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RSPB-backed 'green' electricity
marketing scheme censured
by Advertising Standards Agency
Editorial
Filed 11 Dec 04
Summary
Complaints against a 'green' energy advertising
campaign, backed by the Royal Society for the Protection of Birds
(RSPB), have been upheld by the Advertising Standards Agency (ASA).
The ASA ruled that the advertisement should not be repeated unless
what it claimed could be proved (1).
RSPB Energy had claimed that sales of electricity
supplied by Scottish & Southern Energy plc
"helps reduce the amount of carbon dioxide entering the
atmosphere and is increasing the amount of renewable energy being
produced in the UK"
The ASA upheld complaints that Scottish &
Southern, in order to qualify for the government's renewable obligation
schemes, had in fact reduced the capacity of some of its hydroelectric
schemes.
Specifically the advertisers had not provided
evidence to show that they were increasing the amount of renewable
energy being produced in the UK at the present time.
Editorial Comment
It is a matter of great concern that the 'green
lobby' - in this case in the form of the RSPB in conjunction with
one of the UK's leading energy producers - should be found guilty
as charged of misleading the public through advertisements containing
claims that they cannot substantiate.
Regrettably this adjudication by the Advertising
Standards Agency (ASA) is likely to have exposed only the tip of
the iceberg of inadequately substantiated statements contained in
submissions by well-funded lobby groups to influential committees
within the Westminster and Scottish Parliaments (2),
and in their propaganda for the public (3).
The censoring of the RSPB and the marketing
devices of one of the UK's major companies must be a warning to
the public and to MPs and MSPs to interpret the propaganda of such
bodies with caution. Perhaps it has become a forlorn hope to expect
a basic standard of ethics from such influential organisations.
DETAIL
The
following is a transcript of the ASA report (1)
Background information
Because of the complexity of the subject matter
in this case, the Authority (i.e. ASA) took the unusual step of
providing some background information to the complaint.
The Authority understood that Ofgem had responsibility
for implementing the Government’s Renewables Obligation, which
encouraged the expansion of the renewable generation sector by setting
targets for electricity suppliers to source a proportion of their
electricity from renewable generators; the target for 1 April 2003
to 31 March 2004 was 4.3%.
It noted Ofgem issued generators with Renewables
Obligation Certificates (ROCs) for their renewable electricity
output. The Authority understood that each ROC represented one megawatt
hour of electricity and that ROCs could be sold by the generator
either with or separately from the renewable electricity generated;
the opportunity for generators to sell ROCs separately from renewable
electricity created a market for traders or brokers to buy and sell
ROCs and enabled renewable electricity generators to maximise their
revenue by selling their ROCs to the highest bidder.
It understood that there were three ways for electricity
suppliers to meet their obligation:
1. they could buy 4.3% of their electricity from renewable generators
and present ROCs to show they had done so;
2. they could use the buy-out clause, which allowed suppliers
who had not bought enough renewable electricity to fulfil their
Renewables Obligation to meet their obligation by paying for the
shortfall (the buy-out price for 1 April 2003 to 31 March 2004
was 3.051 p/KWh);
or
3. they could use a combination of ROCs and buy-out to meet the
target.
The Authority noted all buy-out payments were
made to Ofgem, who redistributed the payments to the electricity
suppliers who had met their Renewables Obligation through ROCs,
in proportion to the number of ROCs they presented.
Detail of the complaints to the ASA
Objection to a brochure and magazine advertisement
for renewable energy.
The front page of the brochure stated:
"Power to protect wildlife and the environment"
Text inside the brochure stated
" ... RSPB Energy now exceeds the requirements laid down
by the government’s Renewables Obligation by 10%. In simple
terms this means that for every 10 customers, RSPB Energy will
support the generation of enough additional renewable electricity
to supply the needs of an average home. RSPB Energy is brought
to you by a unique partnership between the RSPB ... and the Scottish
and Southern Energy Group ...".
The magazine advertisement stated
" ... RSPB Energy helps reduce the amount of carbon dioxide
entering the atmosphere and is increasing the amount of renewable
energy being produced in the UK ...".
The complainant, who pointed out that Scottish
and Southern Energy Group had down-rated the capacity of some of
their hydroelectric generating stations to ensure eligibility for
receiving ROCs and believed the lost capacity outweighed the renewable
energy contributed by the advertised scheme, and who questioned
whether the advertisers' retired ROCs scheme increased the amount
of renewable energy generated, challenged the claims:
1. "RSPB Energy now exceeds the requirements laid down by
the government's Renewables Obligation by 10%. In simple terms
this means that for every 10 customers, RSPB Energy will support
the generation of enough additional renewable electricity to supply
the needs of an average home" and
2. "RSPB Energy ... is increasing the amount of renewable
energy being produced in the UK".
Codes Section: 3.1, 7.1, 49.2 (Ed 11)
Adjudication
The advertisers said they would retire ROCs to
the value of 10% of all RSPB Energy electricity consumption. They
stated that all retired ROCs were formally classified as such by
Ofgem and could not be used by any supplier to fulfil their Renewables
Obligation.
The advertisers asserted that the removal of ROCs
from the ROC market stimulated the generation of an equivalent quantity
of additional renewable electricity. They conceded that the buy-out
clause offered an alternative to buying renewable electricity as
a way of meeting the Renewables Obligation; they believed, however,
that because they were committed to retiring 10% of their ROCs,
the buy-out option would not affect their pledge to increase the
amount of renewable electricity generated.
The advertisers argued that they were exceeding
the requirements of the Renewables Obligation by 10% because their
commitment to sourcing 4.3% of their electricity from renewable
generators applied to the electricity supplied by Scottish and Southern
Energy Group's supply business, SSE Energy Supply Ltd, and, in addition
to that, they were retiring ROCs to the value of 10% of RSPB Energy
electricity consumption; they believed they were doing 10% more
than was required.
The advertisers asserted that eligibility to receive
ROCs depended on a generating station's capacity, not output, and
that down-rating the capacity of some of their hydroelectric generating
stations had not reduced the amount of renewable energy those stations
produced.
Complaint No.1 upheld
The Authority understood that the declared net
capacity of a hydro-generating station could be regarded as the
theoretical maximum of electricity that the station could produce.
It understood that the down-rating of a station's declared net capacity
would not necessarily affect the efficiency of the station, that
increasing the efficiency of a station could increase the annual
MWh output, and that the efficiency could be increased without increasing
the declared net capacity. The Authority also understood that the
down-rating of a station's declared net capacity could result in
reduction in output during periods of high rainfall, because stations
with reduced capacity would not use the optimum amount of water
when reservoirs were full; that would result in increased spill
from dams, which would represent lost energy. The Authority concluded
that down-rating the capacity of hydroelectric generating stations
might not necessarily reduce the amount of renewable energy those
stations produced, but that the output of those stations could be
reduced during periods of high rainfall.
The Authority noted the target for 2003 -2004
was for electricity suppliers to source at least 4.3% of their electricity
from renewable generators and considered that the claim
"RSPB Energy now exceeds the requirements laid down by the
government's Renewables Obligation by 10%"
was confusing because it implied the advertisers
were exceeding the Government's 4.3% target by 10%, which would
mean that 4.73% of RSPB Energy was produced from renewable sources,
whereas the Authority understood that 100% of RSPB Energy was produced
from renewable sources.
It was not convinced that the advertisers were
exceeding the requirements of the Renewables Obligation by 10% merely
because they were retiring 10% of their ROCs. The Authority noted
each ROC represented one megawatt hour of electricity and understood
that the advertisers held one ROC for every megawatt hour of electricity.
It understood that, if 100% of RSPB Energy electricity was produced
from renewable sources and if the advertisers were retiring ROCs
to the value of 10% of their electricity consumption, it meant that
they were retiring 10% of their ROCs.
The Authority understood that the theory behind
the claim
" ... for every 10 customers, RSPB Energy will support the
generation of enough additional renewable electricity to supply
the needs of an average home"
was that, as a result of the advertisers retiring
10% of their ROCs, the amount of renewable electricity generated
would increase by 10% of the advertisers' output; that increase
would be equivalent to 10% more electricity being supplied to the
National Grid, for every RSPB Energy customer, than that customer
used, so for every 10 customers, enough renewable electricity would
be supplied to the National Grid to meet the consumption of 11 typical
RSPB customers.
It considered that the claim rested on the assumption
that retiring ROCs created a proportional increase in demand for
renewable electricity. The Authority understood that retiring ROCs
forced more suppliers to use the buy-out option to fulfil their
Renewables Obligation, which increased the value of the ROCs that
were in circulation, because it both reduced the supply of ROCs
and increased the amount of money to be redistributed to ROC holders.
The Authority considered it likely that the advertisers'
retired ROCs scheme would, in time, lead to an indirect increase
in the generation of renewable electricity, because the profitability
of renewable energy generation would increase if ROCs were expensive.
The Authority considered, however, that it had
seen no evidence to prove the assumption which the claim rested:
that retiring ROCs created a proportional increase in demand for
renewable electricity.
The Authority told the advertisers not to repeat
the claim unless they had evidence to prove it.
Complaint No.2 upheld
The Authority understood that the advertisers'
retired ROCs scheme was in its early stages and considered that
the advertisers had not sent evidence to show that they were increasing
the amount of renewable energy being produced in the UK at the present
time.
The Authority was not satisfied that the claim
had been substantiated and told the advertisers not to repeat it
unless they had evidence to prove it.
References
1. Advertising Standards Agency
(2004). RSPB Energy and Scottish & Southern Energy plc
http://www.asab.org.uk/asa/adjudications/Adjudication+Details.htm?Adjudication_id=39042
2. Macleod, Kirsty (2004). Who
governs rural Scotland? People Too conference, Perth
A review is presently being prepared for Land-Care with particular
reference to the submission by EnvironmentLink to the committee
of the Scottish Parliament considering the Nature Conservation (Scotland)
Bill (now Act).
3. Mitchell, Ian (2004). False
claims from RSPB.
See ENVIRONMENT Homepage, filed 11 Aug 04, www.land-care.org.uk
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