Businesses who generate renewable energy, say, by using solar panels, but sell the Renewable Energy Credits (RECs) for the renewable energy they generate shouldn’t claim they “use” renewable energy. The Federal Trade Commissions has advised that such a claim would be deceptive.
The guidance from the FTC is not new, but as renewable energy becomes more prevalent, increasingly businesses are making claims about their green energy. This guidance from the FTC may seem counterintuitive, but it is consistent with the longstanding position of the federal agency.
The Federal Trade Commission issued revised “Green Guides”, 16 CFR Part 260, in 2012 that are intended to help ensure that claims made by businesses about the environmental attributes are truthful and non-deceptive under Section 5 of the FTC Act, 15 U.S.C. 45.1. The Guides are administrative interpretations of the law. Therefore, they do not have the force and effect of law and are not independently enforceable. The FTC, however, can and has taken action under the Act if a business makes an environmental claim inconsistent with the Guides
Among the relevant language in the Green Guides is, §260.15 Renewable energy claims,
(d) 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.
That express language is clear. But if there was any doubt as to what is intended that uncertainty is assuaged by the following explanatory example provided in the Green Guides,
Example: 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.”
Despite that being the law, the environmental industrial complex regularly articulates that buying RECs can create market demand for clean energy sources. In describing LEED credit NC-v4 EAc7: Green power and carbon offsets, a U.S. Green Building Council associated vendor claims, “the benefits of renewable energy are well understood by the general public, and so pursuing this credit can help you advertise your commitment to environmental responsibility.” That statement is problematic and the related advertisement requires caution to not run afoul of the FTC.
This is not simply an instance of Detective Pikachu being “in” while True Detective is “out” but is about the FTC and state attorneys general policing environmental claims sua sponte. Moreover, there have been claims by tenants against landlords arising from green power that would not pass FTC muster.
There is concern that the Green Guides not only go too far but have not kept pace with the marketplace and need to be corrected and updated where today some of the guidance results in the federal government inhibiting truthful marketing in the misguided name of the FTC being a policeman wielding prior restraint in the name of truth in advertising.
As renewable energy, including onsite solar installations, become more common so too will questions about what can be claimed about that green power and those installations.