Polls / December 15, 2009

Would you be willing to pay more for green electricity?

eZonomics readers are divided on whether they'd pay more for "green" electricity. More than half (58%) of respondents to our online poll would not be willing to pay more.

I'll pay more if you will
People tend not to like paying more for something unless they think they are getting more. In the case of fair trade coffee, for example, we have seen that buyers saw value in the assurance the brew was grown responsibly.

Research into "green" energy showed another dynamic: people are willing to pay more as long as everybody else does the same. A paper by German researchers Roland Menges and Stefan Traub, released this year, found the promotion of environmentally-friendly electricity was a public rather than a personal responsibility. The findings suggested governments must take the lead on the issue.

Europe targets 20% renewable energy by 2020
There are signs in Europe that governments are taking the lead. The European Commission committed the European Union (EU) to producing 20% of its energy by 2020 from renewable sources. Renewable sources of energy include wind, solar and tidal power, and geothermal energy. They are alternatives to fossil fuels, such as oil and gas. The 20% target was described by the European Commission as "ambitious". In 2006, the EU produced just seven percent of its energy from renewable sources.

Be prepared to pay more
According to power companies, renewable energy tends to cost more in the commercial market because it is still emerging and does not yet have the same economies of scale as traditional forms of energy. It is possible that as demand rises for renewable energy and falls for non-renewable energy, "green" energy costs could come down.

Energy use will be part of the formula to cut greenhouse emissions and is part of the climate change discussions at the influential Copenhagen Summit now underway in Denmark. The European Union Emission Trading System, for example, already affects the operation of electricity generators in 27 member states of the EU. Commitments to further cutting greenhouse gases will likely lead to further regulation of electricity and possible price hikes for consumers.

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