Background
Summary of Council decision:
Six issues were investigated, two were Upheld and four were Not upheld.
Ad description
Three magazine ads promoted wind energy:
a. The ad featured a wind turbine's blades superimposed over a Union Flag. The ad stated "Britain's inexhaustible wind energy supplies will be vital as we become increasingly dependent on foreign gas - 70% of gas will be imported by 2020. Gas prices have trebled in the last decade and have driven up electricity bills. Wind is secure, clean and can keep bills down in the face of rising gas prices. Don't let Britain lose Power" and "BRITISH WIND Powering Homes and Businesses".
b. The ad featured the image of a newspaper headline which stated "Gas prices hit six year high". Text underneath stated "THE COST OF THE WIND WILL NEVER GO UP". The ad also included the same text as ad (a).
c. The ad featured a drawing of a gas pipeline with a Union Flag at one end, and someone turning it off at the other end. Text underneath stated "WIND POWER WILL GIVE CONTROL BACK TO BRITAIN". The ad also included the same text as ad (a), and also stated "And it enjoys more public support than investment in gas".
Issue
Five complainants challenged whether the ads were misleading.
1. One complainant challenged whether the claim "70% of gas will be imported by 2020" in ads (a), (b) and (c) was misleading and could be substantiated.
2. One complainant challenged whether the claim "Gas prices have trebled in the last decade" in ads (a), (b) and (c) was misleading and could be substantiated.
3. One complainant challenged whether the claim "Wind is secure" in ads (a), (b) and (c) was misleading.
4. Three complainants, one of whom was a campaigner, challenged whether the claim "Wind … can keep bills down in the face of rising gas prices" in ads (a), (b) and (c) was misleading.
5. One complainant challenged whether the claim "THE COST OF THE WIND WILL NEVER GO UP," in ad (b) was misleading.
6. One complainant challenged whether the claim "And it enjoys more public support than investment in gas" in ad (c) could be substantiated.
Response
British Wind explained they were an informal consortium of eight leading, largely UK-based, renewable energy companies. The aim of their advertising campaign was to raise issues of energy policy and stimulate debate around the role of wind energy in the UK's energy mix, particularly in response to negative media coverage. They said they recognised there were likely to be strong opinions on the issue amongst readers and so their website contained a series of Frequently Asked Questions where they provided sources for the claims in the ads. They were keen to promote open, honest and factually-based dialogue and placed the ads to draw out that debate and focus it on real issues of energy policy.
1. British Wind said they had based the claim "70% of gas will be imported by 2020" on published data from an international electricity and gas company, which they provided. They said the company produced long-term supply and demand projections for gas in consultation with the industry. The recent forecasts looked at two scenarios, one in which only existing policies were implemented and one in which policies drove progress towards the UK's climate change targets. They said under existing policies imports of natural gas were projected to be 69% by 2020, and under greener policies it was expected to be 73%. They also supplied the company's ten-year report on gas, the purpose of which was to set out their assessment of the future demand and supply position for natural gas in the UK. These reports did not consider the potential impact of shale gas. However, British Wind provided a report by an energy market forecasting and modelling company which they said showed the contribution of shale gas was forecast to be insignificant in 2020. They also supplied supplementary evidence from other sources to verify the claim.
2. British Wind said the claim that gas prices had trebled in the last decade was supported by official government statistics by the Department of Energy and Climate Changes (DECC), and by reference back to the wholesale energy prices. They said the source of the data was actual gas prices incurred by domestic and industrial consumers, and how they have changed over time. They said DECC collected these on a quarterly basis and that the published data demonstrated gas prices had trebled in the last decade. British Wind also said that wholesale prices paid by major power producers in the UK, which had a direct impact on electricity bills, had trebled in the last decade. They supplied further evidence from the DECC to support this.
3. British Wind believed the complaint was based on misconceptions about the meaning of energy security. They said the purpose of the ads was very clearly to draw attention to national energy security, a topical subject in politics and the media. They said that by definition the wind was a domestic energy source that could be used to generate electricity, as opposed to using imported fuels. The adverts raised the issue of the security implications of increasing dependency on imported gas and were specifically timed around the re-election of President Putin in Russia. They said that in common parlance the term 'energy security' was used in reference to unpredictable and outside risks, such as the turning off of pipelines, political instability and disruption to shipments. They said the term was not usually used to refer to the percentage of time energy was being generated. They said that no form of energy generation could be relied on to generate 100% of the time. They said energy system stability and reliability was a very different concept to energy security. They believed it was clear the ads were addressing the issue of energy security, and said it was undisputed that the use of indigenous energy sources contributed to energy security.
4. British Wind said gas generation had relatively low upfront costs but very high operating costs when compared to wind generation. For gas generation the majority of operating costs were due to the cost of the gas, and as gas prices had increased this had caused electricity bills to rise for consumers. They said that as gas prices continued to rise, wind energy could keep bills down. They said gas fired power stations typically operated at 50% efficiency, meaning that a 0.5p per kWh increase in gas prices would result in about a 1.0p per kWh increase to the cost of electricity generation. In contrast the cost of generating electricity from wind was not susceptible to fluctuating fuel prices.
They cited a recent study on electricity prices in Ireland, which concluded that wind energy was not contributing to higher wholesale electricity prices, because wind generation lowered wholesale prices by an amount very close to the cost of the levy and other costs. They said in the UK the cost of energy generation was expressed as a 'levelised cost' which defined the average revenue a generator needed to receive for each MWh generated to make a suitable return on their investment and cover their operating costs. They said the Government's high gas price scenario increased the long-run gas price to 100p per therm (from 44p per therm in 2010) and that in this case the levelised cost of generation using natural gas would increase to £90.6 per MWh, compared to the stable levelised cost of wind at £90.2 per MWh. Because natural gas prices were highly unpredictable there was no reason why the government's high price scenario was an upper limit, and that previous projections had been much lower. As gas prices rose, wind generation would be cost-effective compared to gas and would not require subsidies.
British Wind supplied a published study on large-scale wind power integration and wholesale electricity trading benefits. It included summaries of six studies that examined the effect of wind penetration on electricity prices in six different European countries and one US state, demonstrating a reduction in wholesale prices. It also included a detailed analysis of the Spanish market, and the inverse correlation between wind penetration and price, and concluded that the estimated trading savings exceeded the expense in renewable energy credits and bonuses given to wind farms.
They also supplied two reports by a European wind energy industry group. The first looked at how wind power reduced power prices through the 'merit-order' effect in multiple countries studied, leading to a reduction in prices. The second looked at how wind power reduced spot power prices, the relationship between lower spot prices and increased wind production in Denmark and the impact of wind power on decreasing consumer prices in Denmark.
5. British Wind said the claim the cost of wind will never go up was made to draw attention to the difference between natural gas, a traded commodity that was subject to price fluctuations, and the wind, a limitless natural renewable energy source that had no market price in itself that could increase. They said it was factually correct that the cost of wind used to generate electricity will never increase.
6. British Wind said the claim wind power enjoyed more public support than investment in gas was based on a poll conducted by a polling agency in August 2011 of over 2000 UK adults, which asked "Which of the following would you like the UK to invest the most in for our future electricity needs?". They said 70% of respondents supported investment in a broad range of renewables and only 4% supported further investment in gas. They said that of the renewable technologies wind received the second most support at 20%, with solar the most popular. They also provided a number of other polls they said supported the claim.
Assessment
1. Upheld
The ASA understood British Wind had based the claim that "70% of gas will be imported by 2020" on published data from an international electricity and gas company. However, the report on future scenarios stated it was important to note it was looking at scenarios, not forecasts and that unforeseen events, such as the recent recession or the introduction of new government initiatives, made forecasting several years ahead increasingly difficult. The company's ten-year report referred to forecasting, but also noted that there was significant uncertainty surrounding the future level of gas demand. The complainant was concerned that the 70% figure did not include shale gas. Although the reports did not take this into account, the other evidence provided indicated that the contribution of shale gas to the UK's energy mix would be insignificant in 2020, although there was a possibility that in the longer term it could provide a greater contribution.
The evidence provided demonstrated there was consensus that the proportion of natural gas imported into the UK would continue to increase in the future. However, the claim made by British Wind implied a high level of certainty regarding the 70% figure and we did not consider the reports were sufficient to support this, given the inherent uncertainty of such predictions, which they explicitly acknowledged. The claim also appeared in the context of a sentence that stated Britain would become "increasingly dependent on foreign gas". The evidence provided suggested that, in some scenarios, by 2020 the overall demand for gas in the UK could have decreased, and we considered that in this context the claim could exaggerate the amount of gas that would be imported by 2020. We concluded the claim was misleading.
On this point ads (a), (b) and (c) breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage. (Other comparisons).
2. Not upheld
British Wind had based the claim that gas prices had trebled in the last decade on consumer prices. However, the claim appeared in a sentence that went on to state "and have driven up electricity bills". In that context we considered readers would interpret the claim as referring to wholesale natural gas prices, which would affect electricity bills, rather than consumer prices, which wouldn't. However, British Wind had also supplied evidence from the DECC that the wholesale price of gas paid by major power producers in the UK had trebled in the last decade. We considered that this was the most relevant evidence, in the context in which the claim was being made. We therefore concluded that British Wind had substantiated the claim.
On this point we investigated ads (a), (b) and (c) under CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage. (Other comparisons) but did not find them in breach.
3. Not Upheld
The complainant believed the claim "wind is secure" was misleading because power was not generated if there was insufficient wind. However, the ad was by 'British Wind' and a large focus of the ad was on the benefits of UK wind power, as opposed to foreign natural gas supplies. We considered that in this context readers would understand security to refer to insulation from outside risks such as pipeline disputes and political instability. British Wind had supplied evidence that foreign natural gas supplies could be vulnerable to such risks, and that it was generally accepted that growth in renewable energy sources could contribute to increasing the UK's energy security. We concluded the claim was not misleading.
On this point we investigated ads (a), (b) and (c) under CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage. (Other comparisons) but did not find them in breach.
4. Upheld
The complainants believed that wind energy increased electricity bills for consumers, as it was subsidised and more expensive to produce. British Wind believed that if gas prices continued to rise then power sourced from wind energy could keep electricity bills down. We considered that the claim wind could "keep bills down in the face of rising gas prices" would be interpreted by readers to mean that, if wholesale natural gas prices rose, using wind power to generate electricity would lead to lower bills compared to less or no wind power being used.
The Irish study provided by British Wind looked at the impact of wind power on wholesale electricity prices in Ireland in 2011, and concluded that wind power decreased wholesale electricity prices by an amount equivalent to costs of the Public Service Obligation levy and other costs associated with the generation of wind energy, and thus did not lead to increased wholesale prices. However, the study did not look at future scenarios relating to gas prices, refer to UK wind energy or look at the impact of wind energy on consumer prices, which it noted were set in a competitive open market. Therefore we did not consider the study was sufficient to support the claim being made.
The other studies provided by British Wind indicated that in some European countries wind energy may have contributed to lower wholesale and consumer electricity prices. However, none of the studies examined the UK energy market or specifically examined the impact on the UK energy market if gas prices were to rise. We considered that the differences between countries’ energy markets, such as the mix of electricity sources and the subsidy levels and models meant that these studies were insufficient to support the claim being made. We also noted that consumer prices in the UK were set in a competitive open market, and that there was no guarantee that a reduction in wholesale prices would be passed on to consumers.
We acknowledged that evidence supplied by British Wind showed gas had relatively low upfront capital costs compared to wind generation, but that the cost of electricity generation by gas was vulnerable to wholesale natural gas price fluctuations, whereas wind was not. British Wind believed that if wholesale gas prices rose to 100p per therm then the cost of energy generation by gas would rise to slightly higher than electricity generated by wind. However, their calculations related to 'levelised cost', which was the average revenue a generator needed to receive to make a suitable return on their investment and cover their operating costs, not the amount paid by consumers. They also believed that if gas prices rose, wind generation might not require subsidies. However, we had not seen evidence that there was a prospect of subsidies being removed in this scenario, and considered that government decisions on subsidy levels would be influenced by a number of factors. We acknowledged that evidence suggested if gas prices rose significantly then power generated by wind energy could become more competitive in comparison, but had not seen evidence that if gas prices rose, wind energy could actually keep bills down. We concluded the claim was misleading.
On this point ads (a), (b) and (c) breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage. (Other comparisons).
5. Not Upheld
The complainant believed the claim the cost of the wind would never go up was misleading, because the cost of converting wind was subject to cost fluctuations, just as was the cost of extracting and distributing gas. They specifically referred to the upkeep and replacement of turbines, and the potentially declining level of public subsidies. British Wind said they made the claim to draw attention to the differences between natural gas a traded commodity, and wind an unlimited natural energy source. We acknowledged the funding of wind power generation was a complex area, and that it was currently subsidised via a financial mechanism designed to incentivise the deployment of large-scale renewable energy generation. However, the claim was presented underneath the image of a newspaper headline which stated "Gas prices hit six year high". We considered that in this context it would be clear to readers the aim of the claim was to contrast the unlimited nature of wind, with natural gas as a traded commodity. We did not consider it was misleading for the ad to omit information in relation to subsidies and other costs as the claim related to the resources only, and consumers would be aware that both gas and wind power generation were subject to other costs. We concluded the claim was not misleading.
On this point we investigated ad (b) under CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage. (Other comparisons) but did not find it in breach.
6. Not Upheld
British Wind based the claim that wind power enjoyed more public support than investment in gas on a 2011 poll in which respondents were asked which energy source they would like the UK to invest the most in for its future electricity needs. Of the 2050 respondents, 20% selected wind power, compared to 4% who selected natural gas. The results were weighted to be representative of all UK adults and were available online. The polling agency was a member of the British Polling Council. We also noted other poll results supplied by British Wind supported the claim. We therefore concluded the claim was not misleading.
On this point we investigated ad (c) under CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage. (Other comparisons) but did not find it in breach.
Action
The ads must not appear again in their current form.
