Greenwashing is commonplace among UK energy suppliers. Many energy firms market their tariffs under an eco-friendly banner, but continue to supply electricity that’s generated by fossil fuels.
So how do you work out if your supplier is fuelling your business with the type of energy it says it is?
Well, it’s not easy – partly because many suppliers work hard to cover up the true source of their energy. But fear not, we’ve done the legwork for you.
Our experts analysed the actual fuel mix of the UK’s key industrial and commercial (I&C) suppliers between 2020-2021. Including: British Gas, Npower, Drax and E.ON.
Our findings suggest many business energy suppliers are misleading their customers about the type of fuel they supply.
We’ve presented our findings in this blog so you can quickly check if your supplier is being honest about its fuel mix, or not.
The Fuel Mix Disclosures of UK business energy suppliers
Each year, energy suppliers submit their annual Fuel Mix Disclosure data to Ofgem for the previous supply year (1 April- 31 March).
The FMD regulation was introduced in 2005 with the aim of helping customers (domestic and commercial) understand the makeup of the power they are buying.
In other words, it’s a way for you to check your energy supplier is supplying you with the fuel mix it says it is.
The fuel mix disclosure (FMD) breaks energy sources into five categories:
- Coal
- Gas
- Nuclear
- Renewable
- Other
(In essence – fossil fuel, nuclear and renewable.)
Now:
You should be able to find your energy supplier’s FMD on its website. But to make things easier, we’ve compiled a table of the UK’s key I&C suppliers’ FMDs for the financial year 2020-2021.
You can use this table to:
- Check in on what your energy supplier claims its fuel mix is
- See how your supplier stacks up against the competition
On the surface, the FMD appears to give you all the information you need to make a good decision about the supplier you use to fuel your business.
However:
There are several limitations with the FMD which means it does not give you the full picture about the energy you’re buying.
In many cases, it misses out important information about the genuine makeup of the fuel mix. And it’s the type of information that might make you think differently about the supplier you’ve chosen for your business.
Let’s take a closer look at how limitations with the FMD can impact you.
Energy suppliers can hide their use of ‘dirty’ fuels behind an eco-friendly banner of ‘renewable’
First, the small segmentation of fuel types in the FMD (fossil fuel, nuclear and renewable) enables suppliers to hide the truth about their energy supply.
How?
Because the term ‘renewable’ in the context of the FMD does not necessarily mean non-polluting, sustainable or carbon neutral.
As well as clean sources such as wind, solar and hydro power, ‘renewable’ in the FMD constitutes energy from a range of ‘brown’ sources, too. These include biomass, landfill gas and sewage gas.
In fact, biomass creates just as much CO2 as burning coal. Plus, biomass pellets are usually shipped in from outside the UK – as far away as in North and South America.
When you consider the carbon footprint of biomass pellets, that ‘so called’ green energy starts to become an awful lot browner.
Energy suppliers can buy cheap renewable energy certificates to cover up their use of fossil fuels. But they do not need to declare this in the FMD
Second, energy suppliers can buy fossil fuel electricity from the wholesale market or generate it themselves, combine it with a renewable energy certificate – a Renewable Energy Guarantee of Origin (REGO) or an European Guarantee of Origin (GO) – and legally claim that fuel is 100% renewable.
This is called greenwashing.
How can this happen?
REGO and European GO certificates can be sold separately from the power.
In essence, a supplier could source all of its energy from fossil fuel sources, then buy the equivalent volume of REGOs and claim they only sell renewable energy.
Energy suppliers are required to declare the makeup of their energy in the FMD. But they are not required to provide detailed information about the source of their power and their use of REGOs and European GOs.
So, even if you look at the FMD of your supplier, this loophole makes it almost impossible for you to know whether the electricity you’ve chosen to power your business contains fossil fuels, or not.
Given how little clarity the FMD gives, the big questions is:
How do you work out what’s really in your supplier’s fuel mix?
Here’s where we can help…
Find out if your supplier’s renewable energy was backed with clean or non-clean REGOs (2020-2021)
REGO information is publicly available on the Ofgem website. In fact, REGOs are broken down by type of generation. This makes it easier to see what percentage of your suppliers’ REGOs are clean, and what percentage are non-clean.
For us, clean REGOs are ones that are combined with energy that has no adverse impact on the environment. This includes hydro, ocean, photovoltaic, wind and filled storage hydro.
Non-clean REGOs are everything else:
Sifting through the REGO data on the Ofgem website can be a minefield. So we’ve extracted the latest available REGO data for you.
Here’s what we found:
In this table, we’ve outlined the percentage of renewable supply that is backed by clean and non-clean REGOs for each supplier in the 2020-2021 reporting period.
Analysis of REGOs suggests greenwashing is commonplace amongst key I&C suppliers
Our deep-dive into REGOs suggests greenwashing is commonplace amongst key I&C suppliers in the UK.
Let’s look at a few examples:
According to British Gas’s FMD, 75% of the overall energy it supplied was renewable. Now, 6.6% of British Gas’s renewable energy was REGO backed. However, 39.4% of the energy backed by REGOs, was backed by non-clean REGOs.
In its FMD, Npower states 31.9% of the energy it supplied was renewable. Of that energy, 99% is REGO backed. However, 46.6% of the energy backed by REGOs, was backed by non-clean REGOs.
Engie’s FMD states 60% of the overall energy it supplied was renewable. Of that, 88% is REGO backed. However, 68% of the energy backed by REGOs, was backed by non-clean REGOs.
Want to find out if your energy supplier is masking its use of dirty fuels behind cheap European renewable energy certificates, too?
Read on.
Find out if your supplier’s renewable energy was backed with clean or non-clean European GOs (2020-2021)
In recent years there’s been a sharp rise in suppliers buying the European counterpart of UK REGOs. These are called European GOs.
In fact, energy suppliers in the UK submitted more than 64.4 TWh of European GOs, in the 2020-21 FMD period. This accounts for approximately 19.7% of overall electricity supply in that period.
Suppliers can submit European GOs to Ofgem alongside – or instead of – REGOs for the FMD.
So, we’ve pulled the latest available European GO data for the UK’s key I&C suppliers.
And, like we did with our analysis of REGOs in the previous section of this blog, we’ve outlined the percentage of renewable supply that is backed by clean and non-clean European GOs for each supplier.
Here’s what we found:
Analysis suggests UK suppliers are bulk-buying renewable energy certificates from Europe which they are likely using to disguise fossil fuels in their FMD
Some of the biggest I&C energy suppliers in the UK are backing a significant portion of their renewable energy with non-clean European GOs.
Let’s take a closer look at a few examples:
EDFs FMD states 29% of the overall energy it supplied was renewable. Of that, 45.3% was European GO backed. However, 15% was backed by non-clean European GOs.
In its FMD, SmartestEnergy states 66.2% of the energy it supplied was renewable. Of that energy, 91.3% was backed by European GOs. However, 12.4% of the energy backed by European GOs, was backed by non-clean European GOs.
As we know, British Gas’s FMD states 75% of the overall energy it supplied was renewable. Of that, 93.4% was backed by European GOs. However, 36.5% of the energy that was backed by European GOs, was backed by non-clean European GOs.
European GOs have dirty secrets of their own
Energy suppliers can legitimately submit European GOs for the renewable part of the FMD. However, there’s a whole heap of problems with European GOs.
The main issue is that buying European GOs (instead of the UK counterpart, REGOs) enables energy suppliers to wriggle out of paying green levies which are designed to support UK clean energy projects.
In doing this, energy suppliers are undermining the UK’s support scheme for renewables.
Plus, if your business buys energy backed by European GOs, you are – whether you are aware or not – also undermining the UK’s transition towards clean energy.
British Government plans to ban energy suppliers from greenwashing their image by bulk-buying cheap certificates from Europe
On Thursday 28 July, 2022, the UK government announced a plan to ban British energy suppliers from bulk-buying cheap renewable energy certificates from foreign power stations.
Quite frankly, this new regulation couldn’t come into force soon enough.
Not only are energy suppliers manipulating their fuel mix to lure customers into buying ‘green’ tariffs. But they’re also putting their own customers at risk of greenwashing, too.
Businesses like yours – who are striving to meet sustainability targets – need clarity on the makeup of the energy they’re procuring.
Imagine claiming you procure 100% clean energy, only to find out it’s contaminated with fossil fuels.
Loose regulation has long made it difficult for customers to understand where their energy comes from. This plan, which is set to come into effect on April 1 2023, should help stamp out the deceit in the energy industry. It’s a regulation we fully supported at the consultation stage.
Key takeaway
There is only one way to ensure you are buying genuinely clean energy:
Choose a supplier who only supplies genuinely clean energy, alongside matching clean energy REGOs.
Here at Squeaky, we do exactly that. Our portfolio of generation under contract includes only 100% clean energy, backed by matching clean energy REGOs.
If you’re concerned your business is procuring dirty energy and you’d like to talk about a cleaner option, reach out.
We’d love to talk.