Nudging and residential energy use. Its potential for the EPC

Abstract

The implications of nudging in reducing residential energy demand and its potential for the EPC. Recently there is an increasing interest among policy makers, researchers and social marketing activists towards nudging. This approach takes into account the heuristic thinking of the individuals, who do not always act according to utility maximization principles. Current policies aiming the reduction of energy consumption include soft policies of libertarian paternalism such as nudges. Unlike mandatory one-size-fits-all regulations, nudges have the purpose to preserve the freedom of choice. Contrary to common misinterpretation that nudging exploits exclusively individual’s heuristic thinking and lack of self-control, certain type of nudges address the rationality of the people by avoiding an existing bias. The present paper will give an overview of definitions and principles on which nudges are based and their implications to energy related behavioural change. The reduction of domestic energy use can be achieved by changing everyday habits or by influencing one off decisions for energy efficiency measures such as installing insulation or a condensing boiler. The distinction on what qualifies as a nudge will be analysed according to which system thinking they address (system 1 or system 2). The disambiguation on what nudges are and their three degrees, depending on which system thinking they address, contributes to a better assessment of their limitations and critique. This will be applied to a specific energy policy instrument, being the energy performance certificate of buildings (EPC). The EPC of Flanders will be analysed under the optics of behavioural insights. Based on this, changes will be proposed in order to convert it into a nudging tool for the uptake of energy efficient renovations.