Impacts of China’s Energy Efficient Appliance Subsidy Program on Consumer Behavior

Fueled in part by decades of rapid economic development and rising disposable incomes, China’s domestic energy consumption has risen at an extraordinary rate, growing 43% between 2008 and 2012. The Chinese Government recognizes that increases in household appliance ownership and use is one of the primary contributors to overall energy consumption, and has implemented a series of measures to improve household appliance energy efficiency. In 2012, the Government launched a year-long incentive phase of the Promoting Energy-Efficient Appliances for the Benefit of People Program, which subsidized consumer purchases of six energy-efficient household appliances.
In order to assess the effectiveness of this subsidy program, CLASP and All China Marketing Research (ACMR) conducted a survey of consumers across different socioeconomic categories in ten Chinese cities in 2012. The study investigated consumers’ behavior when considering appliance purchases and examined the subsidy program’s impact on those purchases. The results of the survey offer lessons to be considered during the design and implementation of future incentive programs.
The survey found that electricity savings were a primary reason that most Chinese consumers selected energy efficient appliances, most likely because these savings would allow consumers to save money on their energy bills amidst steadily rising electricity prices. While the subsidy program enjoyed a considerable level of awareness among Chinese consumers, most consumers lacked an in-depth understanding of the program, and subsidies were not a top consideration when making appliance purchases. Furthermore, Chinese consumers’ willingness to pay for more efficient appliances was low, and the size of current subsidies was relatively small compared with consumer expectations.
Findings from this survey suggest that increased public awareness as well as adjusted subsidy amounts would boost the program’s impact and ultimately push the market toward more efficient products. The study recommends allocating a sufficient budget for public outreach around future subsidy programs, as well as making use of a wide range of media and communication channels. In addition, policymakers should consider offering higher subsidies for smaller, more-select groups of highly-efficient appliances, a change that would better align subsidy amounts with consumer expectations while promoting only those products with the highest energy efficiency.
Market research was conducted by ACMR for CLASP. The study was authored by Yang Yu of CLASP.