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

Research output: Contribution to journalArticle

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 costeffective potential of energy savings above 30% (compared to the
baseline) is observed. In environmental terms, the resulting greenhouse
gas emission reductions are around 200Mt 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 ofmarket 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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Subject classification (UKÄ) – MANDATORY

  • Social Sciences Interdisciplinary

Keywords

  • Energy efficiency Energy policy Ex-ante evaluation EU-wide tradable white certificate scheme
Original languageEnglish
Pages (from-to)3016-3043
JournalEnergy Economics
Volume30
Issue number6
Publication statusPublished - 2008
Publication categoryResearch
Peer-reviewedYes