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Efficiency and Distributional Impacts of Tradable White Certificates Compared to Taxes, Subsidies and Regulations

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Author Info

  • Philippe Quirion

    (CIRED)

  • Louis-Gaëtan Giraudet

    (CIRED, ENPC)

Abstract

Tradable White Certificates (TWC) schemes, also labelled Energy-Efficiency Certificates schemes, were recently implemented in Great Britain, Italy and France. Energy suppliers have to fund a given quantity of energy efficiency measures, or to buy so-called "white certificates" from other suppliers who exceed their target. We develop a partial equilibrium model to compare TWC schemes to other policy instruments for energy efficiency, i.e., energy taxes, subsidies on energy-saving goods and regulations fixing a minimum level of energy-efficiency. The model features an endogenous level of energy service and we analyse the influence of the substitutability between energy and energy-saving goods to produce the energy service, as well as the influence of the elasticity of demand for the energy service. We show that if the level of energy service consumption is fixed, a TWC scheme is as efficient as an energy tax, but that it is much less otherwise because it does not provide the optimal incentive to reduce the consumption of energy service. This inefficiency is worsened if energy suppliers' targets are fixed rather than proportional to the suppliers' current output. On the other hand, compared to taxes, a TWC scheme allows reaching a given level of energy savings with a lower increase in the consumers' energy price, which may ease its implementation.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2008.88.

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Date of creation: Oct 2008
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Handle: RePEc:fem:femwpa:2008.88

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Related research

Keywords: Energy Saving Policies; Energy-Efficiency Certificates; White Certificates; Rebound Effect;

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Cited by:
  1. Xavier Labandeira Villot & Pedro Linares, 2009. "Energy Efficiency: Economics and Policy," Economic Reports 06-09, FEDEA.
  2. repec:hal:ciredw:hal-00866425 is not listed on IDEAS
  3. Rosenow, Jan & Platt, Reg & Flanagan, Brooke, 2013. "Fuel poverty and energy efficiency obligations – A critical assessment of the supplier obligation in the UK," Energy Policy, Elsevier, vol. 62(C), pages 1194-1203.
  4. Giraudet, Louis-Gaëtan & Guivarch, Céline & Quirion, Philippe, 2012. "Exploring the potential for energy conservation in French households through hybrid modeling," Energy Economics, Elsevier, vol. 34(2), pages 426-445.
  5. repec:hal:ciredw:hal-01016399 is not listed on IDEAS
  6. Frédéric Branger & Louis-Gaëtan Giraudet & Céline Guivarch & Philippe Quirion, 2014. "Sensitivity analysis of an energy-economy model of the residential building sector," Working Papers hal-01016399, HAL.
  7. Gries, Thomas, 2011. "Climate and Industrial Policy in an Asymmetric World," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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