Wednesday, October 3, 2007
Our upside-down world of rewarding polluters and making conscientious consumers pay
Reading Tim Flannery's 2006 book "The Weather Makers" finally spurned me into action and I signed our household up for the "green energy" option offered by our energy supplier. Unfortunately, I have since found out that not everything that looks green also is truly green. According to Green Electricity Watch
Energy retailers recognise a competitive advantage in providing green energy products and a confusing array of them have appeared. Some are good; some not so good; and others are of no use at all in supporting new green power generation and reducing our current emissions.
There are two broad categories of products - Green Power which is accredited by an independent government panel; and non-accredited products.
Now, what is accredited renewable energy and why does it matter? Here is the definition by Green Power, the agency responsible for the regulation of the green energy industry:
Accreditation is essentially an endorsement from an independent authority. In GreenPower’s case this means the renewable energy product is endorsed by a collection of state governments that manage the GreenPower program. For a renewable energy product to gain endorsement from the GreenPower program it must be generated from:
- Eligible renewable energy sources that meet strict environmental standards
- A new renewable energy facility that was built since January 1997 (Other renewable energy exists, but it may not be accredited because it was built before 1997, and was already contributing energy to the electricity grid)
So I went back to my energy provider, and sure enough, the feel-good "green" option I had subscribed to (which was the only one available at the time of my subscription) was not quite as green as I would have liked it to be. For $67.70 a year extra fee we got 100 per cent renewable energy (up to the average Australian household usage) but only a small proportion (I think it was around 10 per cent) was for accredited renewable energy. No wonder that Green Electricity Watch gave this option a "poor" rating. Our energy supplier has now changed their system, offering green energy products with a choice of ten, twenty, fifty and 100 per cent accredited renewable energy. The 100 per green energy option (which got a "good" rating from Green Electricity Watch) will set us back $6.00 a week (or $312 a year).
That is quite a premium to pay for doing the right thing. Wouldn't it make more sense to make customers pay for choosing a dirty energy supplier (such as coal) than punishing them for choosing a climate friendly solution? Clearly, this is a case of market failure. We do need a carbon tax to properly reflect the true cost of our choices.