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Equity and the willingness to pay for green electricity in Germany

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  • Andor, Mark Andreas
  • Frondel, Manuel
  • Sommer, Stephan
Abstract
The production of electricity on the basis of renewable energy technologies is a classic example of an impure public good. It is often discriminatively financed by industrial and household consumers, such as in Germany, where the energy-intensive sector benefits from a far-reaching exemption rule, while all other electricity consumers are forced to bear a higher burden. Based on randomized information treatments in a stated-choice experiment among about 11,000 German households, we explore whether this coercive payment rule affects households' willingness-to-pay (WTP) for green electricity. Our central result is that reducing inequity by abolishing the exemption for the energyintensive industry raises households' WTP substantially.

Suggested Citation

  • Andor, Mark Andreas & Frondel, Manuel & Sommer, Stephan, 2018. "Equity and the willingness to pay for green electricity in Germany," Ruhr Economic Papers 759, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  • Handle: RePEc:zbw:rwirep:759
    DOI: 10.4419/86788884
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    2. Cordes, Ole & Klick, Larissa & Krieg, Marielena & Sommer, Stephan, 2020. "FDZ data description: Socio-ecological panel - wave 5 (Green-SÖP)," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 229169.
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    5. Gurupraanesh Raman & Yang Yang & Jimmy Chih-Hsien Peng, 2024. "The social factors shaping community microgrid operation," Nature Communications, Nature, vol. 15(1), pages 1-8, December.
    6. Ewald, Jens & Sterner, Thomas & Sterner, Erik, 2021. "Understanding the Resistance to Carbon Taxes: A Case Study of Sweden," RFF Working Paper Series 21-18, Resources for the Future.
    7. Nicole Meinusch & Susanne Kramer & Oliver Körner & Jürgen Wiese & Ingolf Seick & Anita Beblek & Regine Berges & Bernhard Illenberger & Marco Illenberger & Jennifer Uebbing & Maximilian Wolf & Gunter S, 2021. "Integrated Cycles for Urban Biomass as a Strategy to Promote a CO 2 -Neutral Society—A Feasibility Study," Sustainability, MDPI, vol. 13(17), pages 1-22, August.
    8. Kaczmarski, Jesse I., 2022. "Public support for community microgrid services," Energy Economics, Elsevier, vol. 115(C).
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    10. Bae, Jeong Hwan & Rishi, Meenakshi & Li, Dmitriy, 2021. "Consumer preferences for a green certificate program in South Korea," Energy, Elsevier, vol. 230(C).
    11. Zawojska, Ewa & Gastineau, Pascal & Mahieu, Pierre-Alexandre & Cheze, Benoit & Paris, Anthony, 2021. "Measuring policy consequentiality perceptions in stated preference surveys," 2021 Annual Meeting, August 1-3, Austin, Texas 313977, Agricultural and Applied Economics Association.
    12. Ewald, Jens & Sterner, Thomas & Sterner, Erik, 2022. "Understanding the resistance to carbon taxes: Drivers and barriers among the general public and fuel-tax protesters," Resource and Energy Economics, Elsevier, vol. 70(C).
    13. Frondel, Manuel & Helmers, Viola & Mattauch, Linus & Pahle, Michael & Sommer, Stephan & Schmidt, Christoph M. & Edenhofer, Ottmar, 2021. "Akzeptanz der CO2-Bepreisung in Deutschland: Evidenz für private Haushalte vor Einführung des CO2-Preises," RWI Materialien 147, RWI - Leibniz-Institut für Wirtschaftsforschung.
    14. Frondel, Manuel & Kaeding, Matthias & Sommer, Stephan, 2022. "Market premia for renewables in Germany: The effect on electricity prices," Energy Economics, Elsevier, vol. 109(C).
    15. Olivier Beaumais & Romain Crastes Dit Sourd & Dimitri Laroutis & Patrice Lepelletier & Salima Taibi-Hassani, 2022. "Consumer awareness of renewable energy and willingness-to-pay for energy transition in France: the less you know, the less you pay? Evidence from a discrete choice experiment," Post-Print hal-04435149, HAL.
    16. Koch, Melanie & Menkhoff, Lukas & Schmidt, Ulrich, 2021. "Coupled lotteries—A new method to analyze inequality aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 236-256.
    17. Sommer, Stephan & Mattauch, Linus & Pahle, Michael, 2022. "Supporting carbon taxes: The role of fairness," Ecological Economics, Elsevier, vol. 195(C).
    18. Groh, Elke D. & Ziegler, Andreas, 2018. "On self-interested preferences for burden sharing rules: An econometric analysis for the costs of energy policy measures," Energy Economics, Elsevier, vol. 74(C), pages 417-426.
    19. Andor, Mark A. & Lange, Andreas & Sommer, Stephan, 2022. "Fairness and the support of redistributive environmental policies," Journal of Environmental Economics and Management, Elsevier, vol. 114(C).
    20. Ivan Savin & Stefan Drews & Sara Maestre-Andrés & Jeroen Bergh, 2020. "Public views on carbon taxation and its fairness: a computational-linguistics analysis," Climatic Change, Springer, vol. 162(4), pages 2107-2138, October.
    21. Bakkensen, Laura & Schuler, Paul, 2020. "A preference for power: Willingness to pay for energy reliability versus fuel type in Vietnam," Energy Policy, Elsevier, vol. 144(C).
    22. Jan-Philipp Sasse & Evelina Trutnevyte, 2023. "A low-carbon electricity sector in Europe risks sustaining regional inequalities in benefits and vulnerabilities," Nature Communications, Nature, vol. 14(1), pages 1-15, December.

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    More about this item

    Keywords

    stated-choice experiment; behavioral economics; fairness;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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