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


  • Georg Meran
  • Nadine Wittmann


Our paper deals with modeling the effects of introducing a market-based tool for improving end-users' efficiency in an energy market which is already regulated through a cap-and-trade system for green house gas emissions and a quota system meant to improve competitiveness of energy produced using renewable resources. Our results show that the regulation of energy demand achieves its underlying objects of energy savings and energy efficiency solely at the expense of other goals such as the environmental efficiency of energy production. In our model, the implementation of a market for White Certificates (WCTS) causes energy producers' investment in abatement to decrease along with the price for Brown Certificates and the amount of renewable energy demanded. Once we turn to the currently more empirically relevant case of integrating end-users only partially into WCTS, the unregulated group compensates in parts for the decrease in demand of the regulated group, due to an indirect price effect. As both supply and demand side of the market are regulated, this special set of regulations applied can, therefore, be compared to the grip of pincers embracing the entire market, leaving some of it virtually scarred. Consequently, we intended to search for alternative policy measures, which are able to achieve an increase in end-users' energy efficiency without the negative side-effects witnessed in case of a WCTS. In our model a subsidized reduction in the price for households' investment in energy efficiency renders just slightly more favorable results than an implementation of WCTS. However, the most effective way to accomplish all goals of environmental policy alike is to reduce the cap on emissions.

Suggested Citation

  • Georg Meran & Nadine Wittmann, 2008. "Green, Brown, and Now White Certificates: Are Three One Too Many? A Micromodel of Market Interaction," Discussion Papers of DIW Berlin 809, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp809

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    References listed on IDEAS

    1. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
    2. Amundsen, E.S. & Mortensen, J.B., 2001. "The Danish Green Certificate System: Some Simple Analytical Results," Norway; Department of Economics, University of Bergen 226, Department of Economics, University of Bergen.
    3. 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.
    4. 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.
    5. Philippe Quirion, 2006. "Distributional Impacts of Energy-Efficiency Certificates Vs. Taxes and Standards," Working Papers 2006.18, Fondazione Eni Enrico Mattei.
    6. Steven Sorrell, 2003. "Carbon Trading in the Policy Mix," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 420-437.
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    8. Patterson, Murray G, 1996. "What is energy efficiency? : Concepts, indicators and methodological issues," Energy Policy, Elsevier, vol. 24(5), pages 377-390, May.
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    Cited by:

    1. Wirl, Franz, 2015. "White certificates — Energy efficiency programs under private information of consumers," Energy Economics, Elsevier, vol. 49(C), pages 507-515.
    2. 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).
    3. Abrell, Jan & Weigt, Hannes, 2008. "The Interaction of Emissions Trading and Renewable Energy Promotion," MPRA Paper 65658, University Library of Munich, Germany.
    4. 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).
    5. repec:eee:energy:v:143:y:2018:i:c:p:191-201 is not listed on IDEAS
    6. 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.

    More about this item


    Energy markets; certificate trading scheme; white certificates; efficiency; regulation; market-based tool; pincers policy;

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