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Britain’s biggest energy suppliers are refusing to stop buying controversial certificates that allow them to sell tariffs as “100pc green” when they are not.
“Green” energy tariffs have typically come at a premium and have been up to £60 more expensive than a standard deal. About 9m households had “green” energy deals in 2021.
But industry experts say that households are being “duped” into thinking their electricity is clean because suppliers can buy certificates that allow them to market tariffs as sustainable.
Energy suppliers can buy certificates, known as Renewable Energy Guarantees of Origin or “Regos”, from green energy generators – and still provide their own customers with power generated from fossil fuels.
Suppliers are facing increasing pressure to ditch the practice and it is understood that a regulatory review into greenwashing in the sector could be restarted later this year.
Meanwhile, Britain’s major energy companies have spent nearly £2bn on the certificates over the past five years.
Archie Lasseter, the head of sustainability at Utilita, said: “The problem is industry wide. Almost all suppliers are offering tariffs purporting to be ‘100pc renewable’ or ‘zero-carbon’ electricity.
“Households on these energy tariffs have been duped into thinking the energy they use is 100pc renewable when it’s not.
“It’s unbelievable that suppliers have been willing to do it for so long, but even worse, the regulator and the Government have simply watched on and done nothing.”
Last month Ovo Energy said it would stop buying Regos, because they allow suppliers to “greenwash” their environmental credentials without boosting the supply of renewable energy.
Telegraph Money approached all of the major energy suppliers, but not one would commit to stop the use of Regos.
Regulator Ofgem issues the certificates to energy generators, which can include wind and solar farms, who then sell them on to suppliers, without the green energy created.
In 2019 certificates could be bought for as little as 22p per customer, but the cost has recently risen to £5 as energy prices have risen – making them increasingly unviable for suppliers.
One Rego represents one megawatt hour of renewable energy, and on average a household consumes three megawatt hours of electricity a year.
Utilita estimates that the energy industry has spent £1.9bn on Regos over the past five years.
Mr Lasseter said: “Regos should never have happened. They have always been a poor piece of legislation that enabled consumers to be misled.”
If a Government review does come to light, Mr Lasseter reckons it could have big repercussions for suppliers and the regulator. “It will rewind the industry by 10 years and expose the fact there is no such thing as a 100pc renewable tariff.”
At present, the income from Regos makes up a small percentage of generators’ income, which is why the scheme has done little to drive usage of renewable energy, he explained.
Ian McKee, of supplier Good Energy, said: “It’s like if you bought organic tomatoes at the supermarket, but actually they’re not organic. That’s what’s been happening with Regos.”
Utilita says that it used to cost suppliers just 66p a year to be able claim a customer’s energy supply was 100pc green. Yet some “green” tariffs have been around £60 more costly to customers than regular tariffs.
Data from Ofgem shows Eon redeemed the most Regos in the financial year 2021-22, at 30m. This was followed by Ovo (9.9m), EDF (9.6m), Scottish Power (8.2m), and Bulb, which is now owned by Octopus, (8.2m). British Gas bought 5.7m, Shell Energy 5.4m, Octopus 4.8m, So Energy 1.2m and Outfox the Market half a million.
Suppliers say they are now generating green energy themselves through wind farms.
A spokesman for EDF said: “We agree that there needs to be a better and clearer way for customers to understand where their energy comes from.
“This is why we have been calling on the Government to introduce a new energy tariff label, similar to that for white goods, to provide greater transparency for consumers on a supplier’s low carbon credentials.”
The Government did launch a consultation on greenwashing across the sector in August 2021. But this review was put on hold in the advent of the energy price crisis.
Energy UK, the trade body for energy suppliers, has said it would welcome more transparency over green tariffs which could allow consumers to make more informed choices.