Policy packages to achieve demand reduction

Brenda Boardman, University of Oxford

Keywords

demand reduction, climate change, product policy, equity, minimum standards, market transformation, consumer education

Abstract

In many sectors and many countries, energy demand is still increasing, despite decades of policies to reduce demand. Controlling climate change is becoming more urgent, so there is a need to devise policies that will, virtually, guarantee demand reduction. This has to come from policy, at least in the UK, as the conditions do not exist, yet, when the consumers will 'pull' the market for energy efficiency or the manufacturers will use technological development to 'push' it. That virtuous circle has to be created by a mixture of consumer education and restrictions on manufacturers (for instance, permission to manufacture). The wider policy options include higher prices for energy and stronger product policies.

An assessment of the effectiveness of different policy packages indicates some guiding principles, for instance that improved product policy must precede higher prices, otherwise consumers are unable to react effectively to price rises. The evidence will be assessed about the ways in which national and EU policies can either reinforce, duplicate or undermine each other. Another area of examination will be timescales: what is the time lag between the implementation of a policy (whether prices or product based) and the level of maximum reductions. In addition, the emphasis given to factors such as equity, raising investment funds and speed of delivery also influence policy design and the extent to which absolute carbon reductions can be expected.