White Certificates for energy efficiency improvement with energy taxes: A theoretical economic model
In this paper we analyze interactions of two energy policy instruments, namely a White Certificates (WhC) scheme as an innovative policy instrument for energy efficiency improvement and energy taxation. These policy instruments differ in terms of objectives and final impacts on the price of electricity. We examine the effect of these policy instruments in the electricity sector, focusing on electricity producers and suppliers in a competitive market. Using microeconomic theory, we identify synergies between market players and demonstrate the total effect on the electricity price when suppliers internalize the behaviour of producers in their decisions. This model refers to an ideal market situation of full liberalization. The cases we examine consist of electricity producers with and without a carbon tax, electricity suppliers with and without an electricity tax, and with WhC obligations. Furthermore, we present a parallel implementation of WhC for electricity suppliers with carbon tax on electricity producers and an electricity tax with WhC obligations to electricity suppliers. We demonstrate differences in optimization behaviour of producers and suppliers. Based on a couple of cases of WhC with carbon and electricity taxes, various positive and negative effects of both schemes in terms of target achievement and efficiency are present, which can lead to an added value of such schemes in the policy mix, although uncertainties of outcomes are quite high. A basic finding is that in a merit order several parameters can increase final electricity price after the implementation of different policies: demand for electricity and electricity supply cost at a large scale and then follow the level of level of obligation for energy saving, level of penalty, and price of WhC (representing the marginal costs of energy saving projects). The impact magnitude of parameters depends on the values chosen and on the initial position of suppliers (i.e. if their actual behaviour deviates from full compliance with targets).
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.:
- Speck, Stefan, 1999. "Energy and carbon taxes and their distributional implications," Energy Policy, Elsevier, vol. 27(11), pages 659-667, October.
- Boyd, Roy & Uri, Noel D., 1991. "The impact of a broad based energy tax on the US economy," Energy Economics, Elsevier, vol. 13(4), pages 258-273, October.
- John C. V. Pezzey, 2002.
"EmissionTaxes and Tradable Permits: A Comparison of views on Long Run Efficiency,"
Economics and Environment Network Working Papers
0210, Australian National University, Economics and Environment Network.
- John Pezzey, 2003. "Emission Taxes and Tradeable Permits A Comparison of Views on Long-Run Efficiency," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 26(2), pages 329-342, October.
- Pezzey, John C.V., 2003. "Emission Taxes and Tradable Permits: A Comparison of Views on Long Run Efficiency," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 58198, Australian Agricultural and Resource Economics Society.
- repec:cup:cbooks:9780521311120 is not listed on IDEAS
- A. Lans Bovenberg & Lawrence H. Goulder & Derek J. Gurney, 2005.
"Efficiency Costs of Meeting Industry-Distributional Constraints Under Environmental Permits and Taxes,"
RAND Journal of Economics,
The RAND Corporation, vol. 36(4), pages 950-970, Winter.
- A.L. Bovenberg & Lawrence H. Goulder & Derek J. Gurney, 2003. "Efficiency Costs of Meeting Industry-Distributional Constraints under Environmental Permits and Taxes," NBER Working Papers 10059, National Bureau of Economic Research, Inc.
- Bovenberg, A.L. & Goulder, L.H. & Gurney, D.J., 2003. "Efficiency Costs of Meeting Industry-Distributional Constraints under Environmental Permits and Taxes," Discussion Paper 2003-86, Tilburg University, Center for Economic Research.
- Baranzini, Andrea & Goldemberg, Jose & Speck, Stefan, 2000. "A future for carbon taxes," Ecological Economics, Elsevier, vol. 32(3), pages 395-412, March.
- Bert Willems & Guido Pepermans, 2003. "Regulating transmission in a spatial oligopoly: a numerical illustration for Belgium," Energy, Transport and Environment Working Papers Series ete0314, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
- Zhang, ZhongXiang & Baranzini, Andrea, 2004.
"What do we know about carbon taxes? An inquiry into their impacts on competitiveness and distribution of income,"
Elsevier, vol. 32(4), pages 507-518, March.
- Zhang, ZhongXiang & Baranzini, Andrea, 2000. "What do we know about carbon taxes? an inquiry into their impacts on competitiveness and distribution of income," MPRA Paper 13225, University Library of Munich, Germany, revised Jan 2003.
- Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
- repec:cup:cbooks:9780521322249 is not listed on IDEAS
- Peter Hoeller & Jonathan Coppel, 1992. "Energy Taxation and Price Distortions in Fossil Fuel Markets: Some Implications for Climate Change Policy," OECD Economics Department Working Papers 110, OECD Publishing.
- 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.
- Manne, Alan S. & Richels, Richard G., 1993. "The EC proposal for combining carbon and energy taxes The implications for future CO2 emissions," Energy Policy, Elsevier, vol. 21(1), pages 5-12, January.
- Pearce, David, 2006. "The political economy of an energy tax: The United Kingdom's Climate Change Levy," Energy Economics, Elsevier, vol. 28(2), pages 149-158, March.
- Ghalwash, Tarek, 2004. "Energy Taxes as a Signaling Device: An Empirical Analysis of Consumer Preferences," Umeå Economic Studies 646, Umeå University, Department of Economics.
- Roberton Williams, 2002. "Prices vs. Quantities vs. Tradable Quantities," NBER Working Papers 9283, National Bureau of Economic Research, Inc.
- Ghalwash, Tarek, 2007. "Energy taxes as a signaling device: An empirical analysis of consumer preferences," Energy Policy, Elsevier, vol. 35(1), pages 29-38, January.
- Ekins, Paul, 1999. "European environmental taxes and charges: recent experience, issues and trends," Ecological Economics, Elsevier, vol. 31(1), pages 39-62, October.
- Vehmas, Jarmo, 2005. "Energy-related taxation as an environmental policy tool--the Finnish experience 1990-2003," Energy Policy, Elsevier, vol. 33(17), pages 2175-2182, November.
- Bosello, Francesco & Carraro, Carlo, 2001. "Recycling energy taxes: impacts on a disaggregated labour market," Energy Economics, Elsevier, vol. 23(5), pages 569-594, September.
- Ramos-Real, Francisco Javier, 2005. "Cost functions and the electric utility industry. A contribution to the debate on deregulation," Energy Policy, Elsevier, vol. 33(1), pages 69-87, January.
- Birkelund, Hugo & Gjelsvik, Eystein & Aaserud, Morten, 1994. "The EU carbon/energy tax Effects in a distorted energy market," Energy Policy, Elsevier, vol. 22(8), pages 657-665, August.
- Ekins, Paul & Barker, Terry, 2001. " Carbon Taxes and Carbon Emissions Trading," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 325-76, July.
When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:30:y:2008:i:6:p:3044-3062. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.