Study Finds Money Rules in Household Energy Efficiency Gains

Meat locker air-conditioning in the summer and blast furnace heating in the cold months both take a toll on the Earth’s environment, but what’s the best way to get people to prioritize energy efficiency at home?

According to a new study by an international team of researchers that includes a University of Maryland geography professor, monetary carrots and sticks—like critical peak pricing at times of high energy demand—are a more effective way to encourage people to cut household energy use than non-financial interventions that focus more on providing information, such as comparing a household’s consumption to neighbors’.

Combining both approaches resulted in even more energy savings, according to the first-of-its kind study published in Nature Energy; it used machine learning to analyze findings from more than 120 earlier studies that gathered data in 25 countries. The paper focuses on households’ use of existing equipment and home infrastructure, aiming to fill a gap in knowledge needed to reduce energy use that promotes climate change, said geographical sciences Professor Giovanni Baiocchi, one of the co-authors.

“A comprehensive analysis of household-scale interventions and their emissions reduction potential was missing from the overall examination of ways to reduce carbon emissions at a global scale,” Baiocchi said.

Critical peak pricing is effective because consumers work to cut their consumption to avoid higher prices during peak times, resulting in a more efficient energy grid overall, Baiocchi said. One benefit is that flexible pricing based on supply and demand facilitates the introduction of more intermittent renewable sources like wind and solar power, with output that varies according to weather and other conditions.

The findings provide critical information for a society-wide move toward greater sustainability.

“While it might seem to be conventional wisdom that financial motives yield effective results, our study is an important first step in proving that theory—making it clear to policymakers that financial incentives are a step in the right direction to encourage personal responsibility and eco-awareness,” Baiocchi said.

If financial incentives plus feedback on consumption and social comparison metrics are employed, the team estimated a global carbon emissions reduction potential 350 million metric tons per year—about 5% of annual emissions from residential buildings.

“Household behavior is one important step—one piece of a larger puzzle to stabilize our environment,” Baiocchi said.