Green Business Energy UK: Genuine vs Greenwashed Tariffs

TL;DR

A green business energy tariff can mean a supplier has built and is feeding power from new renewables, or it can mean the supplier has bought tradable certificates that let it label brown grid electricity as renewable on your bill. The two routes have very different climate impact. UK tariff labelling does not distinguish them clearly. This guide explains what to look for, what to ignore, and how the Advertising Standards Authority and Ofgem now police greenwashing claims.

Last reviewed: 12 May 2026

By 2026, almost every UK business energy supplier offers a tariff labelled green, renewable, or 100 percent renewable electricity. The marketing implies a fundamental choice: pay more, support clean energy. The underlying reality is more nuanced. Some green tariffs genuinely contract with named renewable generators and pay them directly. Others buy certificates on a wholesale market that decouples the certificate from the physical electron, and use those certificates to relabel ordinary grid power.

This guide unpacks the two routes, explains how the UK regulatory framework treats each, and shows you what to ask a supplier before signing.

Why the question matters

For an SME with annual energy spend of £20,000 to £100,000, the premium for a green tariff is typically 2 to 8 percent on unit rates. Across a portfolio of sites the cost difference can be material. The fair question for any business is whether that premium translates into actual additional renewable generation that would not otherwise have happened.

The honest answer depends on what you bought. A Power Purchase Agreement with a specific wind farm clearly does. A bulk purchase of unbundled Renewable Energy Guarantees of Origin from an oversupplied secondary market arguably does not. The label "green energy" covers both.

The certificate system: REGOs and GoOs

UK and EU electricity markets use a tradable certificate system to track renewable generation. The UK certificate is the Renewable Energy Guarantee of Origin, or REGO. The EU equivalent is the Guarantee of Origin, or GoO. Both certify that a defined volume of renewable electricity was generated and fed into the grid during a specific period.

The original purpose was simple: stop double-counting. If wind farm A generates 1 GWh of electricity, only one party should be able to claim it. REGOs and GoOs allocate that claim to a single owner.

The complication is that REGOs are tradable separately from the underlying electricity. A renewable generator can sell its physical electricity at the wholesale price to one buyer, and sell its REGOs separately to a different buyer who wants to claim renewable status. The wholesale market does not distinguish between renewable and non-renewable electrons once they enter the grid: they are physically indistinguishable. The REGO is the paper claim that follows the molecule.

How a non-green supplier sells you a green tariff

A supplier with no direct renewable generation contracts can build a green tariff in three steps:

Buy ordinary electricity on the wholesale market, including a fossil-heavy mix reflecting the actual UK generation mix on any given day.
Separately buy REGOs from generators or brokers in the secondary REGO market, matched to total customer consumption on the green tariff.
Use the REGOs to certify that the volume billed to green tariff customers is renewable.

The supplier is not breaking any rule. The REGO system is designed to allow this kind of disaggregation, and Ofgem accepts REGO-backed labelling as the basis for fuel mix disclosure. The supplier can truthfully state on its bill that 100 percent of the electricity sold to green tariff customers is matched by REGOs.

What it cannot truthfully say is that the purchase additionally caused new renewable generation. The REGO secondary market has been chronically oversupplied for several years, with prices for vintage REGOs in some periods falling below £1 per MWh, far too low to influence generator economics. Buying those certificates simply allocates an existing surplus to a new owner. The wind farm would have built and operated regardless.

What a genuinely green tariff looks like

The clearest contrast is a Power Purchase Agreement. A PPA is a long-term bilateral contract under which a renewable generator sells electricity directly to an end user or supplier at an agreed price. The supplier or buyer is taking project risk: the generator built the project knowing the demand was contracted.

For a corporate buyer, a PPA delivers genuine additionality. The contract supports the financial case for the renewable project at the point it was being built or developed. The buyer can also point to a specific named asset, with a postcode and a generation profile, that is producing the electricity attributed to them.

Suppliers building green tariffs around PPAs typically:

Disclose the specific generation assets, often with site names and locations.
Match volume on a half-hourly or daily basis where possible, rather than annual aggregate.
Carry the PPA price risk on their balance sheet, often passing it through to customers in unit rates.
Publish a third-party audit of the matching methodology.

The premium for a genuine PPA-backed green tariff tends to be higher than for a REGO-backed tariff. The supplier is paying real renewable generators a fixed long-term price rather than buying surplus paper certificates at near-zero cost.

How to tell the difference on a quote

The clearest tell is what the supplier discloses. A REGO-backed tariff and a PPA-backed tariff use the same regulatory disclosure framework, so the fuel mix label looks identical. Both can show 100 percent renewable on the bill. To distinguish them, look beyond the label.

Questions to ask before signing:

Does the supplier own or have long-term PPAs with named UK renewable generators? Ask for the asset list.
What proportion of the supplier's green tariff volume is matched to PPAs versus unbundled REGOs?
What is the matching granularity? Half-hourly matching is materially stronger than annual matching.
Has the supplier published a third-party verification of its green tariff methodology?
What happens to the REGO surplus or shortfall in any given year? Is it banked, sold on, or used to support marketing-only claims?

A supplier that genuinely backs its green tariff with PPAs will usually answer these in writing. A supplier relying on the REGO secondary market will often deflect to general fuel mix disclosure.

The ASA rulings on greenwashing claims

The Advertising Standards Authority has, since 2022, ruled on several complaints against energy suppliers for misleading green tariff claims. The pattern of rulings establishes a clearer line on what suppliers can and cannot say:

Claims that a tariff is "100 percent renewable" backed only by REGOs are generally permitted, provided fuel mix disclosure is accurate.
Claims of "zero carbon" or "carbon neutral" require evidence beyond REGOs, because they imply lifecycle emissions and Scope 2 emissions claims that REGO certificates do not fully substantiate.
Claims of "supporting" or "investing in" renewable generation must be backed by genuine financial flows to new or operating renewable projects, not just secondary-market certificate purchases.
Claims about reducing the customer's carbon footprint must be qualified to reflect the limited additionality of REGO-only tariffs.

The ASA framework runs alongside Ofgem's separate consultation, ongoing through 2024 and 2025, on tightening fuel mix disclosure rules for green tariffs. The expected direction is greater required transparency on the underlying source of green claims, with possible separation of PPA-backed and REGO-backed labelling.

Green gas: a separate problem

Green business gas tariffs work on the same principle as green electricity, but the supply side is far more constrained. UK biomethane production is small relative to total gas demand, and most green gas tariffs are backed by Renewable Gas Guarantees of Origin, the gas equivalent of REGOs.

The honest version of green gas is either biomethane injected directly into the grid from anaerobic digestion or a verified offset programme. The dishonest version is again a REGO-style certificate decoupled from physical flow. The same questions apply.

For most businesses, the highest-impact carbon action on gas is reducing consumption through efficiency or partial electrification, not buying certificates. The green gas market is too small to absorb significant additional demand without driving up certificate prices and revealing the supply constraint.

What additionality actually means

The term "additionality" is the heart of the greenwashing question. A renewable purchase is additional if it caused a renewable asset to be built or operated that would not otherwise have been built or operated. It is not additional if the asset would have existed regardless.

By this test:

A long-term PPA for a new-build wind or solar project is highly additional, because it underwrites the financing.
A long-term PPA for an existing renewable asset has limited additionality, because the asset is already operating.
An unbundled REGO purchase from an oversupplied market has minimal additionality, because the volume already exists.

If your business has set a Net Zero target or a science-based emissions reduction target, the additionality test matters. The Greenhouse Gas Protocol's market-based Scope 2 accounting allows REGO-backed claims, but the credibility of corporate net zero claims increasingly depends on demonstrating additionality, not just certificate ownership.

The pricing reality

A supplier offering you a green tariff at a 2 percent premium over its standard tariff is almost certainly using REGOs. A 2 percent uplift cannot fund a PPA. A genuinely PPA-backed tariff typically costs 8 to 15 percent more than the supplier's standard product, reflecting the cost of long-term renewable price commitments.

If price is the decisive factor, the honest framing is: a small premium gets you a label, a larger premium gets you a contract that genuinely supports new renewables. The choice is yours, but the labels alone do not tell you which you are buying.

Frequently asked questions

Editorial disclaimer: This guide explains the structural difference between REGO-backed and PPA-backed green energy tariffs based on Ofgem regulation, ASA rulings, and standard industry practice. Individual supplier offerings vary. Confirm the specific basis of any green tariff with the supplier in writing before signing.

Are all green energy tariffs the same?

No. The label hides a wide spectrum from genuine Power Purchase Agreement backed tariffs to tariffs backed only by secondary-market certificates with limited additionality.

Does buying a green tariff reduce my business carbon footprint?

Under the Greenhouse Gas Protocol's market-based method, a REGO-backed tariff allows you to claim reduced Scope 2 emissions. The physical electrons in your supply are unchanged. Whether the certificate purchase caused additional renewable generation is a separate question.

What is a REGO?

A Renewable Energy Guarantee of Origin is a tradable certificate confirming that a defined volume of electricity was generated from renewable sources in the UK. REGOs can be sold separately from the underlying electricity.

How do I check whether my supplier is genuinely green?

Ask the supplier to list its renewable generation assets and PPAs, the proportion of green tariff volume matched to each, the matching granularity, and whether the methodology has been third-party verified.

Will UK rules on green tariffs change?

Ofgem has consulted on tightening green tariff disclosure rules and on possibly separating PPA-backed from REGO-backed claims. The direction of travel is greater required transparency, but no final rules have yet been published as of mid-2026.

How we verified this

This guide draws on Ofgem published guidance on fuel mix disclosure and the REGO scheme, Department for Energy Security and Net Zero policy publications on renewable certificates, ASA adjudications on misleading green energy claims published 2022 to 2024, and the Greenhouse Gas Protocol scope 2 guidance. Premium pricing benchmarks reflect quote data from major UK suppliers for 2024 to 2025.

Sources

For more on the underlying mechanics of corporate renewable procurement, see our guides to REGOs and business energy, Power Purchase Agreements for business, and net zero for business energy buyers.