Policy implications from the micro-level analysis

For household technology choices, insights from the psychology and behavioural economics literatures suggest that both time and risk preferences (including also present bias and loss aversion) may help explain the energy efficiency paradox according to which households may fail to invest in energy-efficient technologies even though these appear to pay off under prevailing market conditions.The below table suggests possible policy interventions based on the survey findings and analysis.

Table: Summary of key findings and policy implications

FACTOR

IMPLICATIONS FOR POLICY

Preferences and behavioural biases

 

Less patient participants and those with higher present bias were found to be less likely to have adopted energy efficient technologies

Alter the timing of the cost/revenue streams, less up-front outlays; offer rebates (rather than tax breaks), delay payments; low-interest loans;

More risk-averse and more loss-averse participants were found be less likely to have adopted retrofit measures

Lower perceived financial/technological risk of adopters, e.g. via warranties (technical risk), energy performance contracting (financial risk); information: highlight “asset character” of investment in energy efficiency (less vulnerable to changes in energy prices); in information and communication programs could frame failure to invest in EET as a loss;

Participants with strong pro-environmental preferences were found to be more likely to have adopted energy efficient technologies

Provide information on environmental effects (e.g. via labelling);

Participants exposed to strong pro energy efficiency social norms were found to be more likely to have adopted energy efficient technologies

Use social comparisons in information campaigns; try to shape social norms, e.g. via information campaigns;

External barriers

 

Households renting their dwelling (rather than owning it) were found to be less likely to have adopted energy efficient technologies

Retrofit: labelling/building certificates; facilitate pass through of additional retrofit investment costs;

Households who do not have their own electricity meter were found to be less likely to have adopted energy efficient technologies

Promote metering of individual dwellings (e.g. via regulation);

Households with limited access to capital were found to be to have adopted energy efficiency measures

Low-interest loans, rebates; energy performance contracting;

Key Messages from the micro-level analysis

The detailed results from the (micro level) survey themselves can help policy makers design more effective programmes and tools for implementing energy efficiency in households.

Key Messages from the micro-level analysis

Further in-depth reading from the library