Updated: Ofgem outlines gold, silver, bronze rankings for green tariffs

Customers looking to purchase green energy could soon be able to choose between gold, silver and bronze tariffs, under proposals set out today by energy watchdog Ofgem.

However, the proposals for an independent accreditation scheme for green tariffs have been attacked by some in the industry for not going far enough, and continuing to endorse tariffs that fail to contribute to an increase in renewable energy capacity.

Critics have claimed that confusion over what constitutes a green tariff is widespread among customers, and that some suppliers are guilty of simply offering tariffs that promise renewable energy that suppliers are already legally obliged to generate under the government's Renewables Obligation.

Under Ofgem's proposals, the watchdog has called for an end to this practice and urged suppliers to sign up to the new guidelines and an independent accreditation scheme that would ensure only firms offering "additional" environmental benefits through their green tariffs can market them as green. It also proposes a gold, silver and bronze ranking system, whereby tariffs are awarded a different badge based on the amount they invest in delivering these additional benefits.

Alistair Buchanan, chief executive of the watchdog, said that the guidelines would "shine a light onto suppliers green offerings to show the customer why a tariff is green", adding that energy firms should now move quickly to deliver the new accreditation scheme.

"We want suppliers to stop re-packaging their environmental activity as green immediately, and to align their marketing with our guidelines by September 2008, " he said. Ofgem warned that failure to sign up to the scheme could force it to introduce mandatory regulations governing green tariffs.

The guidelines were welcomed by Juliet Davenport, chief executive of green energy provider Good Energy. "We want to assess the proposals in detail but our initial view is that the revised guidelines and the accreditation scheme should remove "greenwash" and give customers a clearer understanding of the real environmental benefits of their chosen tariffs," she said.

However, others were less impressed by the guidelines and Ofgem's controversial proposal that the accreditation scheme should recognise a wide range of additional environmental benefits, including investment in carbon offset or demand management schemes, as well as extra investment in renewables capacity that goes beyond that legally required by the government. Observers warned that this failure to clearly distinguish between those green tariffs based on extra investment in renewable energy capacity and those based on offsets, meant customers were likely to remain confused over precisely what constitutes a green tariff.

Dale Vince, managing director of green energy supplier Ecotricity, launched a blistering attack on the new proposals, accusing the watchdog of greenwashing and failing to provide a clear definition for green tariffs. "Ofgem are avoiding the big issue, which is new renewable capacity," he said. "Putting in place a system that will ensure customers cannot get real green tariffs – instead all they can get are green tariffs where trees get planted and carbon gets offset – cuddly, stupid, off message and pointless green tariffs. That's how Ofgem think they’re going to straighten out consumer confusion – redefine green tariffs as anything other than investment in new renewables."

A spokesman for Ofgem insisted that the proposed scheme was robust and would require any supplier offering a green tariff to ensure it is investing extra money in delivering additional benefits. He defended the decision to allow green tariffs to be linked to investment in measures besides extra renewable capacity, insisting that offsets, demand management and R&D programmes would deliver "legitimate" environmental benefits. "We wanted to give suppliers the freedom to select the best mix of additional measures for their customers," he said.

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