Association for Public Policy Analysis & Management

Digitalisation, decentralisation, technological and business-model innovation, and shifting generational norms of consumption are transforming mobility, food provision, domestic comfort and residential energy services. Disruptive innovations shake up established consumption practices by providing consumers with new and appealing value propositions. Disruptive consumer innovations range from shared, on-demand electric mobility and peer-to-peer trading of electricity, food and cars, to grid-responsive smart appliances, lights and boilers.

Although currently at the fringes of mainstream markets, these disruptive consumer innovations have the potential to reduce CO₂emissions if adopted at scale. The first part of this paper synthesises the evidence base on mitigation potentials from disruptive consumer innovations, drawing on prospective market studies, simulation modelling, as well as observational data from early-adopter market segments. Available evidence ranges in quality, form, and so comparability. Meta-analysis finds that estimation methodologies and geographic scale help explain variation in emission reduction potentials.

Given the potential public-goods benefit of disruptive consumer innovations, the second part of this paper explores the role of public policy in supporting, restricting or remaining agnostic towards disruptive processes. Policymakers face a trade-off between maintaining stability and driving rapid system-transformation to address climate change. Regulatory frameworks designed to ensure system reliability, continuity and affordability may create barriers to disruptive new entrants who can potentially deliver rapid emission reductions through novel consumer value propositions.

The paper concludes by setting out conditions under which public policy for disruptive consumer innovations is both necessary and appropriate as part of broader efforts to mitigate climate change.