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Utilities buyers' guide: Green Tariffs

a lightbulb made out of a plantGreen Tariffs: Eco-Friendly Energy Consumption

With growing concern over the environmental impact of our lifestyles, most electricity and gas suppliers now offer a selection of green tariffs in an attempt to mitigate pollution and the release of greenhouse gases. In other words, they are working to clean-up their energy supply.

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These tariffs come in a few shades of green, as there is a variation in both how the energy is generated, and what the supplier does with the money that you spend with them. Typically however these fall into three main categories: energy match, green fund and carbon offset.

Energy Match – This is where the supplier matches the amount of energy that you buy from them with an equivalent amount of energy from renewable resources.

Green Fund –where a portion of your bill is paid into funds that support (via investment) renewable energy projects, such as solar power, hydro-electric generation or wind farms.

Carbon Offset – this involves balancing carbon emissions with carbon-reducing projects elsewhere, such as reforestation. So emissions are not reduced at source, but they are evened out.

Ofgem Guidelines

To minimise confusion among consumers, Ofgem proposed two separate sets of guidelines in 2007. One covers tariffs for energy produced from renewable sources. The other covers tariffs for energy sources that have low carbon dioxide emissions. Ofgem’s aim is to improve the information available so customers can make informed choices.

The guidelines rate low carbon offerings from A to F, depending on how low their associated carbon emissions are – with A being zero, and F being very high (over 1,000 g/kWh). As such, suppliers’ tariffs are rated according to ‘carbon intensity’ – so customers can choose a low carbon energy supply.

Pros

  • The CO2 scale allows customers to make an informed decision, based on the amount of CO2 produced.
  • Customers can also see the respective mix of fuels used to produce energy.
  • The actions being taken by suppliers to offset or reduce the environmental impact of production may be disclosed.
  • From the customer’s point of view, it’s a painless commitment to doing something positive to help the environment; no action is required - apart from payment of bills on receipt!

Cons

  • The CO2 scale ranks nuclear energy as a very 'green' source of supply, due to its low CO2 emissions. However most would argue that nuclear is far from a green energy supply!
  • Green products / tariffs are traditionally more expensive, and this is not very clear to customers unless they do a full price comparison.
  • Users may be better off choosing a cheaper tariff and making their own green arrangements e.g. planting a tree themselves, or offsetting CO2.
  • Renewable energy is highly controversial and can have its own environmental impacts e.g. a wind turbine can be considered both beautiful and an eyesore!

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