Crackdown on energy ‘greenwashing’
ENERGY companies that mislead consumers with supposedly eco-friendly deals that are not as green as they seem will be targeted in a new government crackdown.
Price comparison websites that fail to accurately show which energy tariffs are better for the environment than others could also face stricter regulations.
It comes as an academic paper published in the journal Energy Science & Engineering warns that a governmentbacked push to heat millions of homes using hydrogen boilers risks increasing carbon emissions and speeding up global warming.
The Daily Telegraph understands the new crackdown on “greenwashing” is due to be announced within weeks with a public call for proposals about how to tighten the rules.
There can be huge financial gains for firms involved in greenwashing. In 2019, UK consumers spent £41billion a year on ethical goods and services – four times the amount two decades ago.
It comes after a landmark UN climate change report said it was “unequivocal” humans have caused global warming.
The reforms are part of a wider effort by the Government to help the public make informed decisions as they seek to reduce their carbon footprint.
The coming months will see major environmental announcements from the Government, not least on how the
UK can hit its target of bringing all greenhouse gas emissions to net zero by 2050. It comes ahead of the Cop26 UN climate change conference, being staged in Glasgow this November.
A note circulated within the Department for Business, Energy & Industrial Strategy (BEIS) and seen by this newspaper lays out the two “calls for evidence” soon to be published.
The first, on greenwashing, “will look at checks on tariffs which are described as green to consumers, who may be misled into signing up to them based on their green credentials”. The second “will look at greater regulation
of price comparison websites to ensure consumers have the correct information to make informed decisions about which energy retailer (and tariff) to choose”. Advertising rules already exist which forbid companies from making grossly misleading claims to consumers about their products.
However, ministers fear bad practice is still happening, with some energy firms exaggerating their green credentials. For example, an energy provider could tout the amount it invests in renewables but consumers may be unaware that much of the energy they provide still comes from fossil fuels.
“Nobody can say the energy coming out of your plug is completely green because not all the energy sources going into the grid are green,” said a senior government source.
That referred to the national power grid, the source said, noting the exception would be a local grid system that uses energy from renewable sources such as solar panels.
“It is really about building the clarity of understanding about what customers are getting when they buy certain tariffs,” the source added.
The exact shape of any changes in regulation for energy firms or price comparison websites will be determined by the responses to the calls for evidence.
But one option that will be considered is fines for price comparison websites which fail to accurately present the green credentials of competing offers.
Last November, price comparison website Compare The Market was fined £17.9million by the Competition and Markets Authority for keeping home insurance costs artificially high.
At the time, a spokesman for Compare The Market said the company “fundamentally” disagreed with the conclusions and did not “recognise” the analysis of the home insurance market.
In the coming months, the Government will set out how it will encourage people to switch from gas boilers to heat pumps by 2035 and reveal a new hydrogen strategy. It will also detail specific steps that will be taken to hit the UK’S net zero target in 2050.
Much debate inside government is focused on how much of the financial burden for Boris Johnson’s green agenda should fall on individuals rather than businesses or the Treasury.
A BEIS spokesman said: “Our Energy White Paper set out our commitment to look further into energy tariffs that are being branded as ‘green’, to ensure they are suitably transparent. We will set out further plans in due course.”