Preference for energy futures in Scotland

Tinch, Elena and Hanley, Nick (2011) Preference for energy futures in Scotland. Fraser of Allander Economic Commentary, Special E (1). pp. 46-61. ISSN 2046-5378

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In the next two decades Scotland is facing tough greenhouse gas emissions reduction targets as well as the upcoming shutdown of a number of existing thermal plants. Given the limited timeframe it would seem imperative that Scotland’s energy policy is developed with public preferences in mind, as political unpopularity and public objections, with the associated need for lengthy public enquires, are likely to mean that targets are more likely to be missed. As such, appraisal of any potential energy option should not be limited to consideration of financial viability but should also take full account of environmental and social costs. The primary aim of our study was to determine public preferences and willingness to pay for alternative energy options, such as wind, nuclear and biomass against the current generation mix, all of which may form an integral part of the future generation portfolio for Scotland. One method of determining social costs is through stated preference techniques, one of which is choice experiments – the method applied in the current study. Our analysis is based on a postal survey sent out to a random sample of 1000 households across Scotland. People were asked to choose between four energy options: wind, biomass, nuclear and current energy mix, depending on which energy option and associated mix of attributes they prefer. Attributes were: distance from respondent’s home, carbon emissions reduction, local biodiversity impacts, land requirements (a fixed attribute) and an annual electricity bill increase (the cost attribute). Our results suggest that carbon-neutral energy options tend to have a positive willingness to pay associated with them and be more favoured by the population over the current energy mix with distance from the respondent’s home, increases in biodiversity and increases in energy bill all having a significant impact on preferences. We also found variation in preferences according to socio-economic groupings, for example respondents with children tend to have a higher preference towards renewable technologies than those without. In addition to the overall sample, we also investigated divergence in preferences between three areas of Scotland (Highlands and Islands; Central; and South). The results indicate that, depending on the geographical location, people’s preferences for energy generation technologies vary. Our results suggest that Scottish energy policy need not only be planned accounting for public preferences for different energy options but also regional divergence of preferences within the country.