‘Greenwashing’ Is Slowing Down Needed Progress In Renewable Electricity Studies – Analysis

By Zhangchen Wang*

The renewable energy industry is now entering a stage of high-speed growth as countries pay more attention to reducing carbon emissions. Considering the enormous additions of the fossil fuel industry to the global CO2 emissions output, a transition from fossil fuels to renewable energy to generate electricity will be the only path to curb climate change. In fact, this transition has already begun.

Currently, more than a fourth of global electricity production capacity comes from renewable energy, leading the proportion of fossil fuels-generated power to decrease in recent years. Many energy consumers, including both individual households and major corporations, are also trying to increase their share of renewable electricity to fulfill sustainable development goals and enhance the brand image. Unfortunately, despite the encouraging trends, the huge demand for renewable electricity clearly exceeds its actual productivity.

As a result, some cases of misinformation and practices in disinformation related to climate productivity—commonly coming to be known as “greenwashing”—began to emerge in the renewable energy industry. Although the emergence of such “greenwashing” activities further prove the preference of the public and general market toward renewable energy and its unprecedented potential, it is still necessary to prevent this misleading information from both causing unfair competition and consequently damaging the environment. 

According to the United Nations, “renewable energy” refers to the energy derived from natural resources—such as solar, wind, water, and geothermal—that are replenished faster than they are consumed and create far fewer carbon emissions than fossil fuels. Global renewable electricity generation capacity is expanding rapidly every year, and it amounted to more than 3,000 gigawatt (GW) by the end of 2021. The International Energy Agency is also expecting this capacity to double between 2022 and 2027. Nevertheless, as an increasing number of households and corporations anticipate switching to renewable electricity, the supply of renewable electricity starts to look stretched and the chance for “greenwashing” is therefore created. 

As hinted above, “greenwashing” is essentially a form of disinformation occasionally involving misinformation. It typically refers to the activity of companies intentionally enticing consumers who prefer environmentally-friendly products to purchase goods or services by falsely promising their products to be sustainable or environmentally conscious, or exaggerating the product’s environmental protection effect. In the case of renewable energy, some energy providers conducting greenwashing would falsely claim that they are providing 100% renewable energy while the majority of the energy that they supply is still generated by unsustainable fossil fuel-generating power plants. 

As environmental concerns get more attention from the public, protecting the environment and achieving zero carbon emission is becoming a new fashion. Customers are also more inclined to choose “green” products. This allows many companies to make themselves more attractive in the market through greenwashing. For example, apartment buildings in metropolitan areas have used “zero emission” as selling points to attract new residents while in reality it could be using the same sources of electricity generated by fossil fuel power plants as a building that does not make that statement.

By 2020, at least nine universities in the United States claimed to be carbon neutral—a claim that does not require any renewable energy initiatives—and many higher educational institutions said that they are gradually becoming carbon neutral even though the majority of them do not generate any renewable energy at all. These agencies and companies almost all achieved their self-claimed objectives through purchasing certificates, such as the renewable energy certificates (REC) of the U.S., to “greenwash” the energy they supplied in order to make their claims appear legitimate. 

While acknowledging that money paid to the certificates is still used in developing renewable energy and the ones who purchase the certificates are indeed making contributions in this regard, it has to be simultaneously recognized that the whole process is causing extra waste that could be avoided and providing a hotbed for misinformation. Firstly, no one is able to guarantee that the electricity used by an individual is 100% renewable because electricity generated in all methods has to be collected together by electric grids before being redistributed to customers.

Moreover, electricity generated by low- and zero-emission generators could both be verified with passes like RECs, allowing some polluting energy sources to be falsely exaggerated in value. A journal article published in Nature Climate Change suggests that RECs lead to an inflated estimation of the mitigation effectiveness by at least 20% on average. 

In many cases, the REC-type certificates are likely to be more of a self-consolation that is ultimately counterproductive in fighting climate change. Unfortunately, their spending for these certificates does not immediately change the amount of fossil fuel used and the money that they pay is not fully used to build more renewable electricity generators because a part of the fees is paid to the brokers to provide the certificates. 

It is feasible and necessary to reduce carbon emissions by increasing the proportion of renewable energy usage; the world just needs to find more effective and meaningful methods. There are two ways to achieve this objective. First, instead of tangling with the RECs, companies should be encouraged to increase the direct investment in the construction of renewable energy power generators, which is not only a more immediate method but also avoids the expenses on brokers.

For example, last year entities in China—both governmental and private—invested more than five hundred billion dollars in clean energy and China again generated the most renewable energy in the world. Indeed, investments make less of a visual impact than self-claimed zero-emission, but the end goal of proper climate-related projects is to pragmatically get closer to preventing climate change rather than portray a seemingly “green” image. 

Second, renewable energy certificates and other carbon-offsetting products should not be banned all at once since they would subsidize the relatively high-cost renewable electricity. Instead, more strict criteria must be set for the issuance of the certificates and the scope of application of the revenues from selling certificates. Energy generated by low-emission generators should still be praised for its progress, but it should not be issued the same RECs as those of the zero-emission generators; this will help prevent companies from using it for greenwashing.

Also, there are renewable electricity generators built without relying on RECs and so are not obligated to use the money earned from REC sales on expanding renewable energy. This situation must change to accommodate the future development of renewable energy development. The generators should be required to use the compensation earned from RECs to further develop its renewable energy generation capability, or they should not be allowed to enjoy the benefits brought by the REC. 

Emission reduction and carbon offsetting products such as the REC are essentially active measures to encourage and support renewable energy development and satisfy the public’s goal of protecting the environment. It is also understandable to encounter issues such as greenwashing since all those products are still in their early stages, and there are rules and regulations that need to be improved. However, a better organized and regulated carbon trading system must be established as soon as possible to ensure fair trading and healthy operation of the market. This is not only to protect the interests of both producers and consumers but also to eliminate hidden obstacles to the future development of renewable energy.

*About the author: Zhangchen Wang, Research Assistant Intern, BCCC Program

Source: This article was published by ICAS