Incentivizing incremental change

July 1, 2021

As humans, we are not wired to easily commit ourselves to incremental change. 

But sustainable change is incremental.  And incremental isn’t easy.

When we think about carbon emissions, we often forget that most of our economy is governed by supply and demand dynamics.  Just as any market requires trading and negotiation between parties, the burden of driving the clean energy transition cannot solely be placed on the supply side. 

Indeed, consumers have an important role to play in changing patterns of consumption.  With that in mind, what are some strategies for encouraging environmentally sensible decisions by consumers of electricity and energy services? 

A first step here involves educating consumers on how they generate their carbon footprint in everyday activities, including energy consumption.  As we have seen, electricity is generated differently throughout the world.  Most consumers have the luxury of only worrying about the price of their electricity bill and power outages. 

But understanding the electricity value chain is critical to making informed decisions.  If consumers were truly aware and constantly reminded that each time they turned on the lights they were generating carbon emissions, they might change their consumption patterns.  However, if they were financially incentivized to do so, the likelihood would be much greater.  How can we do so?

One way would be to help consumers constantly monitor their carbon emissions.  Certain technological applications exist already, but are not widely used.  What if there was a way that consumers could generate carbon credits for environmentally sensible decisions?  What if each time a consumer used a public transportation pass or public bicycle, they generated credits that could then be put towards their electricity bill? 

Another solution would be to have insurance costs reduced for lower car use.  These “pay as you go” schemes already exist in certain EU countries, but will need to be ramped up if there is to be meaningful progress on the demand side. 

There is also a role for manufacturers of consumer goods – developing technologies that are efficient in terms of electricity consumption and designing products that can be synchronized with digital solutions, including home appliance scheduling.

Ultimately, a big part of tackling climate change involves teaching ourselves to modify our consumption patters on a voluntary and incremental basis. That includes turning off the lights, lowering the heat, cycling, consuming less meat, composting, recycling and repurposing and reinvesting savings into projects that support ecology and biodiversity.

It’s difficult to imagine that such small changes could have such a big impact. But what would happen if everyone lowered the temperature of their shower by 1 degree Celsius?  What would happen if everybody turned off their lights at 10 p.m.?

We can re-incentivize ourselves to make the right collective decisions. And there is an important role for companies and policy-makers to help us along this path. What if instead of a tax on petrol, we received a tax credit or lower insurance premium for making environmentally-sensible decisions?

How can we promote environmentally sustainable practices in our immediate community? 

CPM