TODAY’S STUDY: CONSUMER ATTITUDES ABOUT NEW ENERGY

This is the logline for the report highlighted below: People want New Energy but they don't know how to get it and they don't know how to ask for it.

The survey shows high consumer awareness of the difference between electricity generated from polluting, toxic Old Energy sources like coal and nuclear and electricity generated from this good earth's sun, wind, flowing waters and deep heat.

But there appears to be less awareness of how to access such electricity.

And there is significantly less understanding (and hence popular mistrust) of the concept of offsets which was developed so that spending by conscientious consumers could be channeled into the building of New Energy and Energy Efficiency infrastructure.

The obvious remedy would seem to be education but that answer comes too easily. Getting a teachable moment with a public distracted by the crashing of home values, the rising of the latest television idol and the fate of the newest movie hangover is no small task.

Even skyrocketing gas pump prices only produce sound and fury before the oil producers grab their profits from the global casino table, retreat until their next opportune syllable of recorded time and let the petty pace of rising and falling oil price cycles go on.

This is the tragedy of the commons. Everybody knows New Energy and Energy Efficiency are the answers, just like everybody knows society's common grounds must be cared for. But it seems to be in no individual's interest to stop taking the easy way out and tend to the commons.

There is, however, a way out. Does the phrase "promote the general welfare" ring a bell? That's the Liberty Bell ringing because it's the part of the preamble to the U.S. constitution, written before the Liberty Bell cracked, that calls on government to take action in situations like this.

What kind of action? Simple. As the report highlighted below says, "Opportunities exist for continued market growth in renewable energy..." All government has to do is design and implement the right stable, long-term incentives to drive entrepreneurs toward the opportunities and set up rules to keep vested interests from suppressing the desire of the marketplace.

Long-term investment, production, manufacturing and alternative fuel vehicle tax credits, a national Renewable Energy Standard (RES) requiring utilities to obtain a portion of their power from New Energy sources by a designated date, a price on toxic emissions, a streamlining of permitting complexities and the opening of transmission corridors - these are not challenging concepts. They are things that would not only promote the general welfare but achieve what poll after poll shows a bipartisan majority of the voting public wants.

Consumer Attitudes About Renewable Energy: Trends and Regional Differences
Gwynne Rogers, April 2011 (Natural Marketing Institute and National Renewable Energy Laboratory)

Executive Summary

Significant Results, Trends, and Regional Differences

The data in this report are taken from Natural Marketing Institute’s (NMI) Lifestyles of Health and Sustainability (LOHAS) Consumer Trends Database®. Created in 2002, the syndicated consumer database contains responses from 2,000 to 4,000 nationally representative U.S. adults (meaning the demographics of the sample are consistent with U.S. Census findings) each year. A sample of 2,000 has a confidence interval of +/-2.2 percentage points at the 95% confidence level, which decreases to +/- 1.2 percentage points with 4,000 respondents. NMI used the database to analyze consumer attitudes and behavior related to renewable energy and to update previously conducted related research. Specifically, this report will explore consumer awareness, concerns, perceived benefits, knowledge of purchase options, and usage of renewable energy as well as provide regional comparisons and trends over time.

click to enlarge

Based on this analysis, NMI found the following:

• The majority of consumers (80%) indicated that they care about the use of renewable energy. However, concern has diminished slightly over time, which is consistent with other broad environmental consumer attitudes (such as concerns related to environmental protection or sustainable agriculture).

• Consumers primarily associate renewable energy with environmental benefits, despite the other potential benefits renewable energy has to offer and the recent efforts to broaden its appeal.

• Consumer awareness of renewable energy purchase options remains relatively low, with approximately one in six consumers aware of the green power options provided by their electric suppliers, although approximately half of consumers have options available to them.

• Consumers are more price sensitive for renewable energy than in the past, mirroring an increased price sensitivity NMI has observed across the green consumer landscape.

• Despite the common perception, there are few differences in consumer attitudes across regions. However, consumers in the West are more aware of renewable energy terminology, such as renewable power and carbon footprint. In addition, Western consumers, compared to Midwestern consumers, are more aware of their purchase options, are less price sensitive, and are more likely to have already purchased at least some type of renewable energy.

• Seven percent of the adult population reports buying at least some renewable energy for their home. According to similar research, this is a significantly lower percentage than the proportion of the population that cares about renewable energy and a higher percentage than penetration rates reported by utilities and marketers that offer renewable energy options to consumers.

• Opportunities exist for continued market growth in renewable energy as indicated by the differential between concern and usage and declining premiums. However, the modest awareness levels of renewable energy options are a challenge.

click to enlarge

Introduction

Project Background and Objective

The voluntary renewable energy market has grown considerably since its inception in the 1990s. In 2009, more than 30 million MWh of renewable energy were sold in the voluntary market, a nearly four-fold increase compared to 2005 and almost equal to the amount of new renewables required to meet 2009 state renewable portfolio standards. Renewable energy is available to consumers in three forms: (1) utility green pricing programs offered in regulated states, (2) competitive retail electricity products in deregulated or competitive markets, and (3) renewable energy certificates (RECs) purchased in over-the-counter transactions or through independent REC marketers. Customer participation in utility green pricing programs and competitive market programs has increased over the years, though penetration rates remain low. More than 1.4 million consumers purchase green power through their utility or retail electricity provider or in the REC market, with the vast majority (99%) of consumers purchasing through their utility or retail electricity provider.

However, in 2009, the average participation rate among utility green pricing programs was 2.0%, while penetration rates in competitive markets ranged from 1.7% to 2.5%. The top 10 programs in 2009 had participation rates ranging from 5.1% to 20.8%. (Bird and Sumner 2010) The objective of this report is to explore trends in consumer interest and awareness of renewable energy options through analysis of historical and regional survey data. Specifically, the report provides a historical and regional analysis of consumer responses to questions that indicate how much people care about renewable energy sources, how aware they are of options to buy renewable energy, their willingness to pay for renewable energy, and their opinions on the benefits of renewable energy. Only the renewable energy data are summarized here, provided by Natural Marketing Institute’s (NMI’s) Lifestyles of Health and Sustainability (LOHAS) Consumer Trends Database, a survey instrument conducted annually since 2002 that covers a broad range of environmental issues. This report also provides an update to previously conducted research on consumer attitudes regarding renewable energy. Earlier consumer market research revealed consumer interest in supporting renewable energy. For example, utility market research on consumer preferences found that 52%–95% of residential consumers were willing to pay at least a modest amount ($3– $10) for renewable energy on a monthly basis (Farhar 1999).

click to enlarge

Deliberative polling of Texas electricity consumers also found that the median willingness to pay among consumers in various utility territories ranged from $1.50 to $6.50 per month (Lehr et al. 2003). In addition, a 2007 Opinion Research Corporation poll found similar results to 2007 NMI data regarding familiarity with the term renewable energy, awareness of purchasing options, and purchase rates.

The updated data on consumer attitudes and awareness presented here are useful for utilities or marketers engaged in the voluntary renewable energy market. The data on trends and regional differences in attitudes towards renewable energy may also be useful for policymakers, stakeholders, and the renewable energy industry as a whole.

U.S. LOHAS Consumer Trends Database Research Methodology

Survey Scope

LOHAS describes the consumers and organizations that put health and sustainability first and foremost in their lives. NMI first designed the LOHAS Consumer Trends Database in 2002 to measure and describe the marketplace for LOHAS products and services within the total U.S. population, the consumers who use them, consumer expectations of corporate behavior, and attitudes toward environmental and social issues. Particular attention is paid to consumer attitudes, behaviors, psychographics, lifestyle activities, and product and service usage patterns in order to provide the information needed to capitalize on growing sustainability and corporate responsibility initiatives. Renewable energy has been included since the beginning of the research.

click to enlarge

Data Collection

Undertaken by NMI on behalf of its sponsor clients, the 2010 research was conducted in July via an online survey of 4,000 U.S. general population adults. Survey participants included those who had opted in to a panel as well as a demographically balanced, random subset of the panel. As respondents completed the survey, additional sample data were sent to provide balance demographics for any groups that were underrepresented at that point. To correct for any minor variations in the sample’s demographic characteristics and the population as a whole, the data have been post-weighted to match multiple U.S. Census demographic measures. No individual respondent’s weighting factor is greater than three or less than 0.3. The study utilized a leading online research firm and was designed, managed, and analyzed by NMI. The text of the questions used in this report is included in Appendix A.

Statistical Significance

The results of this survey are nationally projectable to the U.S. adult population and statistically valid at the 95% confidence level +/- 1.2%. Throughout this report, capital letters indicate statistically significant differences between regions at the 95% confidence level using t-tests. The t-tests reflect the probability that the difference in two numbers being compared is not due to sampling error. In regional charts and graphs, each region is assigned a letter as a short-hand code. A significant regional difference is noted on the region with the higher value by referencing the capital letter of the region with the lower value.

click to enlarge

Geographic Division

This report includes analyses by geographic region. The regions are defined in Table 1 and are consistent with industry and market research standards.

Generating market interest in renewable energy starts with raising awareness of commonly used terms. Since NMI began measuring awareness of renewable power in 2008, at least two-thirds of consumers have been aware of the term, with a statistically higher number in 2010 (as shown in Figure 1). In the same timeframe, consumer awareness of carbon-related terminology has increased more rapidly. The awareness of the term carbon footprint has grown particularly quickly, up 24% annually since 2007, with most of the growth between 2007 and 2008, when media coverage of this issue was more prevalent, especially in the Northeast and West where there are established carbon regulations (i.e., RGGI in the East and Western Climate Initiative in California). As newer terms, and those commonly used by the media, many consumers have latched onto them.

click to enlarge

The term carbon offset has not seen the same dramatic increase in awareness as carbon footprint and is still below the 2007 carbon footprint awareness level. While the two terms may be clearly linked within the business community, the same cannot be said of consumers. While carbon footprints are commonly discussed in consumer media, specifically when talking about how to reduce a carbon footprint, reports often refer to energy efficiency and conservation, use of renewable energy, and carbon offsets, among other approaches. Since carbon offsets are just one of the approaches to manage a carbon footprint, it could explain why awareness of this term is lower.

Interestingly, the term carbon footprint has overtaken the term renewable power in awareness. Since the term renewable power has been used for decades, it is remarkable that carbon footprint has eclipsed it after just a few years. While more consumers may be aware of specific types of renewable energy, such as solar and wind (85% of consumers were aware of wind energy in 2009, for instance), perhaps the umbrella term is not as well known. Therefore, communicators in this field need to be mindful of consumer familiarity with these terms in their publications.

As a comparison, 85% of consumers are aware of the term “biodegradable” (the highest scoring term measured) and 60% are aware of the term “sustainability.” Awareness of both renewable power and carbon footprint, therefore, is comparable to other green industry terms. Of course, awareness is not the same as understanding. While awareness is a starting point, presumably fewer understand the terms. Ensuring accurate understanding is also important to generating interest in the marketplace…

click to enlarge

Conclusion

Overall, consumers have a high degree of awareness and concern for renewable energy, but few are aware of their purchase options or follow through on their stated concern…

Major findings of this report include the following:

• Concern about renewable energy is quite high, with 80% of the general population caring completely or somewhat about the use of renewable energy sources. Although concern has decreased from 89% in 2002, such decline is consistent with a general decline in caring about environmental attributes, such as protecting the environment and sustainable agricultural practices.

• Consumers continue to believe that the most important benefit of renewable energy is that it is better for the environment than regular power, although some consumers believe that the most important benefits are domestic sourcing and to a lesser extent human health or economic benefits.

• Consumer awareness is a challenge for utilities or companies providing renewable energy options to consumers. Despite a modest increase in consumer awareness, only 14% of consumers were aware of renewable energy purchase options in 2010. In addition, consumer willingness to pay more for renewable energy has declined in recent years.

click to enlarge

• Despite the common perception that there are regional differences in attitudes about renewable energy, these data generally do not demonstrate strong regional differences, although the following differences do exist:

-Consumers in the West are more aware of the terms carbon footprint, renewable power, and carbon offset than consumers in other regions who have equivalent awareness. Consumers in the West are also less price sensitive than consumers in other regions and are more likely to report buying at least some of their household power from renewable sources.

-Consumers in the Midwest are the least likely to be aware of their renewable power purchase options, while consumers in Texas and the Northeast, where retail competition exists and multiple alternative providers operate, are most aware of renewable energy purchase options.

Given low levels of product awareness, and that half of consumers who are aware of options to buy renewables do say they purchase renewables, these data suggest further opportunity for market growth in this sector, particularly if heightened consumer awareness can be achieved.