GreenPower claims and merits – clearing confusion

Guest Post by Tim KellyTim works as a Principal Climate Change Advisor in the Water Industry and is a regular contributor to Brave New Climate.

It was disappointing this week to see the level of confused and incorrect statements and criticisms in the media regarding GreenPower. Yes there are problems with GreenPower both currently (before an emissions trading system) and in the future (when a true cap on emissions comes into play) yet most of media reports this week incorrectly identified the issues in the flurry of copy and paste journalism and rush for comments by the experts.

The players that were silent in this flurry were GreenPower and the ACCC. These players could clear the air by explaining the problems in law and how GreenPower does reduce Australia’s emissions now but does not reduce customer emissions.

If you would like to understand renewable energy accounting in full without the green spin, I have prepared a this PDF slideshow ‘Renewable energy accounting in the new policy environment’ (20 slides in total).

The problems with GreenPower, and its double counting are not new. In fact I have been working on this matter since 2005. Initially, I sent constructive comments and concerns to the relevant agencies and program managers. I complained to the then Australian Greenhouse Office, the Office of the Renewable Energy Regulator, to the former Minister Campbell. I have made countless submissions that articulate the issues.

I had advised the Office of Minister Wong of the looming problems and sent a registered letter to the Prime Minister.

Despite efforts, the problems of GreenPower were built into law when the National Greenhouse and Energy Reporting (NGER) Act and NGER Technical Guidelines 2008 came into force. Renewable energy benefits of ‘use’ and ‘reduced emissions’ was assigned to all customers rather than to the paying customer. GreenPower marketing continued unchanged.

I advised GreenPower, complained to the ACCC, and following a number of responses that did not address the issues, I again complained to the ACCC and copied my complaint to the Office of the Commonwealth Ombudsman in 2008. This year (on April 14) I formally complained GreenPower and later to the state Ombudsman Offices covering those states that are represented on the GreenPower Steering Committee.

All kinds of responses have been provided. Most totally misrepresent the issue or seek to find ways to avoid fixing or even acknowledging the problems.

Whilst I cannot provide any details of any investigation, the Commonwealth Ombudsman Office (to their credit) has been making enquiries in regard to my complaint about the ACCC role since late last year. My understanding is that a report was close to release before the media circus of last week, which has now caused further delays.

All I can hope for is that customers be told plainly and simply what they are donating their money to when they pay for GreenPower and what this does. This would create the conditions for any reforms that might be necessary.

So take a look at the slideshow ‘Renewable energy accounting in the new policy environment’ if you would like a detailed understanding. I have also attached, at the bottom of this post, links to a few past submissions which cover the issues as the NGERS, the CPRS, Expanded RET and the NCOS have evolved.

Further Reading (follow hyperlinks for PDFs)

Submission on the RET Exposure Draft Legislation

Joint submission [1] with Professor Barry Brook to the Senate Economics Committee Inquiry into the Exposure Draft of the Carbon Pollution Reduction Scheme.

Submission to the Department of Climate Change on the Discussion Paper for a Proposed Carbon Offset Standard

Submission on the COAG Expanded Renewable Energy Target

2007 Submission on the Discussion Paper for a National Greenhouse and Energy Reporting Framework

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21 Comments

  1. I find this confusing but it seems to me the issues are
    1) the utilities take extra money from customers when they have to meet green targets anyway
    2) that green output could be used as an offset against fossil fuel burning.

    That means there will be no reduction in CO2 since the offset has relaxed the cap, that is, pardoned increased emissions. Is that correct?

    I heard Penny Wong’s speech on Monday. While it was more assured she was stumped by questions on population growth and coal exports. She only mentioned CCS once so things could be getting real. As it stands the RET is unachievable and the ETS is almost pointless. I suspect there will be more fudges on green power.

  2. John,

    Not quite,
    1) The Utilities cannot use the Renewable Energy Certificates (which are just proof of generation) to meet their mandatory obligations so this forces GreenPower renewable energy be in addition to mandatory levels hence the claim that it reduces Australia’s emissions before any ‘cap’ comes into play. This is however only part of the story.

    The utilities take the extra money for customers but don’t (and cannot) hand over the ‘use’ and ‘reduced emissions’ aspects. These aspects are legally assigned to all other electricity customers giving them the free ride. It is all because the Government decided not to prevent the voluntary GreenPower component from diluting the State grid electricity factors.

    If the primary GreenPower slogan of “Make the switch and cut your greenhouse gasses today” was changed to inform customers that the accreditation program worked as a donation scheme, then GreenPower customers would not believe that they have reduced their emissions at the same time as all customers have been assigned lower emissions.

    2) The renewable energy aspects could however, be assigned to GreenPower customers by subtracting voluntary renewables from the state emission factors. My view is that in bundled contracts, renewable energy would work best as an energy product that has no scope 2 emissions, rather than being an offset. In this way reforms could go some way to protecting 100% renewable customers from paying carbon costs and the mandatory renewable power percentage.

    I will come back to what will happen to renewables under a ‘cap’ a bit later but first, it is useful just to understand what happens currently.

  3. Tim – isn’t some of this just a little pedantic. My goal as a Greenpower user to see global CO2 reduced so I’m not all concerned that in some legalistic way it does not reduce ‘my’ carbon footprint, but rather is assigned to reduce the carbon footprint of all grid electricity users. Mind you the way in which the ETS handles all this is truely wacky but maybe a double-dissolution and an election on this issue would give the populace a chance to really influence politicians when they are most vulnerable.

  4. From the perspective of a Green Energy consumer I was most interested in the section dealing with GreenPower Marketing.

    “Make the switch and cut YOUR greenhouse gasses today” NO

    “850,000 Australians have switched and are already reducing THEIR impact on Climate Change” NO

    “Your purchase of accredited renewable energy does not mean your electricity will come directly from a renewable source” (a fact most Green Energy comsumers would be aware of) “Instead the equivalent amount of new renewable energy is added to the grid on your behalf every year so you will be resposible for a reduction in greenhouse gas emissions” YES

    NO,NO and YES. Your verdicts on propositions 1&2 appear to contradict your verdict on proposition 3. If the purchase of GreenPower leads to more electricity from renewable sources being added to the grid it must reduce greenhouse emissions, unless for other reasons you dispute the claim renewable energy sources are Green.

    The question then becomes by what amount those greenhouse emissions are reduced. After reading your scathing critique of GreenPower, and the government accreditation that is supposed to underpin it , would it be fair to assume that GreenPower consumers, can place no credence whatever, in the amount of greenhouse emissions saved, that appears on their electricity bill?

  5. Hi Tim,

    Agreed that the media coverage last week missed the point. Most of it framed GreenPower as the problem that needed to be changed in a marketing sense, as opposed to a) it’s treatment under CPRS and b) the design of its internal counting mechanisms.

    Question: If the accounting problems (as you highlight above) cannot / are not fixed, do you still support all GreenPower (i.e. pre-2009 baseline) further tightening CPRS caps?

    Thanks, Damien.

  6. Agreed. We may have some quite different underlying motivations Gordon, but I’m now of the view that carbon trading and/or carbon taxes, and mandated emissions reductions targets that rely on the invisible hand of the market to solve the world’s problems, are dead duck solutions to climate change and the energy crisis.

  7. Bruced,

    There are sometimes valid reasons to understand the detail.
    If someone is seeking to offset their own emissions to ease their conscience then this becomes an issue. If a business is selling a product that they have claimed to be carbon neutral in part because of GreenPower they have purchased then the claim is wrong.

    It is so easy to look across many claims promoted in Australia where the use of GreenPower is claimed as reduced emissions, yet these claims are both not valid under law and are double counted.

    Ultimately it should be the customer that should be provided the information to make an informed choice and they can decide whether there is a difference in reducing ‘their’ emissions or the emissions of all electricity customers in proportion of use.

    Are also willing to pay for future carbon pollution costs and more than 120% renewable energy as the mandatory Renewable Power Percentage increases when you buy GreenPower?

    I am advocating is that the customers be told in full how the scheme works and then it is for them to decide if the difference is pedantic.

  8. Richard,
    My verdicts on 1&2 relate to the marketing that leads consumers to believe that they are reducing ‘their’ greenhouse gas emissions. This does not contradict the claim of GreenPower that there will be a reduction in greenhouse gas emissions (total greenhouse gas emissions for Australia – which I agree with). The issue is that it reduces the emissions of every customer in proportion of use and not the paying customer as indicated in the marketing.

    Let’s for a minute substitute renewable energy for new cars.

    If I buy a new car, I hope to own the new car (like owning the greenhouse gas avoidance) and would like to use the new car (like using renewable energy for my purposes). The car manufacturer most likely has a certificate somewhere that says that it built the new car (Like a Renewable energy certificate).

    As a customer, I am really not that interested in the certificate that records that the car has been built above any minimum manufacturing rates, I just hope to own and use the car.

    With GreenPower, I never get the car or the use of the car, it has probably become a taxi somewhere.

    To me, one of the basic principles in creating a low carbon economy is to establish a principle that the less visible and less tangible greenhouse properties renewable energy including ‘use’ and ‘reduced emissions’ are treated no differently to the more visible tangible commodities such as cars, bricks or tonnes of iron ore. If we treated renewables in this way we would only ever assign the benefits once.

    I agree that the zero emissions printed on my current 100% GreenPower electricity bill dated 08 August 2009 are false for me, because the benefits were assigned to all others not me. I am still however, going to keep being a GreenPower customer because I am reasonably confident (all things considered) that my effort saved up to 1.88 tonnes of Australia’s emissions last quarter.

  9. Hi Damien,

    I answered this as a reluctant ‘YES’ in response to Richard McGuire’s question.

    I will not be happy if we cannot get reform, but what else is there can be as relevant to electricity use? I am prepared to pay for renewable energy and a firming up mechanism and fully expect that the firming up mechanism will become more expensive in time. I don’t want to pay for carbon costs and Mandatory RET costs. I just don’t think that we will actually be moving to a low carbon market of choice or fairness unless we can get reforms.

    The first step is to fully inform customers about the product they are buying or rather the donation that they are making.

    If most of the nearly one million GreenPower customers then demanded reform, I believe that reforms would follow very quickly.

  10. Agreed,

    If we cannot explain how Greenower works in an open and transarent manner, then how can we have confidence in a complex ETS with contradictions such as efficiency reducing emissions by freeing up permits making it easier for a Government to reduce a cap, whilst throwing permits in the bin reduces emissions by removing the same permits, under a cap which is not a true cap until at least 2016.

  11. Tim

    This does strike me as quite a con.

    If I understand correctly, a greenpower customer pays for renewable energy which – due to the mandatory renewable power percentage – they would be getting anyway had they paid nothing extra.

    Wouldn’t it be better if the cost of the mandatory renewable component was spread across all electricity users, thereby making it clear that everyone is a greenpower user to a certain percentage, and then people who wished to pay for a higher percentage would know their payment was going towards lifting the renewable component above the mandatory level?

    I know this doesn’t entirely fix the problem of ‘personal v’s grid wide emission reduction’ but at least it would be evident that your ‘donation’ was actually doing something.

    Marion

  12. My comments on the Senate’s voting down of the CPRS legislation (See http://www.aussmc.org/SenaterejectsCPRS.php for a range of other comments by climate and energy experts):

    I am not surprised that the Senate has voted down the CPRS. The Greens refuse to support this legislation because its carbon reduction targets are totally misaligned with the magnitude of cuts the science says is required. Further, the model of cap-and-trade proposed in the CPRS will do nothing significant to restructure our energy economy, which is ultimately what is the crucial benchmark, as Garnaut and others tried to point out. The Coalition refuses to support the CPRS because (among other reasons) it unnecessarily churns money from the energy sector to households and back to the energy sector, with little apparent gain in terms of carbon reductions or increases in efficiency. Disappointingly, no party seems able to come up with an alternative scheme that does much better, is workable, efficient, and actually forces the required rapid and coordinated restructuring of the energy generation and supply sectors: including low-carbon electricity (renewables and nuclear), energy storage and backup, transmission upgrades, transport fuel substitution, alternative industrial processes, and efficiency gains.

    The refusal of the Government to separate the cap-and-trade system (CPRS) from the 20% by 2020 renewable energy target (RET) is galling and totally unwarranted. The two schemes represent quite different and complementary approaches to carbon mitigation. The first relies on market forces driven by supply and demand, the second is about trying to pick technological winners. Whether or not you agree with the notion that renewable energy is the technology to pick (I strongly favour a predominance of nuclear power as the most cost effective and logistically feasible sustainable solution to carbon mitigation), the non-negotiable pairing of the CPRS-RET has no rational scientific or economic basis.

  13. A key difference between the RET and the ETS is that absent loopholes the latter guarantees lower emissions. If Australia’s installed electrical generation can be rounded to 50 GW that could be apportioned say 48 fossil + 2 renewable. Keeping the 50 static that should move 80%:20% to 40 + 10, a decent reduction in fossil. It could also move to say 48 fossil + 12 renewable = 60 GW total with no fossil reduction at all.

    Since they reckon water heaters that live in cupboards are honorary solar I think they will find a way to make combined cycle gas into ‘honorary renewable’.

  14. Barry,
    the non-negotiable pairing of the CPRS-RET has no rational scientific or economic basis.
    Why would you think it would, passing legislation is a political process. Before the last election the Liberals said they were in favor of a CPRS involving cap and trade and had a RET fixed at less than 2%(caped to a kWH value). Now they want a different CPRS system, and the RET(I think, or would they water that 20% down also if it was to result in higher electricity prices?) ; good double dissolution trigger, where the Greens have voted against RET of 20% and a 5min -25max % CPRS target. We may have an election on reducing CO2/ renewable energy perhaps nuclear.

  15. Marion,
    If GreenPower was marketed as a donation scheme it would not be a con. It does reduce National emissions at the moment and depending on how the Federal Government tighten future caps for sales of greenpower it may still make a difference under the cap and trade approach (with the exception of nearly 1 million existing customers that the Federal Government has taken for granted in setting a 2009 threshold before it would tighten the cap.

    As something that customers can buy however, I agree with you. My view is that GreenPower is false and misleading under law.

    I agree that the mandatory renewable energy component should be identified as the baseline for most customers (but not businesses that are exempt from MRET liabilities). In this way, a greenPower customer could choose to donate the difference to achieve equivalent to 100% rather than the current GreenPower requirement to pay for greater than 100%.

    It is possible to fix the accounting and provide full disclosure so customers can easily understand what is going on.

    Sadly, the Senate Economics Legislation Committee Report into the Renewable Energy (electricity) Amendment Bill 2009 and related bill, has once again failed to address renewable energy accounting matters.
    http://www.aph.gov.au/Senate/committee/economics_ctte/renewable_energy_09/report/report.pdf

  16. Hat tip to Michael Tobis, this is one Barry may want to find time for (or invite Brand to come for a book tour). Just foreshadowing so far:

    http://seedmagazine.com/content/article/a_manifesto_for_the_planet/

    —– excerpt follows —–

    “Seed: Brand has now issued a bold challenge to the very movement he helped create: Can you forsake ideology for the good of the planet? Whole Earth Discipline contains every reason why they should: 300 pages of data, anecdotes, and arguments that illustrate, in withering detail, the scale of ecological problems we face today, and the utter inability of faith-based environmentalism alone to fix them….

    Seed: As a techno-twit, you’ve got some interesting plans for this book.

    SB: Yes—I’m doing an online annotated version. It will go live at the same time that the book publishes in October. Basically, the sections of every chapter that are footnoted will be immersed in the research material with lots of live links and photos, diagrams, charts, and so on. So anyone who wants to see my sources can go straight there and draw their own conclusions.

    And I’ll try to keep updating the book. I’ve already got some additional levels of understanding from people like George Church and Larry Brilliant. I’ll just add that to the online version. ….

    — end excerpt —

    The online annotated version is the right way to go.
    The author doesn’t quit working when the book tour’s over.

  17. Excellent post and article, it certainly is a confusing area with GreenPower, RET, RECS etc. They all have a purpose but some people (and departments) seem to be confused themselves, so what hope does the consumer have.

    It’s basically about ensuring that an equivalent amount of your consumption levels is purchased from renewable generators, rather than non-renewable. Any other claims are slightly more tricky!

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