Markets for energy efficiency: Exploring the implications of an EU-wide 'Tradable White Certificate' scheme
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.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ole Langniss & Barbara Praetorius, 2004.
"How Much Market Do Market-Based Instruments Create?: An Analysis for the Case of "White" Certificates,"
Discussion Papers of DIW Berlin
425, DIW Berlin, German Institute for Economic Research.
- Langniss, Ole & Praetorius, Barbara, 2006. "How much market do market-based instruments create? An analysis for the case of "white" certificates," Energy Policy, Elsevier, vol. 34(2), pages 200-211, January.
- Oikonomou, Vlasis & Rietbergen, Martijn & Patel, Martin, 2007. "An ex-ante evaluation of a White Certificates scheme in The Netherlands: A case study for the household sector," Energy Policy, Elsevier, vol. 35(2), pages 1147-1163, February.
- Ronald J. Sutherland, 1991. "Market Barriers to Energy-Efficiency Investments," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 15-34.
- Kevin A. Hassett & Gilbert E. Metcalf, 1997.
"Measuring the Energy Savings from Home Improvements Investments: Evidence from Monthly Billing Data,"
Discussion Papers Series, Department of Economics, Tufts University
9701, Department of Economics, Tufts University.
- Gilbert E. Metcalf & Kevin A. Hassett, 1999. "Measuring The Energy Savings From Home Improvement Investments: Evidence From Monthly Billing Data," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 516-528, August.
- Gilbert E. Metcalf & Kevin A. Hassett, 1997. "Measuring the Energy Savings from Home Improvement Investments: Evidence from Monthly Billing Data," NBER Working Papers 6074, National Bureau of Economic Research, Inc.
- Sanstad, Alan H. & Howarth, Richard B., 1994. "`Normal' markets, market imperfections and energy efficiency," Energy Policy, Elsevier, vol. 22(10), pages 811-818, October.
- Unger, Thomas & Ahlgren, Erik O., 2005. "Impacts of a common green certificate market on electricity and CO2-emission markets in the Nordic countries," Energy Policy, Elsevier, vol. 33(16), pages 2152-2163, November.
- Gates, Robin W., 1983. "Investing in energy conservation : Are homeowners passing up high yields?," Energy Policy, Elsevier, vol. 11(1), pages 63-71, March.
- J. Daniel Khazzoom, 1980. "Economic Implications of Mandated Efficiency in Standards for Household Appliances," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 21-40.
- Metcalf, Gilbert E., 1994. "Economics and rational conservation policy," Energy Policy, Elsevier, vol. 22(10), pages 819-825, October.
- Frondel, Manuel & Schmidt, Christoph M., 2001.
"Evaluating environmental programs: the perspective of modern evaluation research,"
ZEW Discussion Papers
01-59, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Frondel, Manuel & Schmidt, Christoph M., 2005. "Evaluating environmental programs: The perspective of modern evaluation research," Ecological Economics, Elsevier, vol. 55(4), pages 515-526, December.
- Frondel, Manuel & Schmidt, Christoph M., 2001. "Evaluating Environmental Programs: The Perspective of Modern Evaluation Research," IZA Discussion Papers 397, Institute for the Study of Labor (IZA).
- Dermot Gately, 1980. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables: Comment," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 373-374, Spring.
- A. Greening, Lorna & Greene, David L. & Difiglio, Carmen, 2000. "Energy efficiency and consumption -- the rebound effect -- a survey," Energy Policy, Elsevier, vol. 28(6-7), pages 389-401, June.
- Reddy, Amulya K. N., 1991. "Barriers to improvements in energy efficiency," Energy Policy, Elsevier, vol. 19(10), pages 953-961, December.
- Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy-efficiency gap What does it mean?," Energy Policy, Elsevier, vol. 22(10), pages 804-810, October.
- Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy paradox and the diffusion of conservation technology," Resource and Energy Economics, Elsevier, vol. 16(2), pages 91-122, May.
- Lutzenhiser, Loren, 1992. "A cultural model of household energy consumption," Energy, Elsevier, vol. 17(1), pages 47-60.
- Richard B. Howarth & Alan H. Sanstad, 1995. "Discount Rates And Energy Efficiency," Contemporary Economic Policy, Western Economic Association International, vol. 13(3), pages 101-109, 07.
- Berkhout, Peter H. G. & Muskens, Jos C. & W. Velthuijsen, Jan, 2000. "Defining the rebound effect," Energy Policy, Elsevier, vol. 28(6-7), pages 425-432, June.
- J. H. Dales, 1968. "Land, Water, and Ownership," Canadian Journal of Economics, Canadian Economics Association, vol. 1(4), pages 791-804, November.
- Scheraga, Joel D., 1994. "Energy and the environment Something new under the sun?," Energy Policy, Elsevier, vol. 22(10), pages 798-803, October.
- Jakob, Martin, 2006. "Marginal costs and co-benefits of energy efficiency investments: The case of the Swiss residential sector," Energy Policy, Elsevier, vol. 34(2), pages 172-187, January.
- Mundaca, Luis, 2007. "Transaction costs of Tradable White Certificate schemes: The Energy Efficiency Commitment as case study," Energy Policy, Elsevier, vol. 35(8), pages 4340-4354, August.
- Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
- Huntington, Hillard G., 1994. "Been top down so long it looks like bottom up to me," Energy Policy, Elsevier, vol. 22(10), pages 833-839, October.
- Rader, Nancy A. & Norgaard, Richard B., 1996. "Efficiency and sustainability in restructured electricity markets: the renewables portfolio standard," The Electricity Journal, Elsevier, vol. 9(6), pages 37-49, July.
- Johnson, Blake E., 1994. "Modeling energy technology choices : Which investment analysis tools are appropriate?," Energy Policy, Elsevier, vol. 22(10), pages 877-883, October.
When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:30:y:2008:i:6:p:3016-3043. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.