The news came in the energy regulator’s latest green electricity supply guidelines which set the rules for green tariffs.
Ofgem has been trying to revise the guidelines since 2007. There is widespread concern that electricity suppliers have been claiming that the tariffs lead to new renewables capacity, although this is not necessarily the case. Firms have a legal obligation to obtain a proportion of electricity from renewable sources and some have simply repackaged this obligation for sale in their green tariffs.
Green tariffs are popular and 319,000 households are currently signed up to such contracts.
Last August, Ofgem issued guidelines that said tariffs must produce environmental benefits beyond suppliers’ legal obligations. Tariffs would receive a star rating for the amount of money they invested in environmental projects.
The new guidelines are much simpler. Suppliers must demonstrate that tariffs produce a minimum reduction in CO2 emissions emissions. If they do this by buying carbon offsets, the tariff must save at least 1 tonne of CO2 emissions per customer per year. All offsets used must comply with the government’s quality assurance scheme for carbon offsets.
Other measures can also be used – such as installing energy efficiency equipment – but these must also produce a minimum greenhouse gas saving.
The big six electricity firms have signed-up to the guidelines, as has green tariff specialist Good Energy. Together they will develop an accreditation scheme by summer 2009.