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Monday, January 25, 2010
Green fades in the wash
MATHEW MURPHY AND RUTH WILLIAMS
The Age, January 26, 2010
IT WAS consumer group Choice that first suspected GreenPower provider GreenSwitch was still selling renewable energy to eco-conscious customers in late 2008, weeks after it had been deregistered.
GreenSwitch, owned by a company called Global Green Plan, had been banned in September 2008 after taking money from customers to buy GreenPower certificates, but failing to buy all the certificates promised.
Sure enough, Choice was able to buy renewable energy from GreenSwitch in November, and says that, at the time, GreenSwitch's website was still spruiking ''100% accredited GreenPower''.
Choice took its evidence to the Australian Competition and Consumer Commission, which promptly made an example of the former GreenPower provider, ordering it to buy all the renewable energy certificates (known as RECs) that it had failed to purchase on behalf of its customers.
It was the third GreenPower retailer in two years to be targeted by the consumer watchdog, which is fielding a rising number of complaints about green-branded products.
''It's coming up particularly in relation to power companies,'' says Graeme Samuel, chairman of the ACCC, who says people are often keen to speak to him about GreenPower - even at social gatherings. ''They are paying a small premium on their power bill to get the green advantage, and they ask me, 'Is it for real? Is it genuine?'
''I said that we weren't sure at the moment.''
Choice uncovered GreenSwitch's actions as part of a broader investigation into GreenPower, an accreditation program for renewable energy run by six state governments.
GreenPower audits energy retailers' sales and purchases to make sure they are buying and selling the renewable energy promised and adhere to the ''highest environmental standards''.
Just as well, given the purchase of GreenPower, as with many other green-tinted transactions, hinges on trust and credibility. Accreditation is the only thing differentiating the conscientious operators from the cowboys.
GreenPower discovered that GreenSwitch's buying and selling of green energy credits didn't add up, and suspended it as a result. But, disturbingly, no one noticed that the banned operator was still selling GreenPower from its website. It was left to Choice to expose the problem.
Choice senior policy adviser Kate Norris says consumers are often hamstrung in determining the authenticity of green promises. ''The real problem in this market is that consumers can't verify these claims themselves,'' she says. ''The regulator should be better resourced so it can deal with it and there should be standards that are required to be met.''
In early 2008, BusinessDay investigated the new green economy of carbon offsets, carbon audits, green claims in advertising and the wider world of ''greenwashing'', finding clear regulatory shortfalls and many questionable claims.
Back then, the so-called ''carbon cowboys'' threatened the credibility of the offset market. Many claim such operators have left the industry, but evidence suggests that the green economy remains pocked with regulatory holes.
Efforts to boost the credibility and transparency of the voluntary carbon offset market appear to have been hampered rather than helped by the Rudd Government, which industry experts believe has been so consumed by its carbon pollution reduction scheme that it has fumbled and lagged on other crucial environmental reforms.
Consumers, meanwhile, are growing more confused and cynical about green claims.
It is a worrying situation for a government that rose to power promising ''decisive action'' on climate change. But it also has ramifications for the fight against climate change. If climate change is, as British economist Nicholas Stern declared, the biggest market failure in history, it stands to reason that market forces - especially the awesome power of the consumer - are the best tools with which to fight the problem. But consumers won't buy what they cannot trust.
This is particularly the case with the voluntary carbon offsets market, which allows consumers and businesses to pay for measures - such as tree planting or energy efficiency projects - to offset their emissions.
As with GreenPower, an offset cannot be seen or touched, meaning that accreditation and regulation is doubly important. The problem is, however, that much of the voluntary carbon market is in a state of regulatory flux.
The Government's decision to kill its Greenhouse Friendly accreditation program, its delivery of a national carbon offset standard almost a year late and its initial failure to deem voluntary carbon offsets as ''additional'' to Australia's Kyoto target have all made life difficult for the industry.
This last issue of so-called ''additionality'' in the CPRS - which would have resulted in eco-conscious consumers effectively subsidising big polluters - was fixed by amendments put forward by fallen opposition leader Malcolm Turnbull late last year, and the Government has pledged to honour them when it reintroduces the legislation next week.
But some operators, such as Melbourne non-profit Greenfleet, are still facing a regulatory vacuum if the Greenhouse Friendly accreditation program expires before the CPRS is in place.
For an operation that relies on its accreditation to reassure supporters of its credentials, it is a difficult situation.
''Credibility is everything for carbon offsets,'' says Dr Iain MacGill, from the University of NSW's Centre for Energy and Environmental Markets. ''You are asking people to voluntarily pay money to achieve an environmental outcome that wouldn't have happened otherwise. If there's questions about the credibility of that environmental outcome, obviously the market is at risk, and it should be at risk.''
The Government's efforts to regulate the carbon offset market hinge on its national carbon offset standard, meant to come into effect on July 1, the day after Greenhouse Friendly expires. Greenhouse Friendly was the closest thing Australia had to a universal label for offsets.
The standard was an election promise made by Labor in June 2007, when the then Opposition leader Kevin Rudd and shadow environment minister Peter Garrett promised to protect Australians from the ''green shoe brigade''.
They promised to deliver the standard by the end of 2008, a promise reiterated early that year by new Climate Change Minister Penny Wong. It was finally published online on December 1, 2009.
Some say the new standard raises more questions than it answers. ''We don't think the national standard is entirely adequate,'' says Jeff Angel, from the Total Environment Centre, a long-time advocate of more transparency in the offsets market. The TEC launched its own Carbon Offset Watch almost two years ago, and is planning a follow-up. ''I don't think it's likely that we will accept the national standard as the last word.''
Caroline Bayliss, director of RMIT's Global Sustainability Unit, points to multiple problems with the standard. ''It doesn't actually say in detail what you need to do - it just says you need to have a carbon management strategy … It's pretty darn confusing,'' she says.
Peter Shuey, a director of Ark Climate, a provider of GreenPower and government accredited carbon offsets, describes the standard as ''a very unfortunate document''.
He is particularly critical of its failure to require providers to be audited; the Carbon Offset Guide, published by EPA Victoria and RMIT, shows that only six out of the 85 offset providers in the market submit to voluntary audits.
''In the area of offsets, it is a complete lay down misere in terms of scams, because no one is doing any audits,'' Shuey says.
Nor are many operators disclosing sales figures, even on assurance of confidentiality. For this reason the size of the market is difficult to measure - the most recent and oft-cited figure of $44 million dates from 2006-07.
Another issue is the difficulty of ensuring credits are not double-sold.
''There is no guarantee for the customer that their purchased offset is retired, which is a major flaw in the system,'' Shuey says. ''If you want to scam, you could buy 50,000 offsets and (only) retire 5000.''
Shuey says scams remained depressingly easy to work up. ''It is the problem with an immature market,'' he says. ''There are people out there getting offsets for, say, $12 and selling them for $24. We sell GreenPower for about $40 and we get the certificates for about $35.
''But I know retailers who are selling them for about $60.'' He adds, however, that ''it is a little sanctimonious'' to protest at such mark-ups when no one in the industry is making huge profits.
Bayliss, who is also a board member of the Voluntary Carbon Markets Association, says the voluntary offset market was at risk of alienating consumers unless it increased transparency around how much money went to offset providers and how much into the actual offset.
''I think the market will get to a point where it will be like all those donations people were making to charities like World Vision,'' she said. ''Eventually there will be a point where we can say 'this is the typical price for a forestry offset domestically and internationally'. Then the consumer will start asking … like they did with World Vision, 'how much is going to Sierra Leone and my family and how much is going to your admin costs?' ''
Bayliss says that the voluntary actions - such as the purchase of offsets by households and business - can ''absolutely'' make a difference in the climate change battle. But she fears that confusion surrounding the CPRS may discourage consumers from engaging.
A national survey of more than 2000 people completed by consultants Mobium Group, released last month, found that Australians were more suspicious about environmental claims than ever, and that a lack of information to support green claims was deterring people from buying green products.
Almost 70 per cent of those surveyed said trust was a key barrier to buying environmentally preferable products and services, up from an average of 55 per cent over the past three years. Nearly 90 per cent were doubtful of green claims, compared with 84 per cent previously.
Slightly more than 80 per cent of those surveyed said a universal label (such as the energy rating label on whitegoods, which has 95 per cent recognition) would be ''helpful'' in choosing products based on environmental criteria - an area where Government leadership could make a difference.
''The ability of the Government to provide certainty is really important,'' says MacGill. ''It's very likely that because of the CPRS, they have dropped the ball a bit on other important policy issues - not just offsets, but energy efficiency, renewable energy and other areas.''
Labor came to power in 2007 promising ''decisive action'' on climate change. But as the next election looms, its green credentials are wilting. The voluntary carbon market represents a big regulatory challenge, but it is a challenge the Government must meet if it is sincere in its efforts to combat climate change.