Environment Secretary Hilary Benn said he wants consumers and businesses to be able to get clearer information about exactly what individual green tariffs offer and their real benefits.
Energy regulator Ofgem has now been told to produce detailed guidelines for suppliers and will also develop a rating system to help distinguish between the environmental benefits of different green tariffs.
Chief Executives of energy suppliers have also been approached to encourage them to provide the clearest possible information about how their green tariffs will provide environmental benefits.
Tom Delay, chief executive of The Carbon Trust said: 'We strongly support the move made by Defra as the green tariffs market currently lacks transparency, delivers minimal additional carbon savings and suffers from significant double counting problems.
“Renewable power is key to delivering the UK's carbon reduction targets. However, a coordinated approach is required to ensure that green tariffs deliver genuine carbon reductions and that the benefits of renewables can be accurately reported by businesses towards their carbon reduction targets'
|End to double reporting|
Defra will change its guidance on corporate reporting to try to clear out any double reporting problems caused by green tariffs.
The department’s Best Practice Voluntary Reporting Guidelines advise business on how they should calculate their emissions from their energy use, but previously they allowed companies to report green tariff electricity as zero emissions to try to increase demand for renewable energy.
Mr Benn admits the Government is finding it increasingly difficult to find out whether the renewable electricity tariff is actually offering additional carbon emissions reductions.
He said: 'We will change the voluntary corporate reporting guidelines to bring them into line with current best practice and provide coherent carbon accounting.
“This will mean that for the reporting year 2008-9, best practice is expected to be for businesses to use a grid average rate - average rate of carbon emissions associated with electricity transmitted on the national grid - unless their supplier can prove the carbon benefits are additional.
“This is to reflect the existing evidence that the additional carbon benefit of green tariffs is not transparent. However, we do recognise that some existing and future green tariffs may well deliver broader environmental benefits and we will consult on how these benefits should be treated.'
'Many energy suppliers offer green tariffs to businesses and domestic customers who want to make a contribution to environmental projects or help tackle climate change, but these differ in what they deliver.
'This market is changing rapidly, partly because we have committed to the largest expansion of renewable electricity in our history. We will shortly be consulting on a range of measures that will encourage energy suppliers to increase their investment in renewable energy.
'I want to be sure that people and businesses who buy green tariffs have clear information about what environmental benefits they are getting linked to renewable electricity and whether this is in addition to that which energy suppliers must provide anyway.
“As with any product in the marketplace, we need to know what we are paying for, particularly as in some cases, choosing the tariff may cost more.'
Ofgem Chief Executive, Alistair Buchanan, said: 'Ofgem is eager to clear up the confusion among consumers over green tariffs. We have worked for some time on revising our guidelines on how suppliers should market their green tariffs and last November we proposed an accreditation system that will make clear which tariffs offer real environmental benefits.
'We have since worked on a revision of the proposal based on consultation with stakeholders on the complex issues surrounding green tariffs and we intend to publish a revised accreditation scheme proposal in July, consistent with Defra's position on carbon reporting.'