Ofgem awards 'stars' for environmental energy

Businesses looking to reduce their carbon footprint will be able to compare the environmental credentials of green energy deals more easily under new proposals from Ofgem which will award all green tariffs a "star rating."

Under the plans from the energy regulator, published today, a star-accreditation scheme would identify how much carbon each tariff uses on a scale of one to five, and would apply to green tariffs offered to businesses, and also to domestic customers. With a green supply tariff, part or all of the electricity is obtained from renewable or carbon neutral sources of generation.

These also include contracts under which suppliers can agree to invest a premium back into renewable energy or other environmental funds, or take some other form of carbon-offsetting actions.

The revised guidelines will be expanded to cover low-carbon technologies, such as efficient Combined Heat and Power schemes.

Ofgem has teamed up with the Energy Saving Trust (EST) to launch the scheme, and the organisations will be working with the energy industry and customer groups to develop proposals. They hope to deliver the guidelines by September.

Ofgem's chief executive, Alistair Buchanan, said the star-rating guidelines would make it easier for businesses to cut their carbon footprint and impact on the environment. "Businesses consume two-thirds of the UK's electricity," he said. "We are making it easier for firms to become carbon neutral."

Ian Pearson, Minister of State for Climate Change and the Environment, added: "While more and more people want to go green, they need to know what they're doing is making a real difference."

Further to this, the EST has launched a parallel consultation looking at the issues involved in setting up an independent accreditation scheme.

The EST wants to ensure that when customers buy green energy, they are actually funding additional supplies of renewable energy and not just paying for the amount that is required by government regulations. The aim is to give customers confidence in green-energy tariffs.

The announcement by Ofgem comes after the announcement of the development of a standard measure of carbon footprints, to allow businesses to label products for their contribution to climate change.