By Francesca Papa and Filippo Cavassini, OECD Economics Department
Russia’s war of aggression against Ukraine is strongly impacting energy prices worldwide. While relatively mild weather avoided rationing over the 2022-23 winter in European countries, challenges remain in securing sufficient storage levels for the 2023-24 winter (OECD, 2023). In some countries, high prices have already incentivised some demand reductions from firms and households. However, as argued in our recent paper (Cavassini and Papa, 2023), the crisis calls for additional changes in behaviour to accompany long-term technical and structural solutions to lower gas and electricity demand.
The current energy crisis calls for significant changes in behaviour
Diversifying energy sources and reducing energy demand will be critical. Some of these changes will take time to be implemented, such as improving buildings’ energy efficiency. However, the current crisis also calls for policies leading to more immediate demand reduction (Haas, Kozluk and Sarcina, 2022) (Figure 1).
Figure 1. Without demand reductions, Europe may risk gas supply interruptions
Some of these actions will need to come from changes in the behaviour of households, which account for almost 24% of energy consumption in the EU, with an even higher share in winter (OECD, 2022) (Figure 2).
Figure 2. Households account for a large share of electricity consumption
Electricity total final consumption by sector
Reducing households’ energy use can not only help curb the current crisis, but, if sustained over time, it can also support the transition to net zero. Identifying the psychological factors that influence energy conservation behaviour is particularly important, because changing behaviour is the result not only of responses to prices but also of expectations, habits, and biases (Carrus, 2021).
How to facilitate a behavioural response to energy savings?
A range of structural and psychological barriers make it hard for consumers to change their energy consumption. For example, inattention, sheer habit or emulation can create a gap between the intention to reduce energy consumption – I will turn off the light when I exit the room – and the actual action – but in fact I leave it on. The capacity of individuals to process information can also be a barrier. Information campaigns that are not sufficiently clear on what can be done can be difficult to act upon.
There are, however, ways of counteracting these behavioural barriers.
Successful information campaigns tend to provide a set of clear and actionable guidelines, which can be important for emergency situations (Cornago, 2022). For example, after the 2011 earthquake and tsunami hit the Fukushima nuclear power plant in Japan, the government launched an information campaign to encourage households to save energy. Government and energy utilities disseminated checklists of energy saving tips with simple actionable steps, complemented by technical support to commercial and industrial consumers (Institute of Energy Economics, Japan, 2021). Overall, the campaign led to 15% less electricity being used in 2011 relative to the previous year in the most affected regions. This was achieved without price increases (Kimura and Nishio, 2016).
Social norms are strong determinants of action and can influence the effectiveness of information campaigns. For example, a study on the role of beliefs in energy conservation found that the belief that neighbours were reducing energy consumption correlated highly with energy saving efforts, a finding which has often replicated in real-life applications (e.g. Figure 3) (Jachimowicz, 2018).
Figure 3. Sample of redesigned energy bill emphasising social comparison
Behavioural change can also be promoted through a combination of price mechanisms (time of the day pricing) and user-centric technologies. A study conducted by the OECD in 2018 showed that smart meters providing real-time feedback on electricity consumption, price and expenditures induced households to reduce electricity demand by an average of about 3%, with results increasing to around 4% over a five-month period (OECD, 2019).
Table 1 presents possible responses that build on behavioural sciences and can be used to counteract different behavioural barriers affecting energy consumption.
Table 1. Examples of behavioural barriers that can affect energy consumption in the short and long term and possible responses
Governments should already concentrate on energy saving measures that will prepare us for the next winter. The choice of message that policymakers send to consumers, how and when the information is provided to households and through which channels can make a difference in changing consumption behaviours. The effectiveness of these campaigns and actions should be monitored to gauge evolutions in behaviours and identify solutions to behavioural barriers.
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Valuable comments, inputs and support were received from colleagues across the OECD Economics Department: special thanks go to Tomasz Kozluk; Mauro Pisu; Enes Sunel; Filippo Maria D’Arcangelo; Tobias Kruse; Jonas Teusch; Fátima Talidi and Jesús Calderón Argüello. The authors gratefully acknowledge Cassandra Castle for her important contributions. Isabell Koske, Acting Director, Country Studies, Economics Department, provided guidance and inputs to the policy brief. Antonia Vanzini prepared the blog for publication.