Renewable energy doesn't count in carbon reporting

The UK government plans to change reporting criteria for businesses so that they will no longer be able to claim carbon savings gained by using renewable energy. As a result, many organisations which currently claim to be "carbon neutral" could find themselves with a large carbon deficit to deal with. Several large companies are lobbying against the move, including BT which has been using the carbon contribution from buying renewable energy to help towards its ambitious target to cut carbon by 80% by 2020.

Currently about 5% of UK grid electricity is generated from clean hydroelectric and wind sources, and in 2005 the government said companies buying such renewable electricity tariffs could report them as producing zero emissions. However, environmental campaigners and energy experts have called into question the benefits of green tariffs. The Carbon Trust has indicated that concerns over green tariffs are similar to those over carbon offsets: transparency, double counting and additionality – ie whether they cut carbon emissions over and above what would have happened anyway.

Hence the move by Defra, which could prove costly for larger businesses, which from 2010 will have to participate in the Carbon Reduction Commitment. The cap and trade scheme will not just impose levies on companies with above-average carbon emissions, it will also rank them in a league table, causing potential embarrassment for organisations which have previously earned a reputation for carbon busting.

A consultation will now take place on this subject, but it's likely the controversy will continue for some time. In the meantime, organisations which are serious about cutting carbon should focus on reducing energy use rather than relying on the potential carbon benefit of renewables.