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On-Bill Financing Programs to Support Low-Carbon Energy Technologies : An Agent-Oriented Assessment

Mundaca, Luis LU and Kloke, Sarah (2018) In Review of Policy Research 35(4). p.502-534
Abstract
On‐bill financing (OBF) schemes have been welcomed as innovative mechanisms for encouraging the adoption of low‐carbon energy technologies. Yet while the potential effects of these schemes have received growing attention, less is known about their actual performance. Departing from New Institutional Economics and insights from Behavioral Economics, this theory‐driven assessment examines the How$mart® program in Kansas (United States) and the Green Deal in the United Kingdom. The study identifies the mechanisms designed to trigger behavioral change and technology adoption. We focus on market agents, and related market failures and behavioral anomalies that often prevent energy efficiency improvements. The paper adds to our theoretical and... (More)
On‐bill financing (OBF) schemes have been welcomed as innovative mechanisms for encouraging the adoption of low‐carbon energy technologies. Yet while the potential effects of these schemes have received growing attention, less is known about their actual performance. Departing from New Institutional Economics and insights from Behavioral Economics, this theory‐driven assessment examines the How$mart® program in Kansas (United States) and the Green Deal in the United Kingdom. The study identifies the mechanisms designed to trigger behavioral change and technology adoption. We focus on market agents, and related market failures and behavioral anomalies that often prevent energy efficiency improvements. The paper adds to our theoretical and empirical understanding of public and utility‐driven OBF programs applied to the residential sector. Our findings suggest that simple, carefully designed on‐bill programs, where the financing of efficient technologies takes the form of a service rather than a loan, are more effective for the diffusion of low‐carbon energy technology and the reduction of transaction costs. At the same time, on bill‐financing schemes challenge the core business of utilities, and given the complexities and dynamics of energy efficiency markets and energy use, other policy interventions are needed. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Behavioral change, Climate mitigation, Comparative governance, Energy use, On-bill financing schemes, Policy innovation
in
Review of Policy Research
volume
35
issue
4
pages
502 - 534
publisher
Wiley-Blackwell
external identifiers
  • scopus:85051079489
ISSN
1541-132X
DOI
10.1111/ropr.12302
language
English
LU publication?
yes
id
cb01c296-1b97-4df5-960d-034e1057291b
date added to LUP
2018-06-04 10:57:01
date last changed
2018-09-09 05:00:16
@article{cb01c296-1b97-4df5-960d-034e1057291b,
  abstract     = {On‐bill financing (OBF) schemes have been welcomed as innovative mechanisms for encouraging the adoption of low‐carbon energy technologies. Yet while the potential effects of these schemes have received growing attention, less is known about their actual performance. Departing from New Institutional Economics and insights from Behavioral Economics, this theory‐driven assessment examines the How$mart® program in Kansas (United States) and the Green Deal in the United Kingdom. The study identifies the mechanisms designed to trigger behavioral change and technology adoption. We focus on market agents, and related market failures and behavioral anomalies that often prevent energy efficiency improvements. The paper adds to our theoretical and empirical understanding of public and utility‐driven OBF programs applied to the residential sector. Our findings suggest that simple, carefully designed on‐bill programs, where the financing of efficient technologies takes the form of a service rather than a loan, are more effective for the diffusion of low‐carbon energy technology and the reduction of transaction costs. At the same time, on bill‐financing schemes challenge the core business of utilities, and given the complexities and dynamics of energy efficiency markets and energy use, other policy interventions are needed.},
  author       = {Mundaca, Luis and Kloke, Sarah },
  issn         = {1541-132X},
  keyword      = {Behavioral change,Climate mitigation,Comparative governance,Energy use,On-bill financing schemes,Policy innovation},
  language     = {eng},
  month        = {08},
  number       = {4},
  pages        = {502--534},
  publisher    = {Wiley-Blackwell},
  series       = {Review of Policy Research},
  title        = {On-Bill Financing Programs to Support Low-Carbon Energy Technologies : An Agent-Oriented Assessment},
  url          = {http://dx.doi.org/10.1111/ropr.12302},
  volume       = {35},
  year         = {2018},
}