Will Ofgem’s benchmarks push energy suppliers to become greener?

Utility brands could find it almost impossible to market their environmental agendas if regulator Ofgem’s plan to introduce an accreditation scheme for green tariffs goes ahead, according to industry sources.

Ofgem called for a standard green benchmark to be adopted by all energy suppliers after publishing the results of an investigation into the market (MW last week). The proposals could outlaw environmental claims which donot go beyond the existing statutory minimum of 5% of energy from renewable sources. But some have been charging a premium for green tariffs, meaning many customers end up paying extra to receive a service that companies have to provide anyway.

The regulator suggests that some utilities have repackaged obligatory projects when promoting green tariffs to customers, instead of investing more in sustainable energy. It plans to introduce an accreditation scheme that will reward stars to those that have gone beyond the basic requirements.

Hard workCompanies, many of which are building their brands on such credentials, will need to work harder to win over consumers. E.on has its “See it and save” tagline, while British Gas uses “Your energy experts”. Npower says it does not market itself as a green company, but puts considerable weight behind its Juice environmental offering, claiming it invests “loads”.

Under the revised guidelines, companies must show how tariffs are environmentally better and to what extent. The Ofgem spokesman insists the changes will clear up confusion.

Green tariffs, which pledge to fund extra investment in renewable energy, are generally more expensive than normal bills. Of about 26 million energy customers in the UK, only 350,000 have chosen to buy green tariffs.

Ads such as those for Npower’s Juice tariff, as well as the generic environment-themed brand campaigns, are intended to encourage more consumers to go green, but Ofgem is concerned that consumers are confused by the array of tariffs.

Clamping downAn Ofgem spokesman says there is “significant scepticism” about these environmental claims. For example, the Fuel Mix Disclosure, in which utilities have to show where all their energy comes from, shows that E.on has the highest use of coal in the UK.

One industry sceptic says the measures will put an end to companies marketing their brands as pro-actively green, when they are “simply using carbon offset programmes and have no renewable energy”.

Yet marketers are adamant that they are “doing what they can”, and British Gas suggests those companies that come out well from Ofgem’s investigation may even increase their marketing around green tariffs.

A spokesman adds: “Because there haven’t been any guidelines, the boundaries have been blurred. Unless you have the best green tariff, you probably won’t have been marketing it.”

Meanwhile Npower marketing director Kevin Peake says its commitment to Juice goes beyond the tariff, with £10 donated to help fund renewable start-ups for every new customer.

He admits that consumers are confused, saying that the issue has become “far too technical”. Npower is one of a number of companies to be censured by the Advertising Standards Authority in recent months over green claims. An ad claiming it provided Wembley with green energy could not be substantiated and was therefore upheld.

And British Gas came under fire in January when an ad for its Zero Carbon tariff was banned for implying the energy was carbon-free, rather than offsetting emissions against its renewable sources. Indeed, the ASA is so concerned about “greenwash” that it is setting stricter parameters for environmental and ethical claims.

It’s yet another issue for marketers to grapple with in an industry beleaguered by already soaring energy prices.

Kate O’Flaherty