In late 2022, the Federal Trade Commission (FTC) announced that it was seeking public comment on potential updates to its ‘Green Guides,’ aiming to recalibrate its guidance following shifts in consumer expectations and stakeholder commitments around environmental commitments. Consumers are increasingly interested in and demanding access to less carbon-intense forms of energy, including renewable energy.
In particular, the FTC’s Green Guides, which are a set of guidelines issued by the FTC to help companies avoid making false or misleading environmental claims in their marketing materials, are in the spotlight. Accurately and honestly advertising the environmental benefits of products and services can help deter greenwashing, a term used to describe the practice of misleading environmental claims.
The FTC’s Green Guides are a critical resource that equips consumers with the information necessary to make informed decisions as they shop, looking to save money on their utility bills while promoting the use of renewable energy.
We applaud the FTC for taking action to update the Green Guides and strongly support the efforts to help marketers ensure that the claims they’re making promote competition, protect consumers, and have a tangible environmental impact. REAL believes that there is a continuing need for the Guides, as they provide significant benefits to consumers.
Following unprecedented rate hikes in many states, many consumers are switching to retail energy suppliers to lock in lower, fixed rates and take control of their carbon footprint. Many energy plans offered by retail suppliers include 100% renewable energy, employing the use of renewable energy certificates (RECs) to represent carbon-free energy sourced by suppliers in these plans to meet the growing consumer preference for clean energy. Unfortunately, misconceptions surrounding RECs suggest that they might not actually help renewable energy deployment — but those concerns fail to recognize the fundamental understanding of RECs.
Within the Green Guides, the current guidance in the Renewable Energy Claims section (§ 260.15) is satisfied by retail suppliers who provide renewable energy products by purchasing RECs with wholesale energy (i.e., “grid power”). This guidance has been consistently reinforced by state law and voluntary standards.
In its comments to the FTC, REAL recommended that the FTC maintain the current guidance emphasizing the importance of REC ownership and retirement as the foundation needed to prevent deceptive renewable energy claims and marketing.
REAL urged the FTC to avoid new restrictions on renewable energy claims that could conflict with state law or other existing standards and practices, such as prohibiting unbundled RECs, specifying that RECs must be procured from a particular location and others. Such guidance would create barriers in the voluntary market and would make it more difficult (if not impossible) for consumers to access renewable energy products.
Customer understanding is paramount to a healthy and sustainable marketplace for energy-related products and services. In its comments to the FTC, REAL recommended the addition of an example disclosure statement under the renewable energy claims section (§260.15) for voluntary renewable energy products sold to residential customers that include unbundled RECs. This disclosure would ensure customer understanding and knowledge of the energy products being purchased. Specifically, REAL recommended the following example for §260.15:
Example [X]: A company sells a voluntary renewable energy product by purchasing and retiring RECs in conjunction with wholesale energy and advertises its product as 100% renewable energy. If the company states that renewable electricity is being delivered to the customer’s home from a renewable facility, the claim would be deceptive. If the company explains that grid power is paired with RECs as in the following disclosure, then the claim that the customer is purchasing, buying, or using renewable energy would not be deceptive:
“Electricity purchased from your electricity provider is the product of a mix of energy sources delivered over a system of wires. You will not have electricity from a specific renewable generation facility delivered to your service address. Rather, the energy your home uses from the electric grid will be paired with renewable energy sources through the purchase of Renewable Energy Certificates (“RECs”). By purchasing and pairing RECs with your electricity services, you are using and receiving the benefits of renewable electricity. Increased demand for, and generation of, renewable electricity can help reduce conventional electricity generation from fossil fuels in the region where the renewable electricity generator is located, thereby reducing greenhouse gas emissions. It may also have other environmental benefits such as little or no regional air pollution.”
Since 2012, the Green Guides have been reinforced by federal and state policies and have had an impact on the flow of truthful information to consumers. The Guides have helped promote clear and accurate disclosure of environmental marketing claims, which has given consumers the ability to make informed decisions when shopping for energy products. The Green Guides have been instrumental in preventing deceptive claims from companies that make false or misleading statements about their products, thus protecting consumers from harm.
In conclusion, REAL strongly supports the Guides for the Use of Environmental Marketing Claims (“Green Guides” or “Guides”), Matter No. P954501. The Green Guides are a critical resource that equips consumers with the information necessary to make informed decisions as they shop for clean energy products.
REAL believes that smart regulation and consumer protections are the foundation for a healthy market where states can capitalize on the innovations and customer demand driving our transition to a clean energy economy. We appreciate the FTC’s efforts to help marketers ensure that the claims promote competition and protect consumers, and we look forward to continuing to work with the FTC and other stakeholders to advance the development and modernization of American retail energy, unleashing the full benefits of competitive markets.
