“We really think there is a space for business to mobilise customers,” said Dr Jeff Hardy, head of future consumers and sustainability at Ofgem. “It is a space created by the climate imperative and the associated sticks and carrots. The sticks are the carbon prices and targets and the carrots are the business opportunities.”
Hardy was speaking at a climate and energy expert panel, convened by EDF Energy earlier this month, ahead of COP21 – the UN climate conference in Paris.
For Ofgem, the electricity and gas markets regulator for Great Britain, prompting behaviour change through business levers – many technology-based – raises some big regulatory issues. “A question we’re asking,” said Hardy, “is whether retail regulation should be reliant on principles rather than prescription. More principles in retailer regulation – doing the right thing – could create many more innovative digital propositions.”
Attitudes to climate change
More on those innovations in a moment but first a thought about the customers. Do they really care about climate change to alter their behaviour? “On a macro level, not to a huge extent,” said Laurence Stellings, associate director at Populus, the polling organisation. Populus carries out an “open-ended tracker” asking a sample of the UK population to nominate the big issues facing the country. Climate change is fifteenth on that list, behind the economy, education and the UK’s relationship with the European Union, among other things. Not very high, in other words.
“But on a macro level … climate change does play a part,” continued Stellings. “It’s part of the mix of many other issues. They care about cost, they care about how easy it is to switch, they care about whether the call centre is outsourced to somewhere else in the world.”
“Sometimes they are able to make a decision that ticks a lot of those boxes, including climate change. Sometimes they are happy to make a decision that doesn’t click the climate box.”
Business incentives
Given the complex mix of motivations and attitudes, how does an energy company engage with its customers on climate change? Béatrice Bigois, managing director customers, EDF Energy, said the nature of the engagement tends to differ between domestic and business customers. For example, EDF Energy carries out audits for its business customers to help them understand their consumption habits better. “By raising awareness it helps them change their behaviour,” said Bigois.
But are customers sufficiently interested? Don’t most treat energy supply for what it is – a utility? “That’s true for some customers but for others, when electricity is a big part of their costs, they get interested.” She cited the example of United Biscuits that set itself a 40 per cent emissions reduction target between 2012 and 2020. It reached a 30 per cent saving alone and then came to EDF Energy – which put a structured plan in place – to help with the final 10 per cent.
Role of technology
As for domestic customers, Béatrice Bigois said the implementation of smart meters will prove “an enabler to develop services around the meter … Through digital technologies, we will be able to help customers better manage their electricity consumption.” Patrick Caiger-Smith agreed that technology has a key role to play. As chief executive of Green Energy Options, a Cambridge-based business which helps the energy retail industry with technology and insight around behaviour change, Caiger-Smith argues that there are broadly three ways to lower household carbon emissions: reduce usage through carbon neutral activities such as turning the lights off in empty rooms or by swapping out energy inefficient appliances for efficient alternatives; green the property by buying or self-generating green power; and shift power consumption around during the day to optimise sources of energy.
“We are seeing massive reductions in price [and] fantastic improvements in what electronics and interfaces can do for people,” said Caiger-Smith. He acknowledged that sometimes behavioural change doesn’t last and that the industry should be alert to consumer inertia. “There is a duration for every intervention,” he said. “We’ve made an assumption that technology can be fitted in the home and then ignored.” Often more interactive interventions are required.
The use of technology to engage consumers matches a shift in user behaviour. “We have a first generation that is making less, a generation that is looking at life differently,” said Sandrine Dixson-Declève, director of the Prince of Wales Corporate Leaders group and executive director of the Green Growth Platform. “We have a generation of sharers, people who actually think that sharing is not about communism.”
Selling aspiration
Dixson-Declève also believes that the messaging around emissions reduction has to change. “The doomsday scenarios didn’t work.” Instead it’s time to talk about climate change in the context of “what matters to you as a citizen,” she said. “Here’s a message to the Chinese, for example. You thought you were climbing up the social ladder by going from walking to work to driving your car. What happened on the last China national day? You were stuck in the biggest traffic jam ever on record for an entire day.”
“Do we have a better proposal? Yes. We can increase your quality of life.”
As a means of mobilising and engaging the customer, it was a theme picked up by Jeff Hardy. “Personally, I don’t think enough is made of the aspiration to live in a low carbon future. There’s a lot of talk about what will happen if we don’t get there but no talk about the positives of getting there. And if you think about it for a minute, you’d probably want to live in a low carbon future.”
In his closing remarks EDF Energy’s CEO Vincent de Rivaz stressed the imporance of education in the battle against climate change. “It’s not just about the planet we leave to our children but aslo the children we leave to our planet,” he said.”We cannot achieve anything great without the passion and engagment of the people.”
The EDF Energy Expert Panel debates took place in London on 4 November 2015. To watch a video on engaging customers, visit: newstatesman.com/mobilise