In Clean Energy Portfolios, Money Isn’t Everything – Research by Erb Institute Faculty Director, Joe Arvai

Jul 10, 2018 1:00 PM ET

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People may be more willing to pay for clean energy and strategies that dramatically reduce emissions than previous studies have suggested, according to new research by Michigan State University Professor Douglas Bessette and University of Michigan Professor Joseph Árvai, “Engaging Attribute Tradeoffs in Clean Energy Portfolio Development,” published in Energy Policy. Árvai is the Erb Institute’s faculty director.

To prevent global mean temperatures from increasing beyond 2 °C, governments and utilities will need to make drastic changes to electrical infrastructure, including relying more on clean energy and using carbon capture and storage. Many factors are at play, but the cost of these changes and people’s willingness to pay for them usually are at the forefront of strategic planning and political discourse.

Studies that measure the public’s willingness to pay often rely on vague policy options, ignore important social and environmental attributes, and do not give people a way to analyze trade-offs, the researchers noted. Studies that don’t make the costs and benefits clear may not accurately gauge people’s willingness to pay, they argued.

So Bessette and Árvai conducted three studies on people’s willingness to pay for clean energy and transition strategies in the U.S. and Canada. They gave participants multiple-choice tasks for evaluating real-world portfolio options, including key social and environmental attributes. For some participants, the tasks included constructing an energy portfolio.

“Our results show that individuals placed high importance on minimizing costs, yet also consistently ranked strategies highest that reduced both greenhouse gas (GHG) and air particulate emissions, even when those portfolios require considerable cost increases,” the researchers wrote.

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