Research Paper on "Willingness and Motives of Customers to Offset CO2 Emissions of Consumed Products and Services"

Research Paper 10 pages (3440 words) Sources: 20

[EXCERPT] . . . .

CO2 Emissions

The willingness of customers to offset CO2 emissions

The importance of global warming has progressed to the point that there are very few people who would deny its significance and the fact that it must be counteracted. Over the last decade, there have been a number of attempts to reduce carbon dioxide emissions and fight global warming, and many activists (across different cultures) have championed the cause of environmental awareness. There is no avoiding the consumption of products that emit carbon dioxide; however, people can change the way in which they offset the harmful effects of such products. For example, they can overhaul their lifestyle by walking more or growing more of their own food. However, the implementation of strategies to combat global warming has proved to be largely unsuccessful. There are many reasons for this lack of success, and they span from lifestyle factors, economic policy, the way in which the media frames global warming, and a general inability to properly educate consumers about the harmful effects of global warming and how to reduce carbon dioxide emissions. This paper reviews the extant literature surrounding the willingness of customers to offset carbon-dioxide emissions of consumed products and services.

The willingness and investment in counteracting the harmful effects of climate change are remarkably similar across different countries; this is particularly significant in that it reflects the way in which customer attitudes are relatively uniform throughout the world (Reiner et al., 2006). Consequently, the attempt to overhaul the way in which customers view climate change requires a systematic reworking that takes place on a global scale. Although Americans do have a slightly lower percentage of the population who feel that global warming is a serious problem compared to other countries in the developed world, nations such as Sweden, Britain, and Japan have similarly misrecognized the extent to which global warming is a major threat to the environment (Reiner et al., 2006).

It has been shown that the public investment in combating global warming has a negative correlation with national wealth (Sandvik, 2008). It is this reason that perhaps governs the motives of customers most of all, as it draws a correlation between economic success and environmental lack of consciousness. Indeed, it would appear as though the public is unable to embrace climate change as long as they flourish economically. In order for people to truly become cognizant of the dangers of global warming, they must have some threat to their immediate well-being, and the lack of such a threat is what has caused the lack of motivation evinced by customers with regard to offsetting CO2 emissions.

Not only is the issue of offsetting carbon dioxide emissions a global one, but attacking global warming requires changes in lifestyle and economic policy, both of which influence consumer behavior. The energy consumption by the general public (across different countries) relates to both lifestyle and the influence of their country's economic policy. There must also be improved communication with the public. In many cases, the public is willing to subsidize initiatives predicated around improving carbon dioxide emissions, but they simply have no knowledge of how to enact such change. It has been shown that the average American will pay between $150 and $200 more than they currently spend on electricity; however, they are unwilling to actually go through the effort of changing their electric program (Aldy, Kotchen, Leiserowitz, 2012). In this regard, there is a fundamental passivity that characterizes customer behavior. To an extent, their reticence is understandable, since environmental science has only recently risen in popularity as an academic discipline. However, the problem remains that the vast majority of people have very little knowledge of global warming or even how to reduce carbon dioxide emissions.

Ultimately, it is difficult for people to comprehend climate change because energy use is so multifaceted. Specifically, the existing literature has stressed the way in which energy use has both direct and indirect manifestations. Direct energy use stems from a person's individual behavior, over which they have total control; this includes activities such as taking showers, using electricity, and driving a car (Bin, Dowlatabadi, 2005). It is these activities that are perhaps attributed the most scorn by the environmentally-conscious community, as people are continually chastised for driving a car that is not fuel-efficient enough or using too much electricity. However, the greatest amount of CO2 emissions are stem from consumption that is indirect, including major operations involving transportation, food service, and clothing (Bin, Dowlatabadi, 2005). The distinction between direct and indirect energy consumption is significant in the discourse on customers offsetting carbon dioxide emissions because much of the public is unaware of indirect causes -- they are therefore less likely to assume responsibility for them and try to offset their corresponding effects.

Perhaps the greatest reason why customers have exhibited little motivation for reducing CO2 emissions is that people have a fundamental aversion toward change, in all of its manifestations. Their reticence toward change is particularly pronounced when it involves fundamental aspects of their lifestyle, such as choice in car and home energy use. They are unlikely to offset the carbon dioxide emissions of such products, because they are viewed as indispensable to their lifestyle. It is difficult for a person who is attached to their car to view the car has contributed negatively to the world climate. In turn, they are also unlikely to purchase products that would be more beneficial to the climate. For example, the hybrid car (as well as the newer electric hybrid) has now been on the market for a number of years; however, the public has not embraced the hybrid car en masse, which is absolutely imperative for offsetting carbon dioxide emissions.

Customer willingness to purchase a hybrid automobile has many determining factors. Perhaps the greatest involves the price of the hybrid, particularly when considering the size of hybrid automobiles. Simply put, hybrids are substantially more expensive than non-hybrid counterparts, and the electric car is particularly expensive (generally costing in the mid-$30,000 range for a compact-midsize automobile.) Indeed, in their study of customer attitudes in Japan, Kishi and Satoh (2005) note:

"Although there are people who will buy a hybrid car which is more expensive than a gas-powered car, there are few hybrid cars with prices acceptable for the potential purchasers. Now gas-powered cars are mainstream vehicles in Japan and it is necessary to prevail low-pollution cars to minimize vehicle oriented environmental problems. Toward the future, lowering low-pollution car price and diversifying the vehicle type are as important as raising the environmental awareness of people." (313).

The predicament identified by the authors is basically universal and a common complaint in the Western world as well. Of course, lowering the price of hybrid cars makes great sense in theory, but actually implementing such an initiative would require the cooperation of entire automobile industries from around the world.

Another issue that has been raised in the extant literature on customer behavior is that it is common for customers to develop a strong attachment to a particular type of product, independent of whether it is environmentally prudent. For example, customers in Germany have a predilection for diesel-powered automobiles. Achtnicht (2012) conducted a study that traced customer behavior with consideration for both fuel type and carbon dioxide emissions, and found that while people are environmentally conscious on an intellectual level, they are unwilling to sacrifice their love for diesel-powered, high-horsepower automobiles.

Studies have also recognized the strong extent to which customer behavior is influenced by the way in which a product is constituted within society, and this is particularly pronounced with regard to automobiles, which are viewed as a major status symbol. For example, it is difficult for an upwardly mobile consumer in the United States to purchase an electric Chevrolet Volt (despite the fact that the Volt costs upwards of $30,000) when they could afford a luxury manufacturer for a similar price. Indeed, Karplus, Patsev, and Reilly note that vehicle cost will be a major deterrent with regard to the purchase of plug-in electric hybrid cars in the United States and Japan (2010). It can be inferred that if people feel that electric cars are prohibitively expensive, they will not only be dissuaded from purchasing such a vehicle but may also fail to take ownership for the carbon dioxide emitted by their car, and they will be less likely to take measures to offset the carbon dioxide emissions from their car.

Even if customers are unwilling to offset the CO2 emissions of products and services, it could be argued that they should still be more willing to purchase products that do not emit as much carbon-dioxide. However, this is not the case, and it has been shown that the reputation of a product mandates the customer's purchase. A recent study conducted in Thailand affirmed the extreme influence that attitude has toward customer motivation to purchase a particular product (Sanitthangkui, 2012). Even in cases where the government offers price reductions or incentive initiatives, the public is… READ MORE

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