Simply changing the default option for your energy tariff from opt-in to opt-out leads to surprising changes.
We overwhelmingly stick with the default choice we are presented with, even if we are not satisfied with it, because the hassle of switching overrides our discontent.
Designing default choices to make green energy the default option leads to massive increases in green energy use, even if the green option is more expensive.
Incorporating the insights of behavioural science can help speed up decarbonization efforts and take the stress out of accessing green energy plans.
We all talk about moving towards green energy and helping the environment, but the received wisdom is that people are unwilling to pay more for electricity. This is especially true when we have to opt-in to a green energy tariff or other renewables program; we say we want green energy but the hassle of signing up and going out of our way deters many of us.
Strange as it seems, the type of default option that we are given has a powerful effect on our behaviour.
Even if we support an initiative (say of buying green energy) the effort involved in signing up routinely deters almost all of us. The default effect is one of many cognitive biases that make us “predictably irrational,” explains Dr Rebecca Koomen from the research consultancy, The Behaviourist.
You’ve probably already encountered the ‘default effect’ – one common example is the higher rates of organ donation that come about from making the process opt-out rather than opt-in. So can we replicate this kind of boost for renewable energy? The answer is yes, for when green energy is made the default choice, it simultaneously removes the effort of signing up and provides an official seal of approval which further motivates us to stick with the change.
The handy thing about all this is that once you’re aware of your biases you can hack your laziness to actually help the planet. It’s as simple as making green energy the default option when purchasing energy.
Even the UN has pointed this out, with the United Nations Environment Programme noting that “by using the deep understanding of decision making offered by behavioural science, policymakers can design more effective policies to shift consumption patterns and achieve the Sustainable Development Goals.”
Customers sticking with green energy plans despite higher costs
And don’t think that this is all hypothetical either, as research studies have proven the effect of default choice switching vis-a-vis green energy since at least 1996. A 2008 paper in the Journal of Environmental Psychology confirmed this trend, and a 2015 study involving 42,000 households in Germany saw an order of magnitude difference in green energy use simply by making the green choice the default one.
When energy users had to opt-in to use green energy, only 7% actually did, but when green energy was the default option, 70% chose to stay with the green option, even though it was $0.03 per kWh more expensive.
Granted, the price of green energy was very low at the time of the study, so the authors were unsure whether the results would be replicable in North America. Price considerations aside, similar numbers were seen when US energy users were studied (using German pricing data).
If all energy companies in Germany made green energy the default choice for private household customers, an estimated 45 million tonnes of CO2 could be saved, equivalent to roughly 5% of total national emissions.
“[…] if you help them and tell them we are all moving now to renewable energy, they feel okay. It was kind of what they wanted to do anyway.”
Sebastian Lotz, a research fellow at Stanford University and one of the authors of the aforementioned paper, explained the findings to Futurity. “We believe that the choice [of not opting out of green energy] is being driven because it’s inconsistent with one’s image as a green person if you actively say no to a good cause, such as helping to mitigate climate change.
While it’s relatively easy to find excuses for not actively choosing green energy, it is harder to find a reason to actively negate a personally important belief.”
More recently, an even larger study has confirmed the findings of previous investigations into the impact of default bias. A recent study of 234,000 households and 9,000 businesses in Switzerland shows that before making green energy the default choice, only 3% of customers were actively choosing green power tariffs.
Five years after the initial switch, between 80-90% of private households are still using green power, despite green tariffs being 3-8% more expensive.
Similarly, over 70% of small businesses continue to use green energy half a decade later, despite it costing them up to 14% more (for nighttime energy use).
Dr Jennifer Gewinner of ETH Zürich, explains that “people are a bit overwhelmed because [energy plans are] a hard topic to actually feel competent [about and] to choose your own tariff. So if you help them and tell them we are all moving now to renewable energy, they feel okay. It was kind of what they wanted to do anyway.”