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Markets for energy efficiency: Exploring the implications of an EU-wide 'Tradable White Certificate' scheme

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  • Mundaca, Luis

Abstract

Recent developments in European energy policy reveal an increasing interest in implementing the so-called 'Tradable White Certificate' (TWC) schemes to improve energy efficiency. Based on three evaluation criteria (cost-effectiveness, environmental effectiveness and distributional equity) this paper analyses the implications of implementing a European-wide TWC scheme targeting the household and commercial sectors. Using a bottom-up model, quantitative results show significant cost-effective potentials for improvements (ca. 1400 TWh in cumulative energy savings by 2020), with the household sector, gas and space heating representing most of the TWC supply in terms of eligible sector, fuel and energy service demand, respectively. If a single market price of negative externalities is considered, a societal cost-effective potential of energy savings above 30% (compared to the baseline) is observed. In environmental terms, the resulting greenhouse gas emission reductions are around 200 Mt CO2-eq by 2010, representing nearly 60% of the EU-Kyoto-target. From the qualitative perspective, several embedded ancillary benefits are identified (e.g. employment generation, improved comfort level, reduced 'fuel poverty', security of energy supply). Whereas an EU-wide TWC increases liquidity and reduces the risks of market power, autarky compliance strategies may be expected in order to capture co-benefits nationally. Cross subsidies could occur due to investment recovery mechanisms and there is a risk that effects may be regressive for low-income households. Assumptions undertaken by the modelling approach strongly indicate that high effectiveness of other policy instruments is needed for an EU-wide TWC scheme to be cost-effective.

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  • Mundaca, Luis, 2008. "Markets for energy efficiency: Exploring the implications of an EU-wide 'Tradable White Certificate' scheme," Energy Economics, Elsevier, vol. 30(6), pages 3016-3043, November.
  • Handle: RePEc:eee:eneeco:v:30:y:2008:i:6:p:3016-3043
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Tol, Richard S.J., 2009. "Intra- and extra-union flexibility in meeting the European Union's emission reduction targets," Energy Policy, Elsevier, pages 4329-4336.
    2. Oikonomou, V. & Patel, M.K. & van der Gaast, W. & Rietbergen, M., 2009. "Voluntary agreements with white certificates for energy efficiency improvement as a hybrid policy instrument," Energy Policy, Elsevier, vol. 37(5), pages 1970-1982, May.
    3. 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.
    4. Giraudet, Louis-Gaëtan & Guivarch, Céline & Quirion, Philippe, 2012. "Exploring the potential for energy conservation in French households through hybrid modeling," Energy Economics, Elsevier, pages 426-445.
    5. Giraudet, Louis-Gaëtan & Guivarch, Céline & Quirion, Philippe, 2012. "Exploring the potential for energy conservation in French households through hybrid modeling," Energy Economics, Elsevier, pages 426-445.
    6. Afshari, Afshin & Friedrich, Luiz, 2016. "A proposal to introduce tradable energy savings certificates in the emirate of Abu Dhabi," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 1342-1351.
    7. Mundaca, Luis & Neij, Lena, 2009. "A multi-criteria evaluation framework for tradable white certificate schemes," Energy Policy, Elsevier, vol. 37(11), pages 4557-4573, November.
    8. Bertoldi, Paolo & Labanca, Nicola & Rezessy, Silvia & Steuwer, Sibyl & Oikonomou, Vlasis, 2013. "Where to place the saving obligation: Energy end-users or suppliers?," Energy Policy, Elsevier, vol. 63(C), pages 328-337.
    9. Stede, Jan, 2017. "Bridging the industrial energy efficiency gap – Assessing the evidence from the Italian white certificate scheme," Energy Policy, Elsevier, vol. 104(C), pages 112-123.
    10. Cayla, Jean-Michel & Maïzi, Nadia, 2015. "Integrating household behavior and heterogeneity into the TIMES-Households model," Applied Energy, Elsevier, pages 56-67.
    11. 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.
    12. Anil Markandya & Xavier Labandeira & Ana Ramos, 2013. "Policy Instruments to Foster Energy Efficiency," Working Papers 01-2014, Economics for Energy.
    13. Vlasis Oikonomou & Alexandros Flamos & Niki-Artemis Spyridaki & Wytze Gaast & Ariane Dominicis & Nicolas Chung, 2012. "White certificates and domestic offset schemes: possible synergies," Mitigation and Adaptation Strategies for Global Change, Springer, pages 187-205.
    14. 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.

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