This past week and there have been many other times this law firm was consulted about a marketing claim by a building owner with rooftop solar panels that advertises they “use” renewable energy, but the owner sells Renewable Energy Certificates (RECs) for the renewable energy it generates, so the Federal Trade Commission says it shouldn’t make the claim.
But it is suggested that the Federal Trade Commission’s Green Guides, designed to help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act, 15 U.S.C. § 45, need to be updated with respect to renewable energy, despite that the Green Guides first issued in 1992 were revised in 2012.
With respect to renewable energy claims, the Green Guides advise, “if a marketer generates renewable electricity but sells renewable energy certificates for all of that electricity, it would be deceptive for the marketer to represent, directly or by implication, that it uses renewable energy.”
Key to the Green Guides are the examples. So, with apologies to the FTC, but there is no better way to communicate the thinking of the federal government than to quote extensively from the Green Guides, including examples published in the Guides with respect to renewable energy:
Example 1: A marketer advertises its clothing line as “made with wind power.” The marketer buys wind energy for 50% of the energy it uses to make the clothing in its line. The marketer’s claim is deceptive because reasonable consumers likely interpret the claim to mean that the power was composed entirely of renewable energy. If the marketer stated, “We purchase wind energy for half of our manufacturing facilities,” the claim would not be deceptive.
Example 2: A company purchases renewable energy from a portfolio of sources that includes a mix of solar, wind, and other renewable energy sources in combinations and proportions that vary over time. The company uses renewable energy from that portfolio to power all of the significant manufacturing processes involved in making its product. The company advertises its product as “made with renewable energy.” The claim would not be deceptive if the marketer clearly and prominently disclosed all renewable energy sources. Alternatively, the claim would not be deceptive if the marketer clearly and prominently stated, “made from a mix of renewable energy sources,” and specified the renewable source that makes up the greatest percentage of the portfolio. The company may calculate which renewable energy source makes up the greatest percentage of the portfolio on an annual basis.
Example 3: An automobile company uses 100% non-renewable energy to produce its cars. The company purchases renewable energy certificates to match the non-renewable energy that powers all of the significant manufacturing processes for the seats, but no other parts, of its cars. If the company states, “The seats of our cars are made with renewable energy,” the claim would not be deceptive, as long as the company clearly and prominently qualifies the claim such as by specifying the renewable energy source.
Example 4: A company uses 100% non-renewable energy to manufacturer all parts of its product, but powers the assembly process entirely with renewable energy. If the marketer advertised its product as “assembled using renewable energy,” the claim would not be deceptive.
Example 5: A toy manufacturer places solar panels on the roof of its plant to generate power, and advertises that its plant is “100% solar-powered.” The manufacturer, however, sells renewable energy certificates based on the renewable attributes of all the power it generates. Even if the manufacturer uses the electricity generated by the solar panels, it has, by selling renewable energy certificates, transferred the right to characterize that electricity as renewable. The manufacturer’s claim is therefore deceptive. It also would be deceptive for this manufacturer to advertise that it “hosts” a renewable power facility because reasonable consumers likely interpret this claim to mean that the manufacturer uses renewable energy. It would not be deceptive, however, for the manufacturer to advertise, “We generate renewable energy, but sell all of it to others.”
The guides do not operate to bind the FTC, other governments or the public, and are not legal advice, but they are characterized as the current thinking of the FTC.
Despite that the guides are instructive, this law firm is regularly asked to counsel and advise solar industry participants, owners of green building and others about environmental claims. In an era when consumer class actions are de rigueur it is particularly important that environmental marketing claims are not unfair or deceptive.
All of this exists against a backdrop of the greatly expanding use of solar panels generated by available LEED credits and Green Globes points, federal tax incentives, increasing numbers of local government mandates, not to mention that rooftop photovoltaic panels are chic.
Given this is a fast emergent industry and that consumers have become much more sophisticated about environmental claims in recent years, it is suggested that the current Green Guides need to be updated, especially with respect to renewable energy.