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We wrote back in 2011 about draft guidance from the Federal Trade Commission (FTC) about companies making claims to be “green". That draft guidance is now final and for companies looking to add - and boast about adding - a solar power system to their operations it offers some important warnings.
The guidance comes in the form of the latest edition of the so-called Green Guides which were released in final form late last year. The FTC is concerned about “double counting” - multiple entities taking credit for the same environmental benefit. This sort of double counting can occur when a company hosts a solar power system, but does not own it.
The FTC provides this as an illustrative 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.”
Deceptive claims are actionable under the FTC’s mandate and offending companies could be subject to enforcement actions and fines.
This has important consequences for companies that lease their solar panels (since the RECs are generally kept by the lessor) or participate in Feed-in Tariff programs where all of the energy generated is being sold to the utility which takes credit for that energy as part of its Renewable Portfolio Standard goals. Even companies that own their systems could be restricted by this guidance if the rebate which they received involved transferring their RECs to the utility in exchange for a higher rebate. (Both Glendale and Burbank utilities have had such rebates.)
While we cannot provide legal advice, we can tell you which utilities and which lease programs might cause you problems under the Green Guides. (None of the financing options that we provide for commercial solar clients are affected by the FTC’s guidance.)
One thing is certain - as more and more companies make more and more “green” claims for their operations, look for the FTC to start seeking out some violators to turn into “examples” for all.
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