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Green, Brown, and Now White Certificates: Are Three One Too Many? A Micro-Model of Market Interaction

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  • Georg Meran
  • Nadine Wittmann

Abstract

In recent years, European environmental policy has focused primarily on the reduction of carbon emissions and on fostering the expansion of renewable energy production. In 2008, the EU established the 20/20/20 vision, demanding that carbon emissions and energy consumption both be reduced by 20%, and that the production of Green Energy be further increased in order to account for 20 percent of total energy production by 2020. Regarding the reduction of emissions, a cap-and-trade system (Brown Certificates) was implemented. for the fostering of so called renewable, i.e. Green, energy different nations chose different measures, such as direct subsidies, feed-in-tariffs (e.g. Germany), or Green Certificate markets based on a quota system (e.g. Denmark). Recently, a market-based instrument (White Certificates) intended to improve efficiency of non-commercial energy consumption is also on the agenda of several European nations (demand side management). All of these instruments are directed towards the energy market. Therefore, this paper deals with identifying interdependencies and trade-offs that might occur, if both, supply and demand side, of a single market are regulated by different policy measures. Our results show that, in fact, significant interdependencies and trade-offs exist. In our model, a feed-in tariff in combination with an emission cap or tax renders the most favorable results—in the absence of demand side management. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Georg Meran & Nadine Wittmann, 2012. "Green, Brown, and Now White Certificates: Are Three One Too Many? A Micro-Model of Market Interaction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(4), pages 507-532, December.
    • Handle: RePEc:kap:enreec:v:53:y:2012:i:4:p:507-532
    DOI: 10.1007/s10640-012-9574-2
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    Cited by:

    1. Heimvik, Arild & Amundsen, Eirik S., 2021. "Prices vs. percentages: Use of tradable green certificates as an instrument of greenhouse gas mitigation," Energy Economics, Elsevier, vol. 99(C).
    2. Wirl, Franz, 2015. "White certificates — Energy efficiency programs under private information of consumers," Energy Economics, Elsevier, vol. 49(C), pages 507-515.
    3. Wittmann, Nadine, 2013. "A critical microeconomic analysis of modelling the interaction of WCTS and EU ETS," Energy Policy, Elsevier, vol. 60(C), pages 840-843.
    4. Abrell, Jan & Weigt, Hannes, 2008. "The Interaction of Emissions Trading and Renewable Energy Promotion," MPRA Paper 65658, University Library of Munich, Germany.
    5. Sebastian Strunz, Erik Gawel, and Paul Lehmann, 2015. "Towards a general Europeanization of EU Member States energy policies?," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    6. Barbara Schlomann & Clemens Rohde & Wolfgang Eichhammer & Veit Bürger & Daniel Becker, 2013. "Which Role for Market-Oriented Instruments for Achieving Energy Efficiency Targets in Germany?," Energy & Environment, , vol. 24(1-2), pages 27-55, February.
    7. V., Oikonomou & A., Flamos & S., Grafakos, 2010. "Is blending of energy and climate policy instruments always desirable?," Energy Policy, Elsevier, vol. 38(8), pages 4186-4195, August.
    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. Louis-Gaëtan Giraudet & D. Finon, 2014. "European experiences with white certificate obligations: A critical review of existing evaluations," Working Papers hal-01016110, HAL.
    10. Paul Lehmann & Jos Sijm & Erik Gawel & Sebastian Strunz & Unnada Chewpreecha & Jean-Francois Mercure & Hector Pollitt, 2019. "Addressing multiple externalities from electricity generation: a case for EU renewable energy policy beyond 2020?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(2), pages 255-283, April.
    11. Bye, Brita & Fæhn, Taran & Rosnes, Orvika, 2018. "Residential energy efficiency policies: Costs, emissions and rebound effects," Energy, Elsevier, vol. 143(C), pages 191-201.
    12. Arild Heimvik & Eirik S. Amundsen, 2019. "Prices vs. percentages: use of tradable green certificates as an instrument of greenhouse gas mitigation," CESifo Working Paper Series 7521, CESifo.

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