Switching to green electricity: Spillover effects on household consumption

Abstract

One way to reduce emissions from the consumption of electricity is switching to green electricity suppliers. This paper identifies the determinants of adopting green electricity and the effect on electricity consumption, using panel data on more than 9,000 households. To control for potential self-selection into green electricity tariffs, an endogenous dummy treatment effects model is estimated. The results suggest that wealthier and better-educated households are more likely to adopt green electricity. Moreover, we find that switching to green electricity decreases electricity consumption and households supplied by green electricity are less price-responsive. Consequently, enforcing higher prices for conventional electricity might prove effective in reducing both greenhouse gas emissions and electricity consumption at the household level.