Ethical Consumer
  1. You are in:
  2. Home
  3. Energy
  4. Eco-friendly energy companies

Eco-friendly energy companies

Windmills on hillside with rainbow
Clare Carlile
By
Clare Carlile

More and more energy companies are making eco-friendly claims, but do they hold up in practice? 

In this article, we discuss what it means to be an eco-friendly energy company, which energy companies are truly eco, and how to switch to them. 

What is an eco-friendly energy company?

When most people talk about an energy company’s eco credentials, they’re usually talking about the ‘fuel mix’ for their electricity tariffs. The fuel mix shows different energy sources, such as renewables, gas or nuclear that make up a company’s tariffs. All energy companies must publish their fuel mix annually. 

In 2021, the fuel mix for the UK as a whole was:

  • Other: 2.9%
  • Coal: 3.8%
  • Nuclear: 16.1%
  • Natural Gas: 38.5%
  • Renewables: 38.7%

More and more companies are marketing a 100% renewable fuel mix. Unfortunately, though, your company’s fuel mix doesn’t actually represent the energy you use when you switch your light on.

Pie chart of UK energy supply mix in 2021. Figures in main text.
Pie chart of UK energy supply mix. Figures are in the text.

Your tariff doesn’t actually affect your supply…

In the UK, all of our energy comes from the national grid (unless you’re generating your own at home). The national grid is essentially a jumble of energy sources we use in the UK. When you turn your light on, you may well be using a bit of renewable energy, a bit of natural gas and some nuclear, whatever tariff you’re on.

It’s a common misconception that by switching to a renewable tariff, you’re actually greening your energy supply. While switching may be good for its own reasons, which we will explain below, it doesn’t reduce the carbon footprint from using your heating, TV or washing machine.

Using less energy is therefore crucial for climate action, while we still have fossil fuels in our overall UK energy supply.

So what is an eco-friendly energy company?

Greenwash vs. meaningful renewable energy tariffs

There are two types of ‘100% renewable’ energy tariffs.

For the first, the company essentially produces or buys whatever energy they want, including fossil fuels. They then purchase a number of certificates to say that their energy is ‘renewable’, and this allows them to make eco-friendly claims.

This sounds ineffective, because it is.

The idea behind the certificates (known as REGOs) is that the money from their purchase provides a subsidy for renewable developers. In theory, this could support the growth of renewable infrastructure, like solar and wind farms, in the UK.

The problem is that REGOs are very very cheap, because there are many more available than companies want to buy. This means that they provide only very marginal support for developers: 30-50p per certificate last time we looked (or 1% of wholesale energy costs).

For this reason, Ethical Consumer does not consider companies relying on REGOs to be making a meaningful contribution to renewable energy in the UK. Under UK law they can call themselves renewable, but we remain sceptical of how much the title really means.

Funding renewable infrastructure?

Luckily, there is a second kind of renewable energy company that may be slightly more effective. These companies sell renewable energy tariffs that directly contribute to renewable energy infrastructure.

They either build and produce renewable energy themselves, in which case your tariff may support them to do so, or they have contracts directly with renewable suppliers. These contracts provide a reliable income to the suppliers, allowing them to develop and grow.

Ethical Consumer considers these to be the more eco-friendly companies. The UK government also considers them to be doing something different, and for this reason has exempted them from the energy price cap, which sets a limit on how much companies can charge.

There is however a catch: because subsidies and costs are shared between all energy companies, you may not be providing renewable energy with a huge amount more money. We do, however, think that if you can afford it, it is still worth supporting companies that are trying to build and invest in renewables, and that are not supporting fossil fuels.

Solar panels and wind farm on snowy ground

Should I switch to an eco-friendly energy company?

So if your choice of energy tariff doesn’t make a difference to your supply, should you switch to an eco-friendly company?

The UK’s Climate Change Committee (which advises the government on decarbonisation) suggests that we need to transition away from fossil fuels in our energy supply by 2035.

In fact, because we need to move to electric vehicles and heating, we’ll need to go beyond and add even more additional capacity to our energy supply in the form of renewables.

Wind and solar farms are cheap sources of energy once they’re up and running, but have high up-front building costs.

Choosing to buy from a more eco-friendly energy company means that you will be providing some support to this process. It also means that your money isn’t going towards fossil fuels.

In the long-run then, moving to an eco-friendly energy supplier is a small step you can take. However, right now is probably not the moment to switch, unless you can definitely afford it.

“As the energy price crisis continues,” says Energy Saving Trust, “it may be best to stick with your current supplier, as many suppliers are not currently taking on new customers and you may not actually save anything from switching to another supplier.”

In terms of impact, you may also be better off contributing directly to renewables, for example investing in a solar farm or getting involved in a community energy project. So it’s worth weighing up what you can afford, and whether cutting your energy use and supporting renewables in other ways could be more worthwhile.

Which energy companies are more eco-friendly?

Despite the many claims made in the UK, Ethical Consumer only considers less than a handful of energy companies to be more eco-friendly when it comes to electricity supply.

Best Buy company Ecotricity was the first to offer green energy in the UK, and has been involved in developing significant green infrastructure in the UK, including the country’s first grid-scale solar park.

Recommended company Ripple offers an innovative alternative. It asks customers to make an upfront investment and buy a share in a new wind farm, thereby directly financing new renewable power. This wind farm then backs your energy supply for the next 20 years, with your return on investment taken off your energy bill. Unfortunately, some of its partners, who will actually supply your energy, remain involved in fossil fuels. 

Which energy companies aren’t eco-friendly?

Many of the best known energy companies still rely on fossil fuels, including British Gas, EDF Energy, E.ON Energy and Scottish Power.

A growing number of others are making '100% renewable' claims, or have 100% renewable tariffs, but are relying only on REGOs. Buying these tariffs therefore won’t meaningfully contribute to renewable generation. 

The worst of the bunch was Shell Energy. Shell marketed a 100% renewable tariff, based on REGOs. Yet, Shell plc funnels 90% of its investments into fossil fuels, according to most recent figures. However, in December 2023, Shell plc sold the Shell Energy brand to Octopus Energy, and customers are being moved over. 

Ethical Consumer’s rating for eco-friendly energy companies

Ethical Consumer rates and ranks energy companies on their eco credentials.

Companies that we consider to be making ‘minimal’ contribution to renewables (even if they are marketing 100% renewable tariffs) lose half a mark under Climate Change. Companies that still have more than 5% coal in their fuel mix (compared to the UK average of 3.8%) also lose half a mark under Climate Change.

On the other hand, companies that are focused on contributing to renewable energy in a more meaningful way receive our best rating for Carbon Management and Reporting and a positive Product Sustainability Mark.

What is bioenergy and is it eco-friendly?

Bioenergy refers to any electricity produced from plant or animal matter. Wood, animal slurry and human sewage, for example, can be used as energy sources.

While some sources of bioenergy arguably do help to address emissions (such as animal manure and slurry), there is one big issue with bioenergy as a whole: the land required to produce it.

When crops or trees are grown specifically for bioenergy, it converts land that could otherwise be used to grow food for human consumption or as carbon sinks and habitats. This has an enormous carbon footprint attached.

In October 2022, BBC Panorama revealed that bioenergy giant Drax was “chopping down trees and taking logs from some of the world’s most precious forests to burn at its Yorkshire power station, which provides 12% of the UK’s renewable energy.”

For these reasons, we can’t ever use bioenergy on a large scale.

Unfortunately, bioenergy is very popular. This is because the way that it functions is very similar to fossil fuels. Bioenergy therefore really needs to be reserved for the industries that have no other options.

Wind and solar can provide all the energy we need for our homes, so really we shouldn’t be relying on bioenergy. The Climate Change Committee suggests that we could use bioenergy for 5% of our home heating needs, and that this should come from biowaste.

Is green gas eco-friendly?

‘Green gas’ can mean two things. Either it refers to gas captured from bioenergy sources, or it means natural gas that has been ‘offset’ by the company.

Green gas from bioenergy isn’t a very eco-friendly energy option for our homes, for the reasons explained above. Green gas from offsetting is arguably even worse.

Ethical Consumer thinks that most carbon offsetting schemes are very ineffective. Carbon offsetting generally means buying a certificate that puts some money towards emissions reductions elsewhere. For example, money might go to conserving forests. This might sound good, but there is a fundamental issue with offsets: we need to be reducing carbon emissions everywhere. That forest needs to be left standing and we need to stop burning natural gas.

While an offset certificate might help with the former, it certainly won’t help with the latter. In fact, it may just allow that company to carry on releasing gas emissions, while marketing it as eco-friendly.

Of course, there is the small problem that many of us still have gas boilers in our homes. In fact, around 86% of English homes have a mains gas supply.

Ideally, the UK would be addressing this by transitioning to using heat pumps – a renewable form of home generation for heating our houses. However, we know that for individuals this comes with a high investment cost (until the government decides to properly support it), so for now you may decide to focus instead on cutting your home energy use.

We have guides to reducing home energy use, insulation (including low-cost options), and getting smart heating.

person using calculator to count money

Are eco-friendly energy tariffs more expensive?

Eco-friendly tariffs can be more expensive than conventional ones.

In the UK, the government has historically set a limit on household energy prices, known as the energy price cap. This determines how much your supplier can charge you per unit of energy.

Companies growing renewable energy in the UK (those we consider to be more eco-friendly) have been exempt from this limit. This allows them to charge a bit more in order to continue investing in renewable infrastructure – meaning they are likely to be a bit more expensive.

In October, the UK government introduced a freeze on average energy prices in the UK: the average UK household energy bill will be £2,500 annually for the next two years (depending on actual usage). For companies that were exempt from the cap, new prices are calculated based on their previous ones. This means that they may still be higher than the average freeze.

We checked the per unit electricity costs for the one eco-friendly energy company still accepting new customers, and they were about 45% higher than the frozen average.

How to switch to an eco-friendly energy company?

Right now (winter 2022) may not be the right time to switch. With energy prices soaring, you may decide that now is not the right time to pay that bit extra for an eco-friendly tariff. Citizens Advice recommends saying put for now.

“You won’t find many good deals on energy tariffs at the moment - this is because of changes in the energy industry. If you don’t find a better tariff than the one you’re on it’s probably better to wait until deals are available again before switching suppliers.”

When you do decide to switch, it’s surprisingly easy to do so.

1. Find some more eco-friendly companies

Ethical Consumer’s guide to energy suppliers rates and ranks the ethical and environmental record for 17 energy brands. Our Best Buy companies are all more eco-friendly suppliers.

2.Compare prices

Most company websites can offer you a quote for your annual energy supply if you provide them with basic information like your type and size of house. Otherwise, you can compare the standing and unit charge. The standing charge is the amount you pay per day for staying connected, and the unit charge is the amount you pay per actual unit of electricity you use.

You may also want to use comparison sites like MoneySupermarket and USwitch. These often give quotes for the three key eco-friendly suppliers, but also allow you to compare to other deals so you can understand whether it’s something you can afford. Unfortunately, lots of these sites have stopped providing comparisons for now due to all the changes in the market.

You may also want to check reviews of the company’s customer service and whether they have any exit fees (charges if you want to end the tariff early) before deciding.

A standard variable tariff paid by direct debit is likely to be your cheapest tariff option. If you use a large amount of electricity, for example you have an electric car, you may want to check out some of the specially designed options that we discuss in our energy suppliers guide.

3. Make the switch

Tell your new supplier that you want to switch to them, and confirm your payment method and contract. You can usually do this through their website and will need:

  • Your postcode
  • The name of your current supplier
  • The name of your current energy tariff
  • Your annual energy usage or costs

You can find these details on your previous energy bill (which might be stored online if you don’t have a paper copy).

The company will then confirm the move and give you a ‘switching date’ when your energy supplier will change – likely to be about 5 days' time.

You have 14 days from the time you confirm to change your mind.

The Ofgem website has more guidance and FAQs on switching energy supplier.

Also of interest

  • Ethical Energy Suppliers

    Electricity
    Which is the most ethical & green energy supplier in 2023? Rankings for 18 UK energy companies, with best buys, greenwashing and who to avoid. As well as looking into the ethical and environmental records of each supplier, we also look at their fuel mix and where they buy energy, green tariffs, renewable generation and what '100% renewable' actually means, carbon offsets, biogas, community energy, and fuel pricing. 
    Read more

  • Climate action: Seven steps to insulate your home

    Roll of loft insulation in loft
    Heating our homes can cost a lot in terms of carbon, as well as energy bills. In fact, around 10% of all emissions in the UK come from home heating.  By improving our insulation, we can significantly reduce the amount of energy we use – making it key climate action you can take to reduce your carbon footprint.  Here, we provide a roadmap to insulating your home.
    Read more

We always check the ethics of our advertisers