The Cabinet Office “Nudge unit” brought out its report on behaviour change and energy use this Wednesday, buried in a news week dominated by the scandal of phone-hacking and the implosion of the News of the World.
Whilst there is a lot to question in it- more on which to follow next week- I just wanted to highlight one great element: until the roll out of the full domestic Renewable Heat Incentive (RHI) next year, the government will be considering how to apply behavioural insights to the policy design of the RHI to maximise uptake.
Far too often behavioural knowledge has not been used to inform and improve traditional policies, but has been considered a separate ‘add-on’, if it has been considered at all.
As a result traditional incentive schemes (and indeed the incentive scheme for the renewable electricity feed-in tariff) have been modelled on a rational actor model, assuming that people will calculate the long-term economic benefit of taking up the scheme and act rationally.
Looking at upfront incentive schemes, non-financial barriers, discount rates and inertia as things to be addressed in the scheme’s design should mean the DECC team come up with something a little more interesting.
In addition, they will examine the interim Premium Payment scheme for real-life feedback as to both how people respond to that payment and how they act once they have the renewable heating in their homes and incorporate that into improving the scheme once it is operational.
DECC also propose linking the RHI to the Green Deal and are considering that they may require properties to be insulated to a suitable level before they benefit from the RHI. This is something that could be carried across to the design of small-scale electricity feed in tariffs and would build on the fact that small-scale renewables are more visible and often more attractive to the consumer, than insulation, which once installed is pretty invisible and definitely not in the sexy camp.
Modelling by ACE and others has shown that linking the two in this way gets a far greater coverage for the Green Deal and would start to help address the difficulty of getting expensive solid wall insulation in place.
So thumbs up for people-centred policy design in the RHI, or at least the commitment towards it. I look forward to seeing what they come up with and hope this is the start of a new way of making policy.