Is it really that simple to claim that electricity use is 100% fossil-free? No, we’re not singling out any companies in this text – but hold on, because here’s an explanation of what actually lies behind this expression. And yes, it’s dirtier than you think. Stay tuned!
Buy green on credit
Approaching the issue of green hyperboles is not easy, but for pedagogical reasons a useful starting point is the concept of guarantees of origin. When the electricity market was deregulated in 1996, this system was introduced, not so much to trace the origin of electricity but rather to provide financial incentives for producers of renewable electricity.
As the name suggests, guarantees of origin are intended to guarantee the origin of electricity. These guarantees are issued for all types of electricity production and are currently the system used for measuring energy mix and electricity sources. For each MWh of electricity produced, a guarantee of origin is created as a reference to the source of the electricity produced. To be clear, guarantees of origin are completely decoupled from the actual electricity you receive in your socket. It is instead linked to a specific electricity production.
The name renewable credits clarifies the function, where a credit is given back to the producer of the renewable electricity. It is essentially a credit note that can be used to get paid more at a later stage. A nice idea, right? But it gets more complicated…
Guarantees of origin are traded on a common European market and have an expiration date of one year. So when you buy solar electricity in Sweden, it means that somewhere in Europe, at some point in the last year, solar electricity has been produced. It does not mean that it is solar electricity that lights your bedside lamp in the evening. In other words, there is no real relationship between the electricity you buy and the electricity you use, just a debit and credit relationship in the electricity company’s balance sheet.
So what does it mean?
This basically means that there is a trade behind your own trade with the electricity companies. It also means that an electric car charged at a power pole could very well be charged with electricity generated by Polish coal power (given the common European market). Say an ‘eco-taxi’ service charges its vehicles with electricity and the electricity goes through an electricity company that guarantees 100% green electricity, this electricity could still be produced by e.g. coal power but the electricity company has bought an equivalent amount of green guarantees of origin.
Further complicating the situation is the fact that the purchase of a guarantee of origin does not necessarily mean that the producer produces more green electricity. This is because a guarantee of origin can change hands many times before it is finally canceled. In other words, a guarantee of origin has a fixed lifespan but can be bought and sold several times during that lifespan, with each purchase creating a new opportunity for green reporting. The producer of the green electricity can say look, I use green electricity, then sell the guarantee of origin to someone who can repeat the same phrase. A double count, just like any other stock.
At the national level, this problem becomes strikingly clear. In 2020, 95% of all our domestic electricity was sold as renewable or green, even though in the same year we could see that over 40% of the electricity generated came from nuclear power (which is not classified as renewable).
So what are we talking about when we talk about green communication? Perhaps we are mainly talking about a desire to appear green and sustainable, for the simple reason that as a society this is our shared ambition. But the reality, as so many times before, is more complex and requires both clarification and nuance.
But there is a silver lining…
There are now companies that offer a link between contracts and the electricity in the sockets. One such company is the start-up Renbloc, which through its service allows customers to see exactly what generated the electricity they actually use. Perhaps not to everyone’s liking, mainly because Renbloc’s software demonstrates how volatile green communication can be. This service allows customers to make informed decisions about their energy use.
Even if companies are allowed to make hyperboles and misleading statements about the electricity they supply, there are limits where reality comes into play. Companies have been fined for overreaching with their communication about the climate impact of individual products. For many different reasons, the work to ensure the well-being of the climate will be formalized and clarified in the future to ensure its effectiveness. The energy of the future will need to be green, not just wrapped in green paper. So don’t be satisfied if the product in front of you looks nice – shake and squeeze it.
Because sustainability is just a word without sustainable action.
Through a collaboration with Renbloc, Mestro Portal has been developed. We have chosen to implement data from Renbloc in the existing interface, tailored to make our customers’ sustainability reporting easier. Under Actual Emissions in Mestro Portal, the customer gets access to the real energy data and thus also a better understanding of their carbon footprint.