The 4C Electricity Project

Rationale

Electricity use is a major source of greenhouse gas emissions. Yet the majority of consumers do not make a connection with their own electricity use and climate change. Nor do many realise that there are new opportunities for them to switch to less polluting energy sources in the liberalised electricity markets that are emerging in many countries. An information label, showing the sources used to generate electricity, and the associated carbon emissions would enable consumers to make informed choices about the electricity tariff they wish to choose. It would also act as an important educational tool, raising awareness and helping to create a ‘carbon conscious’ society. This would influence the mix of energy sources used to generate electricity, and incentivise electricity suppliers to reduce the carbon content of their electricity and offer renewable energy options.

Harnessing ‘consumer power’ in this way to help transform the electricity market towards lower carbon options avoids the significant political obstacles associated with both national and international emission reduction schemes. Current experiences indicate that ‘top down’ approaches to tackling climate change may not be sufficient to deliver the emission reductions required. Labelling of electricity could provide an important part of a ‘bottom up’ strategy to cut emissions, creating a market-pull for renewables to complement the market-push from regulators and policy. By educating consumers, labelling will also help to create the broad political consensus needed for international agreement on emission reductions.

Aims & Objectives

• The aim of this project is to promote the gradual greening of electricity production by informing consumers about the source of the electricity product they are currently buying. It is expected that providing consumers with such information will have the effect of increasing the demand for electricity from renewables, although this remains to be quantified through the project research.

• By assisting consumers to make an informed choice in the liberalised market place, this project proposes to develop a label (and the information system behind it) that will provide them with details of the content of their supply mix and its resulting environmental implications.

• By designing an electricity label or information system which displays information about the primary energy sources used to generate a certain product, and ranks that generation in terms of its carbon content, this label will provide a tool which can aid consumers and policy makers in greening Europeâs electricity supply. The project will also investigate, whether additional environmental indicators, besides carbon content, should be included in the label.

• The label will be explored within the context of liberalisation, in order to ensure that a functional and practical label is proposed. An assessment of the opportunities and barriers to labelling, and especially for tracking electricity, from the changes to the European liberalised markets will therefore be undertaken.

Activities

The work consists of three main parts:

Phase 1: A study of the ability of suppliers to access and provide the information needed for an electricity label within the context of liberalisation.

Phase 2: A detailed study of what the label will mean for consumers and what consumers want. To what extent would such a label provide the information they need to be able to make value decisions such as those that would lead to them switching electricity supplier?

Phase 3: Develops policies to maximise the impact of the label, investigating the need for associated policies such as advertising standards for example. This phase also views the label as part of a policy framework towards a lower carbon future, and suggests a policy toolbox of market transformation policies that can be employed to build on the label.

It is recognised that within the present context this cannot be the final study but its output is expected to establish a solid basis from which the issue can be taken further. In this way it will meet the multiple objective of addressing the practicalities of label implementation, label design to ensure consumers are well informed and to recommend means of using this tool to achieve EU goals of increased renewable energy production and carbon reductions.