British Gas has launched a consumer gas and electricity tariff that will cost 10% more than its standard rates but which offers better green credentials than any other consumer utility tariff in the UK market.
The product has the following important features:
- The electricity is derived from renewable sources. The company says that this is not the key ingredient of the tariff. Later in this note I try to explain why.
- British Gas will buy and retire Renewable Energy Certificates for 12% of the electricity it supplies. This is probably the most important aspect of the proposition.
- British Gas will ‘offset’ all of the carbon dioxide produced as a result of each household’s purchases. This is the most expensive part of the deal for British Gas.
- There will be a small donation to a green education fund for schools.
BG says that it makes no extra money from the sale of its Zero Carbon product. This looks a justifiable statement to us. The important other questions to ask are:
- Why did BG decide that 10% was the appropriate premium to its main tariff? It could have designed a less costly offering with reasonably strong green features. Do mainstream ‘concerned consumers’ regard 10% as an acceptable price increment? Did BG need to ‘gold plate’ the new product to avoid any criticism that it was a proper green tariff?
- How will the company manage to ensure that it buys high quality offsets, and not the dubious offerings sold by consumer offsetting companies?
- The product is slightly complex and difficult to explain. Can BG cut through the competing claims of other green suppliers to build a large customer base for this high quality offering?
In early September, researchers from the Tyndall Centre in the UK put out a report that said that incorporation of the airline industry into the Emissions Trading Scheme (ETS) will not provide significant incentive to cut emissions. The big polluters today are paying about €20 per tonne for their emissions. When aviation joins the scheme in 2012, this price would add about €5 for a flight to Barcelona. Tyndall argues that the EU and national governments cannot escape the conclusion that the ETS is not enough and that aviation must be constrained by other fiscal or legislative measures as well as by inclusion in the carbon tax net.
The evidence is not quite clear enough that organic food is better for the atmosphere.
E.ON UK has recently announced a plan to build a second power station using 100% energy crops as fuel. The first investment – a £90m power plant at Lockerbie in Scotland – will open within the next few months. The second plant, still only in the planning stage, will be in Sheffield on the site of a previous generating station. Both power plants will use wood from forestry and specially planted willow but Sheffield will also burn waste wood from other sources, such as industrial pallets. These are the first two large-scale plants in the UK if we exclude the ill-fated Arbre plant of several years ago. (Arbre was an extremely advanced wood chip gasification plant built in Yorkshire. It was never fully commissioned.)
HSBC’s July 2007 survey entitled the Climate Confidence Index contained many surprising results. Carried out in nine major countries around the world, it showed that concern about climate change is far higher in developing countries than in the UK or the USA. As importantly, the inhabitants in these countries also think that the world is more likely to find ways to avert climate change problems.
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