Purchasing Energy-Efficient Appliances – To Incentivise or to Regulate?

Abstract

Making energy use more sustainable and climate friendly requires a lot of different measures. Stopping the growth of private households’ energy demand is one of them, and increasing the energy efficiency of electric appliances which private households purchase may be helpful in this respect. This paper identifies key reasons which hinder even environmentally friendly private households from buying energy-efficient appliances. If information about the energy efficiency of devices would be more available, better accessible and more credible, a lot could be gained. Therefore, energy labels seem to be important to change private households’ purchasing behaviour. The variety and impacts of different energy labels are studied. Incentivizing labels, indicating financial savings from energy efficient appliances, seem to be a promising instrument. The results from various empirical studies are presented and supplemented by results from an online experiment, conducted with a Swiss retailer for electric appliances. Conditions under which incentivizing labels are preferable to regulation are explored.