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British Gas’s new Zero Carbon tariff

Saturday 15 September 2007 by Chris Goodall | 2 comments

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?

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HSBC’s international opinion survey into climate change

Saturday 15 September 2007 by Chris Goodall | 1 comment

The key conclusions from a good piece of market research

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.

Almost 60% of people in Brazil, Mexico and India see global warming as one of the most pressing problems the world faces, compared to little more than 20% in the UK. Broadly speaking, the richer countries tend to see terrorism as a bigger threat to the world than climate change. In all nine nations bar the US, the level of concern tends to rise quite sharply with age. (This result is also seen in most other surveys of UK opinion.)

Confidence that climate change will be successfully addressed by existing institutions is low in most places around the world. It falls to its lowest level (5%) in the UK. The UK also has the lowest level of people saying that they personally are making a significant effort to reduce climate change at 19%, compared to levels above 40% in developing countries. Fatalistic Britons are also almost the most pessimistic about whether global warming will be stopped, with only 6% of people saying ‘I believe we will stop climate change,’ compared to 45% in India and 39% in China.

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