The activities carried out produced a ranking of different policies aimed at improving energy efficiency. The stock-tacking activities also allowed us to develop a conceptual framework, that merges theoretical models incorporating behavioural aspects, a welfare framework and empirical results. Moreover, by analysing the data collected through a large sample survey we were able to compare the consumption of energy services, psychological characteristics and energy-related financial literacy in different European countries.
The main conclusion of the project are the following:
1. The project found that different success factors exist for policies aimed at making energy consumption more efficient. The project identified four success factors: technological advancements, perceived environmental responsibility of the energy providers, social norms, and individual characteristics. The project found that these factors are important per se, but their importance and effectiveness depend on how they interplay with each other and with the policy interventions (see point 4 below).
2. As for an effective design of incentives that improve investment in energy efficient appliances, we found that tailored information on potential monetary savings have an effect on investment, while information on the specific running cost of the appliances on the product webpage does not. The format (monetary savings versus energy costs) is a strong moderator of the effectiveness of information policies on investments.
3. As for an effective design of policies targeting the residential sector in general, we found that it is more effective to target behaviour in the domain of energy efficient investment, than a behaviour in the domain of energy use, such as the curtailment of consumption. Policies that target energy efficiency investments are the most accepted ones. On the contrary, policies that target sustainable energy sources, or curtailment behaviour, or changing the time of energy use are less accepted. We found that financial motivations have a limited influence on behavior. This result however, may depend on the low cost of energy.
4. Financial rewards are not the only option to improve energy efficiency. Environmental appeals are often very effective, but we find that their effectiveness depend on the extent to which people think their energy utility aims to reduce their environmental impact. For effectiveness, it is crucial the interplay between perceived corporate environmental responsibility and the type of message delivered (whether leveraging the environmental appeals versus the financial appeals). As for the interplay between social norms and individual characteristics, we found that social comparison information (comparing own versus neighbours’ energy consumption) influences energy use, in particular among high-energy users. Moreover, the willingness to shift energy consumption in time is higher when people think others do so too. Finally, technological advancements are and will be extremely useful, but they are more likely to be adopted when the design is appealing. This is because nowadays, we are overwhelmed by mobile applications.
5. We found that targeting the message to the relevant consumers is important. For example, social comparison information influences energy use, in particular among individuals who strongly endorse environmental values. We are aware however that targeting is an extremely difficult task.
6. Improvements in energy-related financial literacy are as well important. Higher energy-related financial literacy is associated with lower energy use.
7. Policy makers should be aware that there is a variety of barriers that pertain to individual behaviour (status-quo bias, bounded rationality, reference dependent preferences or strong environmental preferences), that cannot be addressed using only economic and regulatory instruments. The complexity and variety of barriers pertaining to individual behaviour call for increasing insights from behavioural economics.
