How Much Market Do Market-Based Instruments Create?: An Analysis for the Case of ¿White¿ Certificates
AbstractIn the context of economic instruments for more energy efficiency and climate protection, tradable certificates have been investigated for renewable energy and for a number of emissions. In contrast, tradable energy efficiency ¿ or ¿white¿ ¿ certificates have only lately been considered as a market-based tool to foster energy efficiency as compared to standards and labelling, for example. Theoretically, there is little doubt about the advantages. In practice, however, some fundamental problems arise. Critical issues are the design of an efficient artificial market for ¿white¿ certificates, its compatibility with the European emissions trading system, the identification of a suitable target group for an energy efficiency obligation and the measurement of energy savings as compared to a reference use of energy. We use the theoretical framework of Transaction Cost Economics to elaborate these issues. We conclude that transaction costs and investment specificity will restrict markets for ¿white¿ certificates in practise. Long-term contracts rather than spot trade will be the prevailing form of governance for energy efficiency investments.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 425.
Length: 25 p.
Date of creation: 2004
Date of revision:
Publication status: Published in: Energy Policy 34(2006), Iss. 2
Tradable certificates; Energy efficiency; Transaction cost;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-07 (All new papers)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Xavier Labandeira & Pedro Linares, 2010.
"Energy efficiency: Economics and Policy,"
05-2010, Economics for Energy.
- Georg Meran & Nadine Wittmann, 2008. "Green, Brown, and Now White Certificates: Are Three One Too Many? A Micromodel of Market Interaction," Discussion Papers of DIW Berlin 809, DIW Berlin, German Institute for Economic Research.
- Jaehn, Florian & Letmathe, Peter, 2010. "The emissions trading paradox," European Journal of Operational Research, Elsevier, vol. 202(1), pages 248-254, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek).
If references are entirely missing, you can add them using this form.