Understanding green energy tariffs

This week’s Whiteboard Friday is about understanding green energy tariffs. What is a green tariff? What do you need to look at when switching to a green energy tariff? Guy Thompson, our energy expert answers your your questions about green energy tariffs in this video.

Video Transcript

“Hi and welcome to another Whiteboard Friday with MyUtilityGenius. Now today we are going to have a look at what is green? With the fifty shades of green, nobody really knows what green energy is… In fact the greenest people in the UK are Hulk, Shrek and the Green Giant because almost everybody else think they are green but they are not necessary green at all. Let’s start off with What a green energy tariff actually is.

First let’s look at renewable energy CO2 emissions. The first thing people need to understand is that sticking your flag into the ground and say renewable is my thing, you need to investigate a bit more because renewable energy may involve things like burning wood… Wood is a renewable resource but unless the trees are being grown are you getting your energy from a green source? You can have a look at it from a point of CO2 emissions. Now, under the definition of green from a CO2, nuclear power is definitely green: you are not burning anything. Trying to determine whether something is green with a renewable flag or green with a CO2 flag, you also need to look at the lifetime cost (i.e. what it costs in carbon terms or environmental damage terms to build that asset which is going to produce renewable energy). So how much in carbon and what is the environmental impact to manufacture a large scale wind turbine? Or to manufacture a solar panel? You need to start looking at that to work out: is something actually a green source of energy or not? You also need to have aa look at it from a point of view of additionality. If the act of you buying a green tariff does not increase the amount of green generation of energy in the country as whole and move us towards a completely sustainable target of 20%, 30%, then are you really being that green? (Because all you are doing is stealing some green energy from somebody else who was green too but who wasn’t prepared to pay a little more from green energy. The last thing you have a look at is: are there other environmental benefits to the particular source of green energy that you are looking at? If you pick a green tariff, is the supplier looking at saving forests? What else is there that might be a factor into that? Now the analysis can be quite difficult. We have put up here nuclear power and cow poo. Here, basically what you are doing is you are taking something that already has a lot of energy extracted out of it, throwing in some microbes and extracting yet more energy out of what would have been waste and chucking methane through the atmosphere. So you are removing methane through the atmosphere, turning it into CO2. You are still responsible for CO2 but you are also responsible for a complete reduction of methane. Is that green? Well, it doesn’t fall into the definition of these two (certainly doesn’t help with the CO2 emissions).

There are a lot things that make this subject complicated. If you take it from the point of view of the supplier, let’s take this square here, we have 4 little squares underneath, they all look  like in shades of green, this is effectively what a supplier does: these are all the green tariffs they are offering you. They are offering these to you because you have expressed an interest in being ethical and in trying to be green at the same time. However, if you lift the green filter, also know as green washing (which it isn’t), what you end up with is: various shades which don’t look necessary green at all. That is a function of the fact that there is no proper definition of green. The government has not stepped up, the regulators have not stepped up, nobody hasn’t really stepped up to give us a real definition of green. The green certification that does exist is kind of saying: well if you have got some certificates and that you attach them to the amount of electricity that you use that then qualifies them. But some of these certificates could sent in from France, they can come through some gas generation that meets some standards… The certificate also suggest that there is a minimum level of additional environmental benefits that this tariff needs to be delivering but it doesn’t quantify what the minimum level is… It also forces those suppliers to sign up to an annualised audit but it doesn’t tick all the boxes…

The reality is: only you can tick your own green box. Because green ultimately is a subjective thing.  So you need to look at all these things: renewable, CO2, additionality, other environmental benefits… Which one is more important to you and then pick up your tariff on the back of that. It is not useful or helpful to just look at something that simply says green therefore I am going to buy it. Hopefully it was helpful, until next time see you then…” 

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