Green marketing, renewables, and free riders: increasing customer demand for a public good

Altruism, Warm Glow and the Willingness-to-Donate for Green Electricity: An Artefactual Field Experiment

“…In a review of green electricity marketing outside the USA, Bird et al (2002) listed 16 OECD countriesamong them Australia, Canada, Germany, Japan and the United Kingdom -with a total of more than 400 green electricity products available to private consumers. However, investigating the two first US retail competition pilot programs in New Hampshire and Massachusetts, Wiser and Pickle (1997) concluded that ''in the near term, a majority of residential customers are likely to stay with their existing utility rather than switch, thus limiting the size of the 'green' power market'' (p. 9). In fact, though market research indicates a significant WTP for green electricity, typically less than 1% of residential customers have already opted for participation in a green electricity program (compare Table 13 in Bird et al 2002).…”

A Diffusion Model of an Induced Environmental Market: Reconciling WTP to actual adoption of green energy tariffs

“…In the US average rates estimated to be at or below 2% (Bird et al 2002;Wiser 2003;Wiser and Pickle 1997;Zarnikau 2003), though some of the best performing programmes have achieved penetration rates of between 5 and 17% (Bird et al 2007, p.6). European nations have also appreciated only modest levels of green energy tariff adoption by consumers, with the Netherlands providing a notable exception.…”

“…The most often cited reasons have been the free rider problem and upward bias in WTP surveys (Diaz-Rainey and Ashton 2008; Gossling et al 2005;Wiser 2003;Wiser and Pickle 1997). A broader range of explanations have been mooted in recent years as researchers have examined the peculiarities of individual market, including • Lack of knowledge as to green power availability: Mentioned in the context of Finland, UK and the US markets (respectively Salmela and Varho 2006;Ipsos MORI 2008;Wiser 2003) • Hesitancy in switching electricity supplier and high search costs: Again in the context of Finland, UK and the US (respectively Salmela and Varho 2006;Diaz-Rainey and Ashton 2008;Wiser 2003) • Distrust of energy product suppliers and their motives for introducing green energy tariffs: Finland, UK and the US (as above though Boardman et al 2006 also found this in the UK context) • Consumer confusion due to a complex regulatory structure and the absence of effective green energy guidelines for green power retailers: Mentioned in the UK literature on numerous occasion and relates to the complex interaction between green tariffs and the supply side incentive system for renewables, the Renewable Obligation (Boardman et al 2006;Diaz-Rainey and Ashton 2008;Graham 2006) • A lack of renewables supply: Mentioned in the UK context and leading incumbents to innovate and provide green offerings that did not derive their energy from renewables, thus adding to customer confusion (Diaz-Rainey and Ashton 2008)…”

The Static and Dynamic Efficiency of Instruments of Promotion of Renewables

“…However, experience shows that it is a very partial response for two reaSons. As can be seen from experience in Europe, the impacts of green programs are quite limited and the problem of free riding remains (Batley and aI., 200 l;Wiser and Pickle, 1997). Individual choices do not fully reflect the real value that the public may place on preserving the environment by purchasing green energy and therefore cannot replace public support.…”