Environmental Labeling of Electricity: Label Design and PerformanceEPA Grant Number: R826618
Title: Environmental Labeling of Electricity: Label Design and Performance
Investigators: Teisl, Mario F.
Institution: University of Maine
EPA Project Officer: Lee, Sonja
Project Period: September 1, 1998 through August 31, 2000
Project Amount: $72,573
RFA: Decision-Making and Valuation for Environmental Policy (1998) RFA Text | Recipients Lists
Research Category: Economics and Decision Sciences
Description:The objectives are to: 1) identify the types of environmental information that consumers will find useful when choosing among deregulated electricity products, 2) understand how different modes of disclosure affect consumers' ability to comprehend and utilize this information, 3) compare the effect of environmental certification (Type I labeling) and disclosure (Type III labeling) on consumers' perceptions of a product's environmental impact, and 4) understand how these preferences and label performance characteristics differ across consumers.
Approach:The research uses various statistical techniques to analyze survey data collected by the Department of Energy to measure the effects of providing environmental information on electricity purchase behavior. Survey respondents viewed different electricity labels and performed a series of experiments that were designed to measure the respondents' ability to use labels to judge the overall environmental quality of the product, and to verify the truthfulness of environmental claims made on the product.
Expected Results:The research will provide data regarding the type of environmental information sought by consumers and how to display the information to facilitate comparisons of products along their environmental attributes. The results would also provide some non-label-related insights. (e.g., how consumers substitute across price, fuel mix and emissions characteristics). Results will be differentiated across socioeconomic characteristics; providing important information regarding the success of environmental labeling programs across socioeconomic groups.
The research supports two of EPA's decision needs under Project Code 98-NCERQA-J5. The research: 1) advances the understanding of how perceptions of environmental problems and solutions differ across individuals, and 2) examines how the means of communicating information influence attitudes toward environmental problems and solutions. Further, the research supports current NSF initiatives to: 1) increase the understanding of information processing and decision-making by individuals, and 2) improve approaches to providing information for decision-making.
Improvements in Risk Management: From a policy perspective, one aim of eco- labeling is to educate consumers about the environmental impacts of product consumption, thereby leading to changes in purchasing behavior, and ultimately, achieving an environmentally preferred outcome. However, whether customer choice of electricity will lead to cleaner generating sources is an open question. This is of particular concern to policy makers because sulfur dioxide (SO2), nitrogen oxides (NOx) and carbon dioxide (CO2) are all key contributors to a number of air pollution problems (e.g., acid rain and global climate change). In addition, electricity generation creates about two- thirds of