Financial incentives to promote citizen investment in low-carbon and resource-efficient assets

If the ambitious objectives of the international community, as set out in the Paris Agreement of December 2015, are to be met, rapid decarbonisation is required over the coming decades, particularly in developed countries. Many industrialised countries are incentivising the uptake of low-carbon and resource efficient technologies such as waste-to-energy, wind, solar photovoltaic (PV), and biomass heating systems, which alone have the potential to make a very substantial contribution to global decarbonisation by 2050 (IEA, 2015). It is notable that these technologies are particularly attractive to local citizen investors who are acting individually, as a member of a community group or as party to a project by a professional developer (Enzensberger et al., 2003). This is because of their maturity, modularity, high reliability, the simplicity of the energy generation process and availability of technical service providers (Yildiz, 2014). These technologies, however, face a number of barriers when it comes to widespread deployment; this means that their full potential cannot not realised. According to the Intergovernmental Panel on Climate Change (IPCC), policy must address these barriers to enable the full theoretical potential for mitigation to be realised. As illustrated in Figure 1.1, these barriers are not just technical and economic, but also relate to socio-economic, regulatory and institutional factors (IPCC-WGIII, 2001, p. 752). The focus of this report is on addressing two of the key barriers identified in the IPCC typology: financial barriers (and the consequent investment shortfall in low-carbon technologies (LCTs) (section 1.2)), and lack of social support among citizens for low-carbon transition (section 1.3). These barriers are discussed in turn, focusing on the potential for citizen investment to address them.