By Kerri Metz and Doug Miller
Energy customers rely on regulatory guidance from the U.S. Federal Trade Commission (FTC) to inform how to advertise their clean energy claims. The FTC’s Guides for the Use of Environmental Marketing Claims (Green Guides) provide environmental marketing recommendations aimed at shielding consumers from potentially deceptive claims, and the FTC has begun a process to update the guidelines, which have not been revised since 2012.
With the growing clean energy market, the greater diversity of carbon-free electricity (CFE) procurement solutions available to energy customers, and increasing consumer interest in purchasing environmentally friendly products, the FTC this past December announced it was seeking public comment on various issues related to environmental marketing claims. The FTC sought feedback on topics including carbon offsets, renewable energy procurement, recycled content, and compostable materials. The agency accepted comments through April 24.
The Clean Energy Buyers Institute’s (CEBI’s) Next Generation Carbon-free Electricity Initiative began work with more than 35 stakeholders in early 2023 to develop Green Guides recommendations that would both help energy customers understand how they can advertise their next generation procurement strategies and provide additional protections and clarity for American consumers. Through these stakeholder discussions, CEBI developed three guiding principles and three recommendations on ways to enhance the Green Guides.
The three guiding principles shaped the recommendations that CEBI submitted to the FTC:
- Principle #1: The FTC Green Guides updates should help clarify how energy customers can advertise and substantiate their CFE procurement.
- Principle #2: The FTC updates should create the opportunity for energy customers to make more types of verifiable marketing claims based on their respective CFE procurement strategy and provide new examples illustrating how to make these claims for a broader range of CFE procurement strategies.
- Principle #3: The updates should use plain language to avoid creating confusion among consumers and energy customers, refrain from unduly limiting or narrowing the menu of CFE procurement options available to energy customers, and prioritize updates that enable the maximum number of energy customers to participate in CFE procurement markets.
These three principles serve as the foundation for the recommendations that CEBI submitted to the FTC to inform the Green Guides updates:
Recommendation #1: Broaden current Green Guides language from renewable energy to carbon-free electricity.
The FTC should broaden its existing language around renewable energy claims to include technology-neutral CFE and all CFE-related marketing claims. Given the increased interest and investment in diverse CFE resources since the previous Green Guides revision, the guidelines should acknowledge the present greater diversity of CFE procurement options, clarify how marketers can make accurate marketing claims about their CFE procurement, and advise marketers on how to avoid making unqualified or misleading CFE claims.
Recommendation #2: Maintain a requirement for marketers to substantiate CFE claims with energy attribute certificates (EACs) and additional disclosures.
The FTC should continue to require that marketers use customers’ EACs and, where needed to validate differentiated claims, additional disclosures to substantiate CFE procurement claims. This guidance is especially important as new CFE procurement solutions become available to energy customers. The FTC should continue to clarify that energy customers must own EACs that align with any CFE-related marketing claims, including differentiated claims. In cases where EACs do not yet contain sufficient attributes that could be used in making specific CFE marketing claims, energy customers should have high-quality, detailed data — in addition to the EACs they own — to substantiate these differentiated claims.
Recommendation #3: Differentiate between EACs and carbon offsets in marketing claims.
The Green Guides should include new language that provides clarification between the purpose and role of EACs versus carbon offsets in clean energy marketing claims. The FTC should clarify that marketing claims made around an energy customer’s CFE procurement and associated emission reductions in that energy customer’s respective greenhouse gas inventory must be verified through the customer’s completed CFE procurement and ownership of EACs that align with any marketing claims.
The marked increase in the number of individual consumers using their purchasing power to buy products from businesses that can prove they are adopting sustainable practices creates a need for clearer guidance on the wider-ranging types of claims consumers are now seeing. As more types of CFE procurement solutions become available and energy customers pursue these diverse solutions, guidance is also needed about how customers can communicate the differentiated decarbonization impact of their procurement strategies. Between 2012 and 2020, customers’ global voluntary procurement increased from about 300 million megawatt hours (MWh) of CFE to over 1 billion MWh of CFE, and this CFE market growth trend has only intensified since 2020.
The FTC Green Guides clarify how energy customers communicate their leadership in taking voluntary action to accelerate investments in electric grid decarbonization. CEBI’s recommendations for improvements to the FTC Green Guides serve as an example of our broader work to improve customer leadership programs, one of four interdependent market evolutions that CEBI is advancing through the Next Generation CFE Initiative. To learn more about CEBI’s research on the four market evolutions needed to broaden the menu of CFE procurement options and enable customers to optimize their procurement strategy for grid decarbonization impact, check out the Next Generation CFE Procurement Activation Guide.
CEBI presented its FTC Green Guides revisions principles and recommendations in a public webinar on March 29 and submitted them formally before the April 24 deadline. To get involved in CEBI’s NextGen Activator community or learn more about CEBI’s recommendations for the FTC Green Guides, please contact Doug Miller at firstname.lastname@example.org.