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FTC Proposes to Add Renewable Energy, Carbon Offsets to Green Marketing Guidelines

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October 7, 2010

The Federal Trade Commission has proposed revisions to its Guides for the Use of Environmental Marketing Claims to address the marketing of renewable energy and carbon offsets.

The FTC's proposal can be found here.

The FTC admits that, "the Commission does not create definitions or standards for environmental terms."

Given this lack of authority, among the few requirements proposed for renewable energy sales is that, "Unless marketers have substantiation for all their express and reasonably implied claims, they should clearly and prominently qualify their renewable energy claims by specifying the source of the renewable energy (e.g., wind or solar energy)."

The Commission does not propose guidance on which specific energy sources consumers consider to be renewable, except that marketers shall not, "make unqualified renewable energy claims, directly or by implication, if power derived from fossil fuels is used to manufacture any part of the advertised item or is used to power any part of the advertised service."

The FTC's proposal declines to make a distinction between the use of RECs and bilateral renewable supply contracts.

"No evidence on the record suggests that a contract-based system more reliably tracks renewable energy than a well-designed REC-based system.  Accordingly, the Commission does not have a sufficient basis to advise marketers to disclose that their renewable energy claims are based on RECs," the proposal states.

Regarding carbon offsets, in addressing whether RECs may be marketed as carbon offsets, the FTC affirms that, "[i]t is unlikely that the Commission can provide general guidance on these issues without setting environmental policy, which is beyond the agency's purview."

The FTC's proposed revisions regarding carbon offset marketing generally provide that marketers must substantiate their offset claims.

Furthermore, the proposal provides that, "It is deceptive to misrepresent, directly or by implication, that a carbon offset represents emission reductions that have already occurred or will occur in the immediate future. To avoid deception, marketers should clearly and prominently disclose if the carbon offset represents emission reductions that will not occur for two years or longer."

   
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