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Equity and the willingness to pay for green electricity in Germany

Abstract

The production of electricity on the basis of renewable energy technologies is often discriminatively financed: the German energy-intensive sector, for instance, benefits from a far-reaching exemption rule, while all other electricity consumers are forced to bear a higher burden in the form of a higher surcharge on the net price of electricity. Here, we demonstrate that reducing this inequity in cost burden substantially raises household willingness to pay for green electricity. In a stated-choice experiment among about 11,000 households, participants who were informed about the energy industry exemption were less likely to accept an increase in the fixed surcharge per kilowatt hour than those who were not informed. However, participants who were informed about the industry exemption but then told that it would be abolished had significantly higher acceptance rates. This suggests that reducing inequity in the distribution of the cost burden increases the acceptance of bearing these costs. This outcome may have far-reaching implications for policymaking that extend to other domains where exemptions exist, such as carbon tax schemes.

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Fig. 1: Treatment effects by gender.
Fig. 2: Treatment effects by green attitudes.
Fig. 3: Support for the exemption rule.

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Acknowledgements

We are grateful for invaluable comments and suggestions by A. Gerster, L. Götte and C. Vance, as well as for feedback from the audiences at the International Association for Energy Economics conference 2017 at Vienna and the EnInnov2018 symposium at Graz. We gratefully acknowledge financial support by the Collaborative Research Center ‘Statistical Modeling of Nonlinear Dynamic Processes’ (SFB 823) of the German Research Foundation (DFG), within Project A3, ‘Dynamic Technology Modeling’, and by the Federal Ministry of Education and Research (BMBF) within Kopernikus Project ENavi (grant 03SFK4B0).

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M.A.A. was primarily responsible for the creation and implementation of the experimental design. S.S. was primarily responsible for data analysis. While all authors contributed to the writing of the paper, M.F. was primarily responsible for it.

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Correspondence to Manuel Frondel.

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Supplementary Methods, Supplementary Tables 1–4, Supplementary References

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Andor, M.A., Frondel, M. & Sommer, S. Equity and the willingness to pay for green electricity in Germany. Nat Energy 3, 876–881 (2018). https://doi.org/10.1038/s41560-018-0233-x

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