Defra Changes Guidance on Green Tariffs

On 16 June, Defra issued new guidance on how companies should calculate their carbon footprint. The guidance provides conversion factors to be used in calculating the carbon emissions associated with typical business activities, such as electricity consumption and transport.

Previous guidance indicated that 'green' electricity supplies could be zero rated, thus providing an effective and straightforward means for companies to reduce their reported carbon emissions.

In an unexpected move, the Defra guidance now provides that 'green' electricity supplies should be rated like any other supplies, by reference to the average UK fuel mix. The suggestion being that these supplies could only be zero rated if a corresponding number of renewables obligation certificates regime were sacrificed: the need for 'additionality'.

This seems misguided.

The new guidance removes any incentive for consumers to buy 'green' electricity. The renewables obligation places an obligation on suppliers, but we should also allow consumer-led market forces to stimulate demand for renewable/sustainable electricity.

Everyone agrees that greater transparency is needed for 'green' tariffs, and clearly there should be no double counting, but a system that relies on renewable electricity guarantees of origin (REGOs) would surely deliver this?