Has a not-for-profit or charity (an NGO) contacted you to suggest switching electricity retailer? Are you convinced this helps them promote their causes while also addressing climate change?
Several NGOs are now promoting an electricity retailer Powershop to their supporters. Australian activist group GetUp! pioneered such marketing. Others forming partnerships with Powershop include anti-poverty charity Oxfam, and environmental NGOs.
Powershop is owned by New Zealand renewable energy company Meridian Energy. Powershop joined Victoria’s electricity market last year and came to New South Wales this year. It has nearly 50,000 Australian customers.
Many environmental NGOs lobby for a rapid shift to renewable energy. But why encourage supporters just to switch electricity retailer? This does not increase renewable power generation.
GetUp! wants to punish electricity retailers that own fossil fuel power stations. Surely it should promote all retailers that own only renewable generators?
These partnerships are also about fundraising. NGOs facilitating a switch to Powershop can receive about $100 a customer. GetUp! has signed up more than 11,000 customers, receiving more than $1 million. GetUp! uses the money for climate-related campaigns; Oxfam for projects in developing countries.
Does switching retailers help renewables?
Total renewable electricity in Australia is determined by renewable energy markets — the Renewable Energy Target or RET, and GreenPower™ — plus the capacity of small systems such as household solar. Electricity retailers must buy Renewable Energy Certificates (RECs) from renewable energy generators to satisfy their obligations under the RET and the GreenPower™ scheme.
I have heard anecdotally that some people think switching to Powershop helps increase renewable energy generation because Powershop’s parent company Meridian Energy owns two Australian wind farms. But what the parent company owns and what a retailer sells are quite different.
The electricity market is designed such that electricity is sold separately from its renewable attributes. The renewable component is represented by RECs. These are created by renewable energy generators, who sell them to electricity retailers, who then surrender a designated number of RECs, proportional to their electricity sales plus the GreenPower™ claimed.
Meridian, which owns the wind farms — and hence owns the renewable component of the electricity generated — sells most of its RECs to other retailers, including Origin Energy and ERM Power.
When you buy standard electricity from any retailer, including Powershop, most comes from coal-fired power stations. Unless your product carries the GreenPower™ logo, the amount of renewable energy in your electricity is the same no matter which retailer you use.
Environmental claims must be clear
The explanations about this on GetUp!’s and Oxfam’s websites seem confusing. Given the seriousness of climate change, it is crucial that consumers fully understand whether and how their actions make a difference.
While GetUp! states “Powershop must buy the electricity used by its customers via the Australian grid, which contains a mix of renewable and non-renewable energy” it also says “you'll be … showing your support for renewable energy, with a retailer backed by a 100% renewable power generator”.
What does “backed by” mean? GetUp! should be much clearer and explain that most of the renewable component from this “100% renewable power generator” is onsold to other retailers.
Oxfam claims: “Every dollar spent purchasing power from Powershop supports renewable energy generation in Australia”. Again this is confusing. Surely part of a Powershop electricity bill covers generating costs (mostly from coal); part funds powerlines; and part meets Powershop’s costs. Only a small proportion of the bill — covering the purchase of RECs and profits that Meridian reinvests — supports renewable energy generation.
Oxfam also links to a Powershop blog that states: “We generate significantly more energy than is consumed by our customers so we are increasing the greenness of the energy mix at a whole-of-market level in Australia.” But if Meridian’s wind farms weren’t there, other renewable energy generators would have been built to meet the demand created by the RET.
The market for new large-scale renewable energy is limited. Small-scale systems like household solar are uncapped. The total renewable energy sold by electricity retailers is determined by the government’s RET and the GreenPower™ scheme. More electricity from one renewable energy company means less electricity from others. Wouldn’t it be better for Oxfam and GetUp! to promote only methods that actually raise renewable energy generation, such as GreenPower™?
Both GetUp! and Oxfam promote Powershop’s electricity as carbon neutral. This is because Powershop buys international carbon credits to offset its product’s emissions.
Carbon credits come from Clean Development Mechanism projects in developing countries. However, these are currently extremely cheap and typically a household could offset its entire annual electricity emissions for just a few dollars.
More generally, offsetting Australian emissions is problematic. It is worrying that some environmental NGOs are promoting this. Australia has a responsibility to slash its own emissions — we are one of the world’s worst polluters — and should not be outsourcing our responsibilities to developing countries.
The Pope’s recent encyclical is very critical of offsets, saying, “it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors”.
Certainly Australia should help poorer countries develop sustainable energy systems — but in addition to, not instead of, slashing our own emissions.
GreenPower™ is the way to increase renewable energy
There is one way to buy 100% renewable energy from a retailer: buying GreenPower™. It costs more, but offers another market for renewable energy generators.
Most electricity retailers, including Powershop, offer 100% GreenPower™. However, Powershop’s standard product, while notionally carbon neutral, contains no more renewable generation than any of its competitors. Unfortunately, some customers may believe that they are doing their bit just by signing up for carbon neutral electricity.
Another NGO has taken a better approach. Friends of the Earth (FOE) lists all retailers that do not own fossil fuel generators. FOE also promotes the not-for-profit Community Climate Chest. This allows customers to support renewable energy (and get a tax deduction) by buying decoupled GreenPower™, that is quite separate from their electricity bill.
Why electricity retailers lobbied for or against renewable energy
Environmental groups praise Powershop because it supported a higher RET in the 2014 RET review. The large retailers (Origin, EnergyAustralia and AGL) wanted the RET reduced. GetUp! and Greenpeace labels these the "Dirty Three".
Origin, EnergyAustralia and AGL should all benefit from a reduced RET because these companies own coal-fired generators. Companies that own only renewable energy generators should benefit from a higher RET. So each company’s lobbying effort is consistent with their commercial interests. No surprises there!
If all companies are just acting on self-interest, we cannot rate one as morally better just on those grounds. A better reason for NGOs supporting a given retailer might be that the commercial interests of its owners are in renewable energy.
Certainly, the fossil fuel industry should be strongly denounced for obstructing climate action. Yes, NGOs should lobby for renewable energy. However, this is quite different to forming a partnership with a retailer.
The role of activist groups like GetUp! is to build social movements that can push for strong climate action. The role of renewable energy companies is to make profits for shareholders.
NGOs can support the actions of renewable energy companies when their interests coincide. But NGOs should remain independent so they can criticise these companies if required. For example, last year, a wind power company was in the consortium awarded the contract to build Melbourne’s highly controversial East West Link. Partnerships could tie the hands of NGOs, thereby limiting their campaigning effectiveness.
Effective climate action requires fundamental changes to our electricity system, and a massive reduction in energy consumption. NGOs can push for this; however, renewable energy companies are primarily concerned with electricity generation within the current system. It is not in their interests to promote a radical slashing of energy consumption.
Of course, NGOs need to fundraise, and sometimes this means selling products. Oxfam raises funds from product sales associated with aid projects. However, forming a partnership that raises a very large amount is qualitatively different.
How should NGOs foster strong action on climate change?
Should NGOs push for strong climate action by encouraging green consumption? GetUp! wants “to help Australian consumers use their buying power for environmental and social wins”. Yes, our energy practices need to become greener. Given the lack of strong government action, it is commendable that householders are trying to increase renewable energy usage. However, we should not limit ourselves to individualistic approaches to climate action.
As Annie Leonard from Story of Stuff says, individual solutions “amount to little more than modern adult hygiene”. She urges people to also become “active in the community and in the halls of government.” To force governments to slash carbon emissions we need to build mass action — a people’s power movement. A great example is the anti-coal seam gas/coal movement Lock the Gate.
Neoliberalism portrays climate action as an individual responsibility. Many people fail to engage in collective action, thinking they just need to be green consumers. We believe that activist groups like GetUp! need to challenge this “individualisation of responsibility”.
When NGOs use money from corporate partners to fund their campaigns, this may influence which campaigns they choose. Effective social movements need to be independent of corporate interests. GetUp!’s partnership is now helping just one company in a highly competitive market and may not be helping raise overall usage of renewable energy. What we actually need is a massive transformation of our energy systems and a social movement that can build support for this.
[Dr Andrea Bunting's PhD was on the wind power industry. She is a member of Socialist Alliance, Climate Action Moreland and Psychology for a Safe Climate.]