Financial assistance for clean energy

Households and businesses can significantly contribute to energy reduction, although doing so often requires installation of expensive technologies. An American initiative (Property Assessed Clean Energy (PACE)) offers government-backed financing specifically for such technologies, whereby homeowners recoup their initial investment through discounted property taxes.

The EU-funded PACE (Property assessed clean energy) project aimed to devise a similar policy for Europe, aimed at households. The consortium planned to document attitudes behind consumer choices about green technologies, plus the effectiveness of a European PACE model regarding solar investment.

Early work examined household underinvestment in green technologies, using Organisation for Economic Co-operation and Development (OECD) survey data. Results indicate that willingness to invest depends on home ownership, income, social context and attitudes to green issues. High-income homeowners and people motivated about the subject were more likely to invest than renters and low-income families.

The study found a need for targeted policies to address specific obstacles for different types of consumers. For example, lifting of credit constraints for low-income earners would probably stimulate investment from that group. Direct subsidies can also lower the costs of energy investments.

Researchers suggested that subsidies to adopt low-emission technologies may be the most effective policy for Europe, and better than taxation options. Furthermore, adequate consumer information – such as product standards or energy labels – reduces consumer uncertainty and helps with evaluation.

A second phase statistically analysed PACE effectiveness. The analysis compared the only location where PACE has been implemented (Sonoma County, California) against adjacent locales that had not benefited from the programme. Results show that PACE more than doubled the rate of solar photovoltaic installations compared with nearby regions.

Project researchers examined PACE's European feasibility. The study concluded that European differences in building types and mortgage market, combined with high transaction costs, may deter loans to individual households. Furthermore, Europe already offers many generous subsidy schemes, and more could excessively burden public budgets. Thus, the work concluded that PACE is more attractive than subsidy schemes, and viable for long-term sustainable financial growth.

The project showed that PACE could be adapted for Europe. Doing so would mean greater householder uptake of green technologies.