A study of low-income household purchasing decisions in Hong Kong for energy efficient consumer durables

Abstract

As COP26 looms on the horizon with the world watching for governments to commit to policies that see vast reductions in emissions by 2030 and a goal of net zero 2050, there are a significant amount of demand side measures that can be implemented by households. The residential sector’s share of Hong Kong’s electricity consumption is just over 25%, with more than half consumed by air conditioning, refrigeration and hot water. These appliances, however, are of varying efficiency with the most energy efficient costing more than their less efficient counterparts. While it seems sensible that households will invest in these technologies if for nothing else than to save money, the experience is that they don’t. Various reasons, both economic and behavioural, are put forward as to why this may be the case and the aim of this paper was to understand what the situation is in Hong Kong with a particular focus on Low Income Households (LIH). This group is of particular interest because they make up 30% of the population and there are additional barriers for them, such as lack of access to capital to invest in these technologies. A questionnaire was given to over 100 LIH and a lot of the findings were what we expected. Although there was an above average interest in the environment generally, this did not translate into a willingness to pay more for energy efficient consumer durables. We found low levels of energy related financial literacy and while overall low electricity prices may make uptake less attractive it was more likely that lack of disposable income was a major contributing reason. Also, the fact that a considerable number of respondents were in rental accommodation meant that they were a hostage to the decisions of their landlord. This makes it important for policy makers to concentrate their efforts on education for this group and look at financial incentives to increase uptake. Sufficient reductions in emissions will not be achieved if only those than can afford to invest in these technologies do so. It is the responsibility of all to contribute to the reduction and policies are required to help those that cannot.