Ofgem claims it is producing the new guidelines in response to changes in the electricity market. Renewables' exemption from the UK's tax on the business use of energy -- the Climate Change Levy -- which was introduced in April 2001, and the Renewables Obligation, expected to be introduced in April, have increased the demand for renewable energy, leaving less available for marketing separately in green tariff arrangements.
So far, the majority of green power packages in the UK have been accredited by the Energy Saving Trust (EST) under its Future Energy mark which was designed to give customers confidence in the greenness of the products. But with the changes to the electricity market, EST has ceased accrediting green tariff supplies for commercial and business customers. Instead it is reviewing its role in accrediting green offerings to the domestic market.
Ofgem's draft guidelines argue for a consistent approach to what constitutes "green energy." They do not prescribe which renewable energy technologies should be included in green tariffs, but appear to suggest that suppliers may prefer to opt for a "core of technologies" that are generally understood to be renewable. These are landfill gas, sewage gas, hydro, wind, biomass, geothermal, tidal and wave, and solar. Ofgem expects the renewable energy that suppliers buy to fulfil their statutory renewable obligations should not be included in their green tariffs.
Ofgem's Virginia Graham says: "These guidelines aim to give customers the confidence that a green tariff is contributing positively to the environment. The guidelines, which are advisory, will also help suppliers to understand the importance of accuracy and transparency in green supply offerings." The regulator is inviting comments on its proposals until February 22.