A strategy to scale building electrification using behavioral economics

The following is a simple three-step proposal for scaling building electrification and motivating your target population to switch their burned-out gas appliances for an electric air-source heat pump or heat pump water heater, regardless of their financial and environmental stewardship preferences. No silver bullet solution exists to tackle the numerous economic, physical, and behavioral hassles of switching homes to electric appliances, but there should be a strategy! Many climate change policies and goals depend on a need for drastic and rapid market transformation.

So, what are these three steps?

1. Promote a commitment campaign to electrify your burnt-out appliance
2. Provide an incentive or financial reward to those who replace their appliance with a heat pump
3. Give the financial reward a boost to reduce the economic hassle of switching to an electric heat pump.?

Let's go through them:

1. Promote a commitment campaign to electrify your burnt-out appliance.

Getting a building owner's attention is crucial when they realize their appliance has burned out. Instead of likely succumbing to a status quo bias and looking to make a like-for-like gas appliance replacement, the building owner should already have awareness, direction, and skin in the game towards electrifying their appliance. A commitment campaign can fill this motivational gap!?

Commitment devices can be a low-cost strategy for behavioral change. Programs administered by utilities, contractors, or local or state governments could promote a commitment campaign in which participants write on a sticker their commitment to electrify when their gas appliance burns out and place that sticker on the appliance. The campaign could encourage participants to post a selfie photo of the sticker to social media to make the commitment more salient and create more public stakes.??

The sticker could have additional information, such as a website that assists participants in matching with a local qualified contractor and getting an efficient, low-cost heat pump (see, e.g., https://switchison.org/). Having both a commitment to electrify and direction once an emergency changeout needs to happen will help motivate many to make the switch. Promoting a commitment campaign will make the invisible benefits of electrification visible and create a buzz among your target population. It will help overcome consumer awareness barriers regarding the benefits of electrification and who to go to when needing an emergency changeout.

2. Provide an incentive or financial reward to those who replace their appliance with a heat pump

Switching from a gas appliance to a heat pump will undoubtedly involve hassles, uncertainties, and economic and performance risks. However, one should be fair to consumers who are wary of such uncertainties. Therefore, to ease these concerns, one should provide financial incentives to those who have installed heat pumps.?

The money could come from multiple sources. For California, I propose (if legal) a straightforward strategy: let investor-owned utility customers voluntarily put their California Climate Credit funds into an escrow account instead of defaulting to bill savings (Funded by cap-and-trade revenues, the California Climate Credits are once or twice a year credits to some utility gas and electric ratepayer bills). After several years of accruing electrification funds, a customer should have enough to offset the costs of switching from gas to electric.?

Another incentive would be to reward participants who have made a commitment with a discount on electrifying labor or equipment costs (e.g., a coupon or rebate).?

3. Give the financial reward a boost to reduce the economic hassle of switching to an electric heat pump.?

Now, it is time to boost the incentive so that the electrification can scale! One way to boost the incentive is for the contractor, utility, or local or state government to cost-share with the customer by matching the amount a customer has committed to electrification. Another mechanism could be to allow individuals to make tax-free contributions to an electrification escrow or 401k-type account and enable the government or other entities to match the contribution with their climate change funds.?Although I?do not know?the availability or where such matching funds will come from (existing ratepayer energy efficiency programs or government-funded climate change programs?), making the economic burden and hassle less uncertain will undoubtedly help customers?make the?switch to electrify.

These three steps will help create the adoption and market transformation scale needed to achieve states' energy and climate change goals. Judiciously incentivizing such behavioral and market transformation is necessary to tackle the critical and wicked challenges of decarbonizing buildings and convincing reluctant (and often unaware) individuals to decarbonize at such a rapid scale. Implementing a scaleable strategy to help make it easy for individuals to electrify during an emergency appliance changeout would be a much-needed start. ?