Electrification would require excessive public subsidy.

The investment needed to decarbonise the economy, whether through electrification or by other means, can be stimulated through a variety of policies and need not be publicly funded.

Private investments in low-carbon technologies can be driven by a variety of public policies including the use of standards, planning policy, taxes, quota schemes and subsidies. Multiple different policy options can be used to drive the same investment. Consequently, there is nothing about electrification that requires the use of public subsidy.

Indeed, the role of subsidies in driving investment may be limited for reasons unrelated to the budgetary impact. A growing body of work has shown that people often do not respond as expected to financial incentives and that, as such, subsidies can be inefficient at motivating household investment. Factors like this help to underpin renewed interest in non-subsidy measures, like the proposed ban on the sale on conventional cars in at least seven EEA member states.


See, for example, Elisha R. Frederiks, Karen Stenner, and Elizabeth V. Hobman, “Household Energy Use: Applying Behavioural Economics to Understand Consumer Decision-Making and Behaviour,” Renewable and Sustainable Energy Reviews (Elsevier Ltd, 2015), https://doi.org/10.1016/j.rser.2014.09.026.