Signaling sustainability and regionality in the electricity market: An eye-tracking study on visual labels

Abstract

A prevailing hurdle to the rollout of renewable energy is resistance on local levels. Aiming to address this issue, the German government introduced a classification for regional green electricity in 2019. A recent survey indicates that consumers appreciate this classification but also raises concerns of lacking transparency and credibility of its current communication. This study analyzes whether visual labels for regional green electricity can address this issue. Drawing on Signaling Theory, this paper studies how the label affects consumer attitudes and behavior and how familiarizing experiment participants with the label moderates its effects. We test the model by means of a multi-method lab experiment comprising eye-tracking and survey data. We find positive effects of the label with both objective (visual attention, time to decision) and subjective (stated trust) measures. Further, giving participants a briefing on the labels prior to the experiment moderates the labels' effects on visual attention and trust. These findings suggest that a regional green electricity label could provide a potent tool for policymakers to accelerate the transition towards a carbon neutral energy sector.