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Green Buyers Beware*

Energy analyst Nancy Rader's detailed report for Public citizen published late last year, called Green Buyers Beware: A Critical Review of "Green Electricity" Products, examines whether consumers of green electricity products are getting a fair deal for the premium prices they are paying (using California as a case study), and whether "green marketing" has significant potential for diversifying the U.S. electric system with renewable energy resources.

The answer to both questions is a clear "no." The unfolding of green marketing practices underscores the hazards facing consumers in a deregulated electricity market and the improbability that retail competition, through green marketing, will significantly improve the environmental characteristics of the electricity industry.

The major findings of the report, not elaborated here, are that:

1. Most green products on the market have no positive impact on the environment because most marketers are merely reselling renewable energy that other consumers are already paying for and that would continue to operate regardless of any resale to green consumers.
2. In some circumstances, the physical result of a consumer's purchase of a green energy product would be the extended operation of fossil fuel power plants and greater pollution.
3. The resale of utility-controlled resources to green consumers cannot make a difference in the West because the supply of these resources greatly exceeds any realistic projection of green demand.
4. Only one small green marketer (San Jose-based cleen 'n green energy) purchases power exclusively from renewable energy producers that are not owned or under contract to a utility and that would otherwise receive only the market rate for their power.
5. Most of the premiums charged for green power are spent on marketing and advertising costs, not on renewable energy content.
6. Largely because of high retail marketing costs, public subsidies are required to support green marketing.
7. Some green marketers sell products on the basis of promised future content from new renewable energy projects. Others lead consumers to believe that their products currently contain power from new renewables when they do not. Both charge extra now for promised electricity, which invites abuse of consumers.
8. Green product claims cannot be property verified without a region-wide tracking system, which does not yet exist.
9. False or misleading green product claims are common.
10. Green marketing is unlikely to reverse the current decline in renewable energy production and significantly diversify electric system resources.
11. Most green marketers are affiliated with polluting companies and are not advocates of renewable energy policy.
12. To suggest that green marketing is an answer to the lack of market penetration of renewables is to ignore the market imperfections that have hindered renewables in the first place. It is unreasonable to expect green marketing to obviate the need for public policies to promote renewable energy.

*  The full report is available from Public Citizen. It may also be viewed online at www.citizen.org/cmep.