Green business energy: what “green tariff” actually means, and the questions to ask

More businesses want to buy green energy, for customers, for tenders or because the owner wants to. The trouble is that “green” on a quote is a label, not a standard. Two offers that both say green can be backed by quite different things.

This guide explains the one mechanism that regulators point to when they talk about proving renewable electricity, the REGO scheme, what fuel mix disclosure tells you, what the CMA says about environmental claims, and the questions worth asking before you sign. We are an introducer, so we give you the questions, not a verdict.

What does “green business energy” mean?

There is no single legal definition behind the word on a quote. Suppliers use it for different things, so the useful move is to turn the label into specific questions. Ofgem’s guidance for businesses choosing a broker says to tell them your business energy requirements, for example if you only want green energy or want to use or avoid particular suppliers. So the market does recognise it as something you can ask for. What it does not do is tell you what the word means for each offer.

What is a REGO?

Ofgem administers the Renewable Energy Guarantees of Origin scheme for Great Britain. It says the scheme provides transparency to consumers about the proportion of electricity suppliers source from renewable electricity, through certificates called REGOs, which demonstrate that electricity has been generated from renewable sources.

• One certificate per MWh. One REGO is issued per megawatt hour of eligible renewable output to generators of renewable electricity.
• Who can get them. Generating stations in Great Britain and Northern Ireland that produce electricity from eligible renewable sources can apply for accreditation.
• What they are used for. Ofgem says the primary use of REGOs in Great Britain and Northern Ireland is for fuel mix disclosure.
• EU certificates. Ofgem says that as of 1 January 2021 the EU no longer recognises UK REGOs, and that from the disclosure period beginning 1 April 2023, EU Guarantees of Origin are no longer recognised for use in GB fuel mix disclosure.

In plain terms, a REGO is the paperwork that links a unit of electricity to a renewable source, and Ofgem describes the scheme as the way consumers get transparency about how much of a supplier’s electricity is renewable.

What is fuel mix disclosure?

Ofgem says fuel mix disclosure requires licensed electricity suppliers in Great Britain to disclose to potential and existing customers the mix of fuels (coal, gas, nuclear, renewable and other) used to generate the electricity supplied, with an annual compliance deadline that Ofgem is responsible for.

This is useful to you as a buyer. If a supplier says its tariff is green, the fuel mix information is a place to compare what the supplier says about a tariff with what it discloses about its supply overall. Ask for both.

What the CMA says about environmental claims

The Competition and Markets Authority publishes guidance on environmental claims, the Green Claims Code. It says consumer protection law does not stop businesses from making environmental claims as long as they do not mislead. Its six principles are that claims must be:

• truthful and accurate
• clear and unambiguous
• not omit or hide important relevant information
• fair and meaningful in any comparison
• considerate of the full life cycle of the product or service
• substantiated

The CMA also notes that broad general terms, such as “green” or “eco-friendly”, can have an unclear meaning. That is not a criticism of any particular supplier. It is a reason for a buyer to ask what a green label covers. Your own company claims are covered too: if you tell customers your business runs on green energy, the same principles apply to you.

Questions to ask before you choose a green offer

1. What exactly is the claim? Is it all of your electricity, or part of it? Is gas covered?
2. What backs it up? Ask what evidence the supplier holds, for example REGOs, and for what share of the supply.
3. What does the supplier’s fuel mix disclosure show? Compare the tariff claim to the overall supply.
4. Is the price different from a standard offer? Compare like with like, including term, standing charge and unit rate.
5. What does the contract say? Ofgem tells you to check the terms, fees and what happens at the end.
6. What can I say publicly? If you plan to use the claim in marketing or tenders, ask what wording the supplier is happy to support.

Where green fits with the rest of your energy plan

Green electricity is one part of the picture. Ofgem notes that energy brokers can also help you understand energy grants you could apply for and how to make your business more energy efficient. Our pages on green energy, net zero support and energy efficiency go further, and the Climate Change Levy rules (see our guide to VAT and CCL) are a separate question from what is in your fuel mix.

A short glossary

If you want to talk about your green energy publicly

The CMA says its guidance applies to a more limited extent to businesses marketing to other businesses, and urges all businesses to act fairly in dealings with other businesses, especially small ones. It adds that if a business uses broad terms like “green”, it should consider whether it has clear evidence behind the claim, because without evidence such claims are much more likely to mislead.

For you as a buyer, that suggests a simple routine before you put any green claim on your website, tender or packaging:

1. Ask your supplier exactly what their green offer covers and for how much of your usage.
2. Ask for the evidence in writing.
3. Say only what the evidence supports, and be specific about what it covers.
4. Keep the paperwork with your records.

Frequently asked questions

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