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The market is not a black box

Louise Sunderland freelance built environment sustainability consultant. She previously worked as Senior Policy Advisor at UKGBC and before this in both the research and parliamentary teams here at ACE.

The ruling theory governing energy efficiency policy has for some time now been that the ‘market will deliver’ the energy and carbon savings we as a society need. And the guiding framework for national and European policy is based on interventions to enable the market to deliver.

But as we know ‘markets’ are not sentient beings that make decisions. What we actually mean by ‘the market will deliver’ is that huge numbers of diverse consumers will respond to market signals and engage, behave and invest (often) their own money in “rational” ways that deliver against policy goals. They will change energy profligate behaviours, they will undertake disruptive works to their homes and businesses, they will purchase equipment, materials and services in exactly the ways that ‘socially’ we need them to.

In the last decade we have seen headline European buildings policy begin to make useful interventions to enable the consumer overcome market barriers – the building energy information tool, the Energy Performance Certificate (EPC), was introduced about 15 years ago and more recently there has been a focus on energy use awareness through accurate billing and ‘smart meters’, and the provision of finance to overcome investment barriers.

But what we haven’t really cracked is getting under the skin of what consumers really need ‘end to end’ to enable them to do what society needs them to – for example taking on deep renovations of their buildings. There is no definition of consumer information or advice provision in the relevant European energy efficiency directives (the 2010 Energy Performance of Buildings Directive [EPBD] and the 2012 Energy Efficiency Directive [EED]), there is no indication of what level of consumer support might be needed to achieve our existing buildings refurbishment ambitions (stated in the EPBD as incrementally moving the existing stock to nearly zero energy [and sometimes carbon] buildings!), and current advisory services (with a few notable exceptions) across Europe are inadequate to address the needs of consumers to achieve these aims.

Unfortunately, we haven’t thought seriously enough about the consumer journey and how well the policy framework supports every step. We also haven’t given sufficient focus to those few examples of really rigorous energy advice and support ‘one-stop-shops’ in Europe – like those in France and Germany – and evaluated these and other programmes to develop understanding and evidence of what support produces what results. This reveals a major blind spot.

Focussing on the market rather than the consumer allows us to imagine a kind of black box – ‘the market’ – in which the most difficult questions, like how does an uninformed consumer negotiate conceiving, financing, managing and getting feedback on a complex whole building renovation, get answered by undefined forces or market players. Until we open this black box and do the work to figure out exactly what we need to put in – what support consumers actually need – to get out what we know we need to get out then the market can never be expected to deliver sufficiently to meet our long-term climate and energy objectives.

Louise, as a member of the Energy Advice Exchange, has recently published a discussion paper and briefing (downloadable here) on revisions to the European energy efficiency package which aim to stimulate exchange and debate on the subject and propose improvements to the key European Directives. Louise has also recently posted a blog on her reaction to the European Commission’s recent “winter package” on sustainable energy (downloadable here).

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Comments (1)

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    Phil Beynon


    Excellent article.

    The ‘black box’ description is in my humble opinion a good analogy.

    The black box is perhaps something that Governments want consumers to desire and thereby become believers of its capability to satisfy their wants/needs and thereby that of the Government.

    Believers appear to be in short supply, much to the disbelief of the ardent believers; another article described them as ‘refuseniks’.

    Turning the masses into believers may need to be thought of as a task beyond the wit of Governments, well wishers and the already converted. This was abundantly evident from the absolute and massively expensive failure of Green Deal (soon to be resurrected).

    My approach and assessment has always been that if you fill a room (for the umpteenth time) with the same people (usual suspects) that want it all to work, they will only see the good in their own ideas and repeat the same failings; this has been evident many times over since I first became engaged in the EE field in 1994 and the many marketing failures that have occurred, despite massive funds and resources being applied year in year out.

    Suggested key words to avoid during mass marketing strategy development: training, education, communities, information, Local Authorities, energy, EPC, etc.

    Suggested key words to focus upon: sales, selling, cold-calling, telesales, direct sales, interest free, simple, quick, guaranteed outcomes, etc.

    The latter tends to send shivers down the spines of many believers, hence the gap between aspiration and delivery when it comes to outcomes.

    In summary, the answer to opening the black box and shining a light into the furthest corners, it is not science; the start is the invitation list for the development meetings followed by acceptance that selling energy/carbon is best developed by those that sell and not those that ‘know’.

    Until the sector can swallow the selling poison pill, EE will continue to be way down on the list of consumers basics/needs/wishes aligned with a willingness to party with their money.

    Alternatively, of course we can take the “force the buggers to believe approach” and ignore our tiny worldwide contribution that Donald Trump may wipe out in a few days.

    Food for thought?

    Happy New year!!!


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