Decision-Making of Private Households (Mobility, Energy Use in Dwellings)

  WTP for an increase of one percentage point in CO2 savings for the heating system alternative, based on energy-savings per year (Source: FCN, own calculation) WTP for an increase of one percentage point in CO2 savings for the heating system alternative, based on energy-savings per year (Source: FCN, own calculation)

As part of the doctoral research of Martin Achtnicht of ZEW Mannheim, FCN focuses on improving the understanding of individual preferences of private households with respect to individual mobility and energy use in dwellings, and the resulting decisions and choices.

In the light of climate change and dwindling fossil energy resources, relevant decisions by economic agents have been a major topic in political and academic debates in recent years. For private households, the areas 'Dwellings' and 'Mobility' are the primary foci of political debates today. We present a synopsis of the ongoing research by Martin Achtnicht in these two areas.

Motorized individual transport strongly contributes to global CO2 emissions, due to its intensive use of fossil fuels. To reduce both oil dependency and CO2 emissions, the EU aims at increasing the fuel efficiency of cars and at substituting traditional automotive fuels by “greener” alternatives, like biofuels, LPG/CNG, hydrogen and electricity. Part of the EU’s strategy is a regulation which sets emission performance standards for new passenger cars registered in the EU. Given the EU’s objectives and strategy, however, it is crucial to provide sufficient refueling infrastructure for car drivers. In this doctoral research a choice experiment about car choices was conducted Germany-wide. Based on the survey data, we study econometrically the impact of fuel availability on the demand for alternative-fuel vehicles. Using a discrete choice model, we simulate choice probabilities for passenger cars running on alternative fuels, depending on the size of the underlying service station network. We also provide evidence that a CO2 emission per kilometer is a relevant factor in car choice and derive related willingness-topay (WTP) estimates.

Due to high energy demand for electricity and heating, the residential building sector is also a major emitter of the greenhouse gas CO2, particularly in industrialized countries. Given the EU ETS, decentralized heat generation is of particular relevance for future climate policy in the EU. Unlike electricity and district heating, emissions arising from decentralized heat generation are not covered by the EU ETS. Therefore, measures to save heat energy in residential buildings are likely to result in effective CO2 abatement and not just in a shift of emissions. In order to know house owners' preferences on heating and insulation technologies and to learn more about their decisions we conducted a choice experiment concerning energy retrofits for existing houses in Germany. Unlike previous studies, we explicitly included both cost and environmental benefits of energy-saving measures. We find environmental benefits to have a significant impact on choices of heating systems. However, they play no role in terms of insulation choices. We also obtain substantial WTP estimates for CO2 savings (see Figure).

Project publications

Achtnicht M., Bühler G., Hermeling C. (2008). Impact of Service Station Networks on Purchase Decisions of Alternativefuel Vehicles. ZEW Discussion Paper, No. 08-088, Zentrum für Europäische Wirtschaftsforschung, Mannheim.

Achtnicht M. (2009). German Car Buyers’ Willingness to Pay to Reduce CO2 Emissions. ZEW Discussion Paper, No. 09-058, Zentrum für Europäische Wirtschaftsforschung, Mannheim.

Achtnicht M. (2010). Do Environmental Benefits Matter? A Choice Experiment Among House Owners in Germany, FCN Working Paper No. 27/2010, Institute for Future Energy Consumer Needs and Behavior, RWTH Aachen University, December (also published as ZEW Discussion Paper, No. 10-094, Mannheim).

Achtnicht M. (2013). Essays on Consumer Choices Relevant to Climate Change: Stated Preference Evidence from Germany, Dissertation, RWTH Aachen University.