Chapter 24: The role of behavioural economics in energy and climate policy
While energy-efficiency and conservation have been important tenets of energy policy for decades, concerns about climate change have put these issues at the forefront of policy dialogue. The International Energy Association (IEA, 2010) estimates that, by 2020, about 34 per cent of the global decrease in carbon emissions in a ‘450 scenario’ (limiting the long-term concentration of greenhouse gases in the atmosphere to 450 ppm CO2 equivalent) compared to the reference scenario should stem from direct end-use energy-efficiency measures. This goal calls for a step change in how individuals consume energy and make energy-efficiency purchases. Energy consumption, energy-efficient investment and pro-environmental actions involve consumer decision making and behaviour. These aspects have generated increased interest in designing policy interventions that target energy demand, and interest in assessing the responsiveness of consumer behaviour to these interventions. Behavioural economics can provide new perspectives that can inform policy design on how individuals evaluate options, make decisions and change behaviour.
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