal Society for the Protection of Birds (RSPB) for every new customer on the tariff and contributes a further £5 each year they remain supplied. The money is used to help buy land for nature reserves. The energy comes from 100 per cent renewable sources.

Good Energy "retires" some of its renewables certificates. And it buys and supplies 100 per cent renewable energy from small and medium-sized projects such as solar roof panels.

The NCC said of its tariff: "For those customers who want a green electricity supply, pure and simple, this is probably the closest they will get to it."

Have you tried new the Independent Digital Edition apps?
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins wins the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
Sacha Baron Cohen is definitely not involved in the Freddie Mercury biopic, Brian May has confirmed
film
News
(David Sandison)
newsHow living on a houseboat meant I didn't officially 'exist'
News
news
News
Boyband star Brian Harvey is on benefits and on the verge of homelessness
people
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Refrigeration and Air Conditioning Service Engineer

£25000 - £28000 per annum: Recruitment Genius: A successful national service f...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Ashdown Group: Training Coordinator - Financial Services

£32000 - £38000 per annum + benefits: Ashdown Group: A highly successful, inte...

Recruitment Genius: Supply Chain Administrator

£8000 - £10800 per annum: Recruitment Genius: A Supply Chain Administrator is ...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor