Public Acceptance of the German Energy Transition – An Experimental Study on Distributional Preferences 33rd USAEE/IAEE North American Conference The Dynamic

Public Acceptance of the German Energy Transition – An Experimental Study on Distributional Preferences33rd USAEE/IAEE North American ConferenceThe Dynamic Energy Landscape

October 25-28, 2015 in Pittsburgh

Ole KutzschbauchHelmut Schmidt UniversityDepartment of Economics and Social SciencesInstitute for Behavioral Economics

2Public Acceptance of the German Energy Transition – An Experimental Study on Distributional Preferences

Helmut Schmidt UniversityDepartment of Economics and Social SciencesInstitute for Behavioral EconomicsOle Kutzschbauch33rd USAEE/IAEE North American Conference

Agenda(1) Motivation(2) Experimental Design(3) Results(4) Summary

Pittsburgh, October 27th, 2015



(1)MotivationGermany‘s energy transition:

• Germany‘s energy transition, the so called Energiewende, is by that one of the most ambitious projects in Germany’s recent history.• massive state interventions lead

to far-reaching consequences to society.

→Without the support of a majority of the population, the energy transition will most likely not reach its intended goals.


Main Targets:• Reducing GHG-Emissions

• -40 % by 2020 compared to 1990.

• nuclear phase-out by 2022• Boosting proportion of total

energy consumption by renewable energy sources• Reducing primary energy

consumption



(1) Motivation• The current efforts will not be sufficient to achieve the objectives of the energy

transition.

• Without a significant increase of today’s capacities of renewable energy sources the goals of the energy transition will not be reached.

• Financial support for renewables is crucial to increase the share of green electricity to total energy supply

Research Question:How should the additional costs be distributed among the households to ensure public acceptance?




(2) Experimental Design• The experimental approach allows us to analyze subjects‘ behavior in a controlled environment.

• The experiment was conducted in a shopping mall in Germany with regular visitors as subjects.• Choices of the participants had real monetary consequences.• Every amount that was contributed by the decision maker to the energy transition reduced her payoff.• We excluded efficiency concerns and possible reciprocity to solely focus on distributional preferences.• We constructed a stylized society that want to follow suit the German energy transition.• Subjects chose anonymously how they want to divide the costs of the energy transition between three

heterogeneous income groups (low, medium, high).• Different institutional scenarios allowed us to test for changes in respondents choices.

• Today, we focus on two treatments:I. Baseline scenarioII. Cost Uncertainty

• In addition: We asked for Subjects‘ attitudes, opinions and sociodemograhic data.




(2) Experimental Design

I. Baseline scenario II. Cost Uncertainty




(3) Results• In total 374 subjects participated in the experiment.• 17 % of the participants were 51 or older.• 27.2% had an household income less than 1000 Euro.• 4.8% did not have a job.• 7.2 % were retired.

Target to include low income households and older participants was reached.• The average payout was 10,50 Euro.




(3) Results• 71 % support measures to prevent the consequences of the climate

change.• 70 % stated that they would accept higher costs for these target.• Still 33% thought that the costs are currently too high.

• Climate change is considered as a task for the whole society.




(3) Results• Baseline scenario:• Respondents chose a proportional

distribution.The energy transition seems to be seen as a task for the whole society, but with the limitation that no specific group in the population is overburdened.




(3) ResultsCost Uncertainty scenario:• Uncertainty leads to a more regressive distribution.• This effect is strongest in high income groups but visible for every income.




(3) Results• Effect of Uncertainty is

significant (***).• The results follows more a

consumption tax, where each individual take his share of the costs according to her energy use.




(4) Summary & Conclusion• We find that subjects generally follow the ability-to-pay-principle (supported also by the

other treatments we had) as participants choose in the median position a proportional distribution.

• If the society is certain that the goals of the energy transition will be achieved as planned and the costs are thereby relatively certain a proportional distribution on the basis of the ability-to-pay principle is preferred.• This contradicts the current financing mechanism with his regressive characteristics

• When we introduce cost uncertainty, the society moves from a clear proportional distribution towards a more regressive cost distribution.

• If the costs for the ambitious objectives of the government are perceived unstable, we see a movement towards a capitation of the costs.• the regressive character of the current system could support the public acceptance of the energy

transition.


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Thank You very much




Appendix




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Appendix




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Appendix


Documents

Public Acceptance of the German Energy Transition – An Experimental Study on Distributional Preferences 33rd USAEE/IAEE North American Conference The Dynamic