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Green energy defaults: Too effective or not effective enough?

Moncreiff, Harry LU (2017) In IIIEE Masters Thesis IMEN41 20172
The International Institute for Industrial Environmental Economics
Abstract
Green energy defaults (where the uptake of renewable energy is promoted among households by opt-out tariffs) are gaining increasing interest with policy makers, due to the high enrolment rates shown in (experimental) studies. Such default choices are often justified on normative and behavioural grounds as although consumers express a desire and willingness to pay for green energy, they often fail to act on such preferences. However, what has yet to be identified is whether the defaults actually classify those consumers according to their preferences. This study presents the results of a randomised controlled experiment, in which a sample of Scottish energy deciders (n=518) were randomly allocated to one of three treatment conditions for... (More)
Green energy defaults (where the uptake of renewable energy is promoted among households by opt-out tariffs) are gaining increasing interest with policy makers, due to the high enrolment rates shown in (experimental) studies. Such default choices are often justified on normative and behavioural grounds as although consumers express a desire and willingness to pay for green energy, they often fail to act on such preferences. However, what has yet to be identified is whether the defaults actually classify those consumers according to their preferences. This study presents the results of a randomised controlled experiment, in which a sample of Scottish energy deciders (n=518) were randomly allocated to one of three treatment conditions for renewable electricity (opt-in, opt-out and an active choice). The choices made under the hypothetical markets were then compared with the normative preferences of the participants. Findings reveal two important aspects: a) not all consumers who would like a green tariff remain with it when it is the default, and b) consumers who would not like a green tariff stick with it when it is the default. The first finding suggests that such behaviour is due to scepticism in the green default when originating from an untrustworthy choice architect (e.g. supplier). The second finding proposes that green defaults may have the potential to manipulate consumers into energy contracts against their actual preference. Findings offer new and valuable insights into the workings of green energy defaults never before studied. The findings highlight significant research and policy implications surrounding the role of green defaults. It is concluded that green defaults are rather context- and market-specific and, if not designed carefully, can lead to unwanted policy outcomes. Whereas the experience with green energy defaults indicates untapped potential for behavioural change, the results also suggest that default settings should been seen as a panacea. Ultimately, this study highlights the need for further research on green energy defaults to become part of public policy. (Less)
Please use this url to cite or link to this publication:
author
Moncreiff, Harry LU
supervisor
organization
course
IMEN41 20172
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Behavioural economics, Green defaults, Renewable energy, Pro-environmental behaviour, Energy policy, Preferences
publication/series
IIIEE Masters Thesis
report number
2017:25
ISSN
1401-9191
language
English
id
8927700
date added to LUP
2017-10-23 11:01:32
date last changed
2017-10-23 11:01:32
@misc{8927700,
  abstract     = {Green energy defaults (where the uptake of renewable energy is promoted among households by opt-out tariffs) are gaining increasing interest with policy makers, due to the high enrolment rates shown in (experimental) studies. Such default choices are often justified on normative and behavioural grounds as although consumers express a desire and willingness to pay for green energy, they often fail to act on such preferences. However, what has yet to be identified is whether the defaults actually classify those consumers according to their preferences. This study presents the results of a randomised controlled experiment, in which a sample of Scottish energy deciders (n=518) were randomly allocated to one of three treatment conditions for renewable electricity (opt-in, opt-out and an active choice). The choices made under the hypothetical markets were then compared with the normative preferences of the participants. Findings reveal two important aspects: a) not all consumers who would like a green tariff remain with it when it is the default, and b) consumers who would not like a green tariff stick with it when it is the default. The first finding suggests that such behaviour is due to scepticism in the green default when originating from an untrustworthy choice architect (e.g. supplier). The second finding proposes that green defaults may have the potential to manipulate consumers into energy contracts against their actual preference. Findings offer new and valuable insights into the workings of green energy defaults never before studied. The findings highlight significant research and policy implications surrounding the role of green defaults. It is concluded that green defaults are rather context- and market-specific and, if not designed carefully, can lead to unwanted policy outcomes. Whereas the experience with green energy defaults indicates untapped potential for behavioural change, the results also suggest that default settings should been seen as a panacea. Ultimately, this study highlights the need for further research on green energy defaults to become part of public policy.},
  author       = {Moncreiff, Harry},
  issn         = {1401-9191},
  keyword      = {Behavioural economics,Green defaults,Renewable energy,Pro-environmental behaviour,Energy policy,Preferences},
  language     = {eng},
  note         = {Student Paper},
  series       = {IIIEE Masters Thesis},
  title        = {Green energy defaults: Too effective or not effective enough?},
  year         = {2017},
}