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Efficiency and distributional impacts of tradable white certificates compared to taxes, subsidies and regulations

Author

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  • Louis-Gaëtan Giraudet
  • Philippe Quirion

Abstract

Tradable White Certificates (TWC) schemes, also labelled Energy-Efficiency Certificatesschemes, 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 partialequilibrium model to compare TWC schemes to other policy instruments for energyefficiency, i.e., energy taxes, subsidies on energy-saving goods and regulations fixing aminimum level of energy-efficiency. The model features an endogenous level of energyservice 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 ofdemand for the energy service. We show that if the level of energy service consumption is fixed, a TWC scheme is asefficient as an energy tax, but that it is much less otherwise because it does not providethe optimal incentive to reduce the consumption of energy service. This inefficiency isworsened if energy suppliers’ targets are fixed than if they are proportional to thesuppliers’ current output. On the other hand, compared to taxes, a TWC scheme allowsreaching a given level of energy savings with a lower increase in the consumers’energy price, which may ease its implementation.

Suggested Citation

  • Louis-Gaëtan Giraudet & Philippe Quirion, 2008. "Efficiency and distributional impacts of tradable white certificates compared to taxes, subsidies and regulations," Revue d'économie politique, Dalloz, vol. 118(6), pages 885-914.
  • Handle: RePEc:cai:repdal:redp_186_0885
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    Cited by:

    1. Pedro Linares & Xavier Labandeira, 2010. "Energy Efficiency: Economics And Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 573-592, July.
    2. Nauleau, Marie-Laure & Giraudet, Louis-Gaëtan & Quirion, Philippe, 2015. "Energy efficiency subsidies with price-quality discrimination," Energy Economics, Elsevier, vol. 52(S1), pages 53-62.
    3. Frédéric Branger & Louis-Gaëtan Giraudet & Céline Guivarch & Philippe Quirion, 2014. "Sensitivity analysis of an energy-economy model of the residential building sector," CIRED Working Papers hal-01016399, HAL.
    4. Petrella, Andrea & Sapio, Alessandro, 2012. "Assessing the impact of forward trading, retail liberalization, and white certificates on the Italian wholesale electricity prices," Energy Policy, Elsevier, vol. 40(C), pages 307-317.
    5. Louis-Gaëtan Giraudet & S. Houde, 2013. "Double moral hazard and the energy efficiency gap," Post-Print hal-00799725, HAL.
    6. 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.
    7. Andrea Petrella & Sandro Sapio, 2010. "No PUN intended: A time series analysis of the Italian day-ahead electricity prices," RSCAS Working Papers 2010/03, European University Institute.
    8. Louis-Gaetan Giraudet and Dominique Finon, 2015. "European experiences with white certifirecate obligations: A critical review of existing evaluations," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    9. Marie-Laure Nauleau & Louis-Gaëtan Giraudet & Philippe Quirion, 2015. "Energy Efficiency Policy with Price-quality Discrimination," Working Papers 2015.33, Fondazione Eni Enrico Mattei.
    10. Rodríguez González, Ana Belén & Vinagre Díaz, Juan José & Wilby, Mark Richard, 2012. "Dedicated tax/subsidy scheme for reducing emissions by promoting innovation in buildings: The EcoTax," Energy Policy, Elsevier, vol. 51(C), pages 417-424.
    11. 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.
    12. 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.
    13. Gries, Thomas, 2011. "Climate and Industrial Policy in an Asymmetric World," WIDER Working Paper Series 079, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Energy saving policies; Energy-efficiency certificates; White certificates; Rebound effect;

    JEL classification:

    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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