Proceedings of 29th International Business Research Conference
24 - 25 November 2014, Novotel Hotel Sydney Central, Sydney, Australia, ISBN: 978-1-922069-64-1
An Overview of Australian Green Energy Policies, Barriers and
Strategic Decisions for Green Energy Marketing
Al Sadat I Ahmed and Rooma Roshnee Ramsaran
Green Energy (GE) or Renewable Electricity (RE) generally means electricity generated from
renewable sources such as wind, hydropower; bioenergy, solar, geothermal and biomass. This
paper discusses the scenario of Australia’s RE sector, policies, barriers and marketing implications.
The paper provides some background information about the Green Energy (GE) of Australia, which
could potentially be useful for regulators, investors, academics, electricity companies, and Australian
Government’s “Clean Energy Program”. This paper also describes a conceptual model for “Green
Consumer Behaviour” and seeks to investigate these questions: what are the barriers of GE, and
how government policy and marketing programs can promote the RE of Australia. The research
methodology of this paper involves an analytical literature review and statistical information where
data has been collected from secondary sources of Australian government energy reports and
relevant departments. The barriers in production of RE consists of perceived technology; market
operating mechanism, legal framework and the consumer market. Australian RE sector has
contributed only to 8.9% of Australia’s electricity generation.The research states that electricity
industry of Australia is the largest contributor of carbon emission, producing 38% of the total
emission. The Australian Government has taken significant initiatives to confront environmental
challenges of climate change, greenhouse gas emission and global warming by introducing two
major schemes in the RE sector, the Carbon Pollution Reduction Scheme (CPRS) and the
Renewable Energy Target (RET) scheme. GPE as an intangible product needs more marketing
attention; it needs a social marketing approach focusing on consumer value creation, providing both
monetary and non-monetary benefits to the potential green consumers.
Field of Research: Consumer Behavior, Green Marketing
Key words: Green Consumer Behavior, Green Marketing, Sustainability
1. Introduction
The rising concerns regarding the issues of global warming, climate change and greenhouse
gas emissions have raised special attention as to the development of Green Energy (GE) in
many developed countries. The adoption of GE in the residential consumer market is
influenced by various factors such as government policies and marketing strategies. The
Australian Government has established effective policy, strong initiatives and regulatory
frameworks for the deployment of GE. The Government‘s renewable electricity policies and
initiatives are effectual to address the concerns regarding environmental challenges such as
reducing carbon emissions, climate change and energy security. Although consumers are
apprehensive about environmental challenges, a consistent support is rarely observed in many
green products. Green Electricity, as an intangible product, requires greater marketing
attention. Australia has taken the required significant steps towards the production of GE.
Nevertheless, substantial barriers persist in government frameworks and marketing programs
regarding the deployment of GE.
__________________________________________________________________________
Mr. Al Sadat I Ahmed, Department of Marketing, Central Queensland University, Rockhampton, Queensland,
Australia.
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Proceedings of 29th International Business Research Conference
24 - 25 November 2014, Novotel Hotel Sydney Central, Sydney, Australia, ISBN: 978-1-922069-64-1
2. Renewable Electricity Scenario in Australia:
The Green Energy is titled as ‗Clean energy‘ due to its minimal environmental impact
compared to fossil fuel. Electricity generated from renewable resources does not produce
carbon that causes adverse effect to the atmosphere. In 2009, the electricity industry of
Australia was the largest contributor of carbon emission, which produced 37% of the total
emission (Energy white paper 2012 cited in Byrnes et al. 2013, p-711). In Australia, fossil fuel
is the primary source for generating Conventional electricity and the resultant pollution is the
main contributor for the problem of global warming. For example, in 2004, 91% of electricity
was generated from fossil fuel by 24 power stations around Australia, which is equivalent to
almost 200 million tonnes of carbon pollution (Diesendorf n.d cited in Zahedi 2010, p.2210).
Australia is known as the largest per capita Green House Gas (GHG) emitter among the
Organisation for Economic Cooperation and Development (OECD) countries (Buckman &
Diesendorf, 2010).This is due to Australia‘s extensive reliance on fossil, mainly coal for
electricity generation. The Electricity industry of Australia is the key source of energy
production and a major cause for the carbon emission, and in 2004 it was the major contributor
of total carbon dioxide emission in the world, amounting to 36% (IEA, 2006a cited in
Salahuddin and Khan 2013, p-81). Thus, conventional electricity is ever more becoming a
threat to climate change through its serious influence on increasing GHG emissions, among
other negative impacts on the environment. In 2009, Australia emitted 565 million tons of
carbon gas, which is the equivalent of every Australian adult driving a medium-sized petrolpowered car almost 200,000 km for that year (Department of commerce WA 2009 cited in
Bahadori et al. 2013, p-588). The Australian Renewable Energy (RE) sector has contributed
only to 8.9% of total electricity generation of the country (ABARE 2011 cited in Chowdhury and
Than 2012, p- 6880). On the other hand, the Australian carbon pollution has contributed to
1.5% of global emission of GHG, making Australia one of the top 20 polluting countries of the
world (Effendi and Courvisanos 2012 cited in Bahadori et al. 2013, p-583). Australia‘s
abundance of coal is helpful to keep the energy prices low. More than three- quarters of
Australia‘s power system is generated from coal-burning power plants. This abundance and
reliance on coal puts Australia in one the highest positions of the world in terms of per capita
GHG emission rates (Shafiiullah et al. 2011). In these circumstances, there is a rapid growth of
awareness for generating electricity from renewable resources around the world, where
Australia has a very important role to play by reducing millions of tonnes of carbon dioxide
emitted by conventional electricity production and contributing for a sustainable environment
through generating more GE. Consumers‘ decision to purchase GE is critical in the reduction
of Australia‘s GHG emissions.
2.1 Australian Renewable Electricity Policies and Barriers:
The Australian Government has taken the enterprise of Clean Energy Initiative (CEI) and has
established a ‗Clean Energy Future‘ framework with a view to increase the production of GE
from renewable resources (Byrnes et al. 2013). The government launched the CEI in order to
advance the technologies required for GE production so that RE demands can be met duly
and GHG emissions are minimised. According to the Department of Resource, Energy and
Tourism, CEI comprises of Carbon Capture and Storage (CCS) initiatives, Solar Flagship,
Australian Solar Institute (ASI), Australian Centre for Renewable Energy (ACRE), Renewable
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Proceedings of 29th International Business Research Conference
24 - 25 November 2014, Novotel Hotel Sydney Central, Sydney, Australia, ISBN: 978-1-922069-64-1
Energy Future Fund (REFF) (Shafullah et al. 2011). In the development of GE in Australia, the
governmental policy framework is underpinned by few initiatives like deployment of renewable
technologies, renewable target scheme, the clean energy Finance Corporation, Feed tariffs etc.
Production of RE requires higher amount of up-front capital cost per unit of electricity
compared to conventional electricity (Byrnes et al. 2013). The Australian Government has
taken a monumental step to confront environmental challenges of climate change, GHG
emission and global warming by introducing two major schemes in the RE sector, the Carbon
Pollution Reduction Scheme (CPRS) and the Renewable Energy Target scheme (RET). The
government has established a target, set up by RET, that aims to generate 45,000 GWH of GE
from renewable sources by the year 2020 (Buckman and Diesendorf 2010 cited in Byrnes et
al. 2013, p-716), which is around 20% of Australia‘s estimated total electricity, Figure 3 above.
Electricity generation is a major component of reducing such emissions. So the government
aims to reduce Australia‘s total GHG emissions by 5% on 2000 levels by 2020 and by 80% on
2000 levels by 2050 (BREE 2012 cited in Byrnes et al. 2013, p-713). GE has a conceivable
role in sustainability to the developed countries where the majority of consumers have lack of
access in adoption of GE and this industry has not been successful yet to its market
penetration due to numerous barriers. The initiatives of the government are acting policies to
affirm RE electricity is often attributed by versatile barriers. Australian RE sector is facing the
global environmental challenge by confronting a variety of barriers in both consumer market
and RE production. The barriers concerning consumer market can be attributed to a variety of
factors regarding GE purchase such as, lack of awareness, knowledge, and information; price
premium and green consumer behaviour. The barriers in the production of RE consists of
perceived technology; market operating mechanism and legal framework and many other legal
issues. Australia‘s RE requires technological development and collaboration with international
green energy projects in order to accelerate their clean energy program. The author Paladino
and Pandit (2012) conducted a research in RE sector of Australia and found a number of
factors were viewed by customers as preventing them from engaging in an environmentally
friendly purchase which are availability of green alternatives, choice, performance and
reliability, cost (price), transparency of the benefits and trust in the brand, unknown
environmental impact and availability and convenience, and lack of brand recognition of green
brands.
Although a large proportion of Australian residents express their concern to support the green
environment, taking green initiatives, still consumers failed to behave in an environmentally
friendly manner (Hobman & Frederiks 2014). Barriers that the GE market faces in Australia is
confined with consumer barriers and government policy-making barriers. Some barriers from
consumer‘s perspectives are lack of information, perceived environmental value, ecological
concern, income, understanding government scheme, trust in electricity suppliers, and
negative perception on GE, lack of knowledge on climate change and limited knowledge on
GE consumption. On the other hand from government point of view, the RE sector attributed
by various barriers including lack of legal framework, Renewable electricity promotion policies,
Australian RELec resource (Electricity generated from renewable energy) and technology
limitation (Greg, Mark 2010), Designing limitation of the Renewable Energy Target (Greg &
Mark 2010), RE investment incentives and project financing arrangements (Bird 2005;Kaya
2006, Burer 2009; Zhang 2009), technical risk, limited innovation and knowledge in GE sector
(Foxon, 2005;Reddy 2004; Jacobsson 2004).
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Proceedings of 29th International Business Research Conference
24 - 25 November 2014, Novotel Hotel Sydney Central, Sydney, Australia, ISBN: 978-1-922069-64-1
3. Strategic Decisions for Green Energy Marketing:
GE has surfaced as a topic of paramount importance with the growing concern for
environmental challenges in many countries of the world. Electricity is an intangible product
viewed as general commodity by consumers, where consumers have no perceived differences
in its feature. Furthermore, residential consumers do not have the required knowledge in
identifying the sources of electricity and the perceived advantage of using GE. Green
marketing has emerged as one of the significant tools to promote RE in a deregulated
electricity market. Marketing of GE can take advantage of consumers‘ willingness to
understand the electricity market and provide them with the necessary knowledge of using GE,
which may offer personal benefits as well as environmental benefits.
3.1
Adoption of Green Energy and Green consumer:
With the growing concerns over the environmental degradation in the society, a new class of
consumers has cropped up known as ‗Green Consumers‘, who avoid buying products
responsible for damaging the environment from its production to the disposal of the product
(Ludhiyani, Joshi, Pathak 2012). Research reveals that consumers who are more involved in
community activities are more likely to adopt RE (Wiser, 1998). GE programme in marketing
literature is not likely to grow as other commodities according to marketing literature. Green
consumers have a considerable role in the production process of RE alongside government
policies and framework. Researchers have identified three types of variables that appear to
influential in classifying green consumers: environmental values and concern, sociodemographic variables and psychological factors (Gilg, Barr & Ford 2005).
Adoption of GE is influenced by a number of variables and there are different perspectives on
this topic in the literature. Adoption of GE is viewed as ‗innovation adaption‘ (Ozaki, 2011). The
basis of innovation does not require constructing a new idea, practice or objective, but the
consumers‘ viewpoint has to be new (Straub, 2009). Thus, the mass consumption of GE
compared to conventional electricity can be seen as an innovation; an intangible product or
service innovation. Understanding consumers‘ attitude towards an innovative product may
provide two key benefits. First, the strengths and weaknesses in the innovation attributes may
be identified and managed effectively. Second, additional control may be imposed on the
marketing strategy so that the innovation is made attractive to the most receptive of audiences
(Faiers & Neame, 2006 cited in Thiele, Paladino & Antonio 2008, p- 186). This innovative
consumption is confronted with versatile barriers where practices of green marketing can
establish ‗Green Consumerism‘ behaviour in the adoption of green energy. RE costs a higher
price premium than conventional electricity and consumers‘ willingness to pay is a pivotal issue
in GE; the consumers expect supreme service from their retailers with additional benefits in
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Proceedings of 29th International Business Research Conference
24 - 25 November 2014, Novotel Hotel Sydney Central, Sydney, Australia, ISBN: 978-1-922069-64-1
return for paying extra price. There is no data on how much consumers are willing to pay for
GE and their expectations from government and retailers. Consumers‘ behaviour needs to be
researched in detail with various marketing tools and there is a lack of marketing clarification
on this issue in research papers.
The literature review discussed above serves as the foundation for the following conceptual
framework Figure 1, in order to understand consumers‘ adoption of the GE process and
eventually green consumer behaviour. This theoretical model proposes possible relationships
of numerous explanatory factors, identified from the literature context. The following framework
starts with categorizing the key variables of green purchase intention that affected by some
barriers and finally suggest measures to overcome for green consumerism.
The following conceptual model describes the two kinds of variables independent variables
and dependent variable, the GE. Independent variables are the individual factors which can
influence residential consumers to purchase the GE but all these factors may not create
significant impact on consumer‘s mind to make their ―Green‖ purchase decision. Green
consumer market is attributed by numerous strong barriers and playing a strong negative role
in adoption of green energy. A social marketing approach, Green marketing practices can
motivate consumers to overcome such barriers. Green electricity suppliers should spotlight on
these green barriers to develop their marketing strategies for the transposition of residential
consumers from the conventional electricity to green electricity.
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Proceedings of 29th International Business Research Conference
24 - 25 November 2014, Novotel Hotel Sydney Central, Sydney, Australia, ISBN: 978-1-922069-64-1
Fig 1: A Conceptual model of Green Consumer Behaviour for GE
Conclusion:
Currently there has been considerable demand for sustainable products and services in the
markets, and it can be reasonably expected that their demand will grow in the years to come
(Kotchen, 2005). As yet, the academic research on the marketing demand for electricity as an
intangible product is limited which ought to be rectified, and additional marketing research
need to be carried out (Hanimann, 2013). The initiatives that Australian Government has taken
through RET schemes need research on ―Green Consumer Behaviour‖ for RE. The
importance of using GE for a sustainable environment has increased around the world in this
century and this area is gradually receiving more attention but not in the marketing literature
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Proceedings of 29th International Business Research Conference
24 - 25 November 2014, Novotel Hotel Sydney Central, Sydney, Australia, ISBN: 978-1-922069-64-1
(Paladino & Pandit 2012). More research is required to identify and analyse the options to
adopt GE and more marketing activities are required to promote it to the residential household
consumer market of Australia. The findings and the conceptual model of Green consumer
behaviour of this paper will aid the Australian Government in their ‗Clean Energy Programme‘,
the GE marketers in their market development, the GE suppliers in promoting the consumption
of GE in the future for healthy living and sustainable environment as well as the academic
researchers in a broader understanding of consumer behaviour for GE market in Australia.
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