Original article by Martin Williams republished from OpenDemocracy under a Creative Commons Attribution-NonCommercial 4.0 International licence.

Exclusive: Energy firm making ‘misleading’ claims about ‘neutralising’ gas with carbon credits

The Labour Party’s biggest corporate donor has been accused of “greenwashing” after an investigation by openDemocracy.

Ecotricity Ltd, which has given almost £3.4m to Labour since Keir Starmer became leader in 2020, claims to be “Britain’s greenest energy supplier”.

Yet 99% of the gas it supplies comes from fossil fuels. The company claims this gas is “carbon-neutralised” because it invests in “carbon reduction programmes to cancel out the carbon burned”.

But openDemocracy has learned that Ecotricity has no active carbon credits – despite listing four environmental projects on its website that it says it supports.

When questioned about the company’s claims that “carbon emissions from our fossil fuel gas are offset by investing in carbon reduction schemes”, a spokesperson admitted that some of the schemes it previously supported had not done “as promised” – and said that information on its website would be “refreshed”.

But experts warned that even if the company held active carbon credits, its claims that these “neutralise” its fossil fuel gas would still be misleading.

“It is highly misleading for a company to claim that its product – or itself – is carbon- or climate-neutral,” said Lindsay Otis Nilles from Carbon Market Watch. “These false claims are based on heavily flawed scientific principles and lead to consumer confusion.”

The company has not broken any laws, but it will be illegal to claim that carbon offsets can “neutralise” fossil fuel products in the EU from 2026, as the bloc looks to crack down on greenwashing. An EU directive says these claims create a “false impression to consumers that the consumption of that product does not have an environmental impact”.

Analysis by openDemocracy shows that some of the carbon offset projects that Ecotricity previously pumped money into have been linked to environmental concerns and human rights abuses.

In some cases, records cast doubt on whether the company’s offsetting credits actually helped to reduce emissions at all – since the projects it invested in were already fully funded.

For example, two years ago, Ecotricity purchased credits in the Soubré hydropower plant, the largest hydroelectric dam in Ivory Coast, which was completed in 2017.

The project cost around £452m, 85% of which had already been secured by January 2017, with a loan from EXIM Bank of China. The remaining 15% was covered by the Ivory Coast government.

The Soubré powerplant previously came under fire in a 2019 report that accused it of having an “irresponsible” approach to monitoring its potential environmental impact.

The report, which was published by American environment and human rights organisation International Rivers, also included complaints by workers at the dam of instances of “discrimination and physical abuse” and “threats from the government” when they spoke out.

Meanwhile, the project’s main contractor, Chinese firm Sinohydro – which is responsible for its engineering, procurement and construction – has faced allegations of fraud elsewhere.

The company is currently excluded from projects financed by the European Investment Bank, following an investigation into “misconduct”. And in 2018, another investigation by the African Development Bank found that Sinohydro had “engaged in a fraudulent practice”.

Ecotricity has also held carbon credits in another hydroelectric power plant in Indonesia, called Asahan 1. Reports from as far back as 2012 say the company behind it, PT Bajradaya Sentranusa, had already secured funding from a bank “to take over the entire existing project loans for the construction” when Ecotricity bought the credits.

A spokesperson for Ecotricity said: “The information on the website about carbon reduction projects is being refreshed.”

They added: “We used carbon credits to entirely offset our gas supply for the financial year 2024 which is now closed and our offsetting programme for the financial year 2025 is currently under review which is why we do not currently hold any credits. Any suggestion that we do not or will not offset our gas in the future is false and misleading.”

“Offsetting is an annual accounting period practice and can take place at any point in that [financial year] – that is standard practice. Our offsetting programme for the financial year 2025 is currently under review. Any suggestion that we do not or will not offset our gas is wrong.”

The spokesperson added that Ecotricity is looking at “more direct carbon capture methods”, adding: “Carbon offsetting has been a bridge. We have always been clear about that.”

‘Greenwashing’

Ecotricity not only boasts about its own climate credentials, it also actively warns customers about “greenwashing” by rival energy suppliers.

“A number of energy companies claim green credentials for themselves or for some of their tariffs,” it says, “but are their claims genuine?”

But Ecotricity has itself now been accused of greenwashing. Responding to the company’s claims about carbon offsets, Nilles of Carbon Market Watch told openDemocracy: “It is a fallacy to think that purchasing carbon credits on the voluntary carbon market can magically ‘cancel out’ or ‘offset’ climate harm. Greenwashing practices like this must stop once and for all.”

Ecotricity’s founder, Dale Vince, recently joined Labour’s campaign in Bristol. His involvement in the constituency is controversial because it is seen as one of the few seats the Green Party has a genuine chance of winning in this week’s general election. But Vince tweeted: “Labour has a green manifesto and can make it happen.”

The self-styled “green industrialist” is the outright owner of Ecotricity’s parent company, Green Britain Group Limited. According to the latest accounts filed with Companies House, this firm made £38m profit in the year ending 30 April last year, after bringing in more than £550m turnover.

Responding to openDemocracy, Vince repeated the claim that carbon credits were used to achieve “net neutrality”.

He said: “Ecotricity bought carbon credits from the Asahan and Soubre schemes two years ago – we no longer do so. We’ve been reducing our carbon footprint annually for decades and only recently used carbon credits to achieve net neutrality, for our green gas while we built new gasmills.

“It’s important to reduce as far as possible before using credits, but that world is full of uncertainty, risk and projects that don’t do as promised, which these two schemes appear to be an example of. We welcome the EU move to clamp down on all forms of greenwashing.”

Vince accused openDemocracy of a “smear attack” with a “rather distorted presentation of facts”.

Prior to this response, openDemocracy had repeatedly asked Ecotricity to provide a complete and up-to-date list of its carbon credit portfolio, but it failed to do so.

Last week, Vince told the Financial Times that he was not seeking support for his own energy projects from Labour. “I don’t want support for my projects,” he said, “I’m not interested, life’s too short to be chasing money.”

The latest accounts filed by Green Britain Group Limited show it received £123m in “government grants” in the year ending April 2023. The financial support was designed to pay energy firms to cap prices for consumers.

The previous year, the company received a £9.4m Covid “business interruption” loan to support large companies in the pandemic.

However, Vince told openDemocracy: “Ecotricity hasn’t had any government subsidies.”

Original article by Martin Williams republished from OpenDemocracy under a Creative Commons Attribution-NonCommercial 4.0 International licence.