Around nine million British households are now on green tariffs, with over half of all new electricity tariffs launched now badged as ‘100% renewable’ or ‘green’.

However, there are concerns some suppliers have been ‘greenwashing’ – that is overstating how environmentally friendly their tariffs are.

Energy companies are currently able to market tariffs as ‘green’ even if some of the energy they supply to customers comes from fossil fuels, as long as this is offset by purchasing enough certificates called Renewable Energy Guarantees of Origin to cover their customer base. These determine the proportion of electricity that they source from renewable electricity generation.

The Department for Business, Energy & Industrial Strategy will look at whether the system around these certificates needs to be smarter, as well as whether suppliers need to provide clearer information to households about their green tariffs, including type of renewable energy used (such as wind or solar), where the renewable power was generated and when.

Richard Neudegg, head of regulation at Uswitch, said: “Transparency is key to bring consumers on the journey to net zero. Households want to do their bit to help the environment, so it’s vital to make it as simple as possible for them to confidently pick the tariffs that actually help to support renewable energy.

“More and more people are purchasing green tariffs but it’s been difficult for bill-payers to know exactly what’s under the hood of these deals. We support any measures that aim to demystify green tariffs for households.”

The government will also look into whether third-party intermediaries such as price comparison sites and auto-switching services, which currently operate outside of the retail market rules, should be regulated.

Minister of state for energy and clean growth, Anne-Marie Trevelyan, said: “Millions of UK households are choosing to make the green switch and more and more of our energy comes from renewables. But I want people to know that when they sign up to a green tariff, they are investing in companies that make a conscious choice to invest in renewable energy.

“Part of that is ensuring companies are being as transparent as possible on where their power comes from. That way, every family in Britain can rest assured their choices are helping to contribute to our world-leading target of eliminating our contribution to climate change by 2050.”

Nearly two-thirds (62 per cent) of UK energy consumers say their purchasing decisions are influenced by how eco-friendly an energy tariff is.

However, 75 per cent believe suppliers should be open and transparent about their tariffs, including how much of their renewable energy they buy from other companies.