Market Transformation uses a mixture of information, incentives and regulation to transform the market for a given product. The approach evolved in the US from the early 1970s onwards, in response to the first oil crisis.
The United States first developed a programme for transforming markets through information and regulation. The 1975 Energy Policy and Conservation Act (EPCA) established a three-part programme including test procedures as the basis for comparing appliances, a labelling scheme, and a mechanism for examining mandatory efficiency standards.
Page 204 Hinnels and Boardman in Foxon, T, Kohler, J. and Oughton, C. (2008) Innovation For A Low Carbon Economy Economic, Institutional and Management Approaches Cheltenham: Edward Elgar
Practical experience of implementation of Market Transformation policy since 1994 indicates that not all manufacturers respond in the same way. Manufacturers’ responses to policy proposals is influenced by what they perceive they may gain or lose in comparison to competitors. Manufacturers who consider themselves to be a the leading edge may be supportive of standards, because they feel that the imposition of a Market Transformation policy framework will make other manufacturers bear the same costs they already bear.
Page 218-9 Hinnels and Boardman in Foxon, T, Kohler, J. and Oughton, C. (2008) Innovation For A Low Carbon Economy Economic, Institutional and Management Approaches Cheltenham: Edward Elgar