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

Mundaca, Luis LU (2008) In Energy Economics 30(6). p.3016-3043
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... (More)
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. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Energy efficiency Energy policy Ex-ante evaluation EU-wide tradable white certificate scheme
in
Energy Economics
volume
30
issue
6
pages
3016 - 3043
publisher
Elsevier
external identifiers
  • wos:000260272900018
  • scopus:52049089458
ISSN
0140-9883
DOI
10.1016/j.eneco.2008.03.004
language
English
LU publication?
yes
id
98ac4097-24ee-44a0-8792-a38613b37baa (old id 1278555)
date added to LUP
2009-01-19 13:13:05
date last changed
2017-08-13 03:47:08
@article{98ac4097-24ee-44a0-8792-a38613b37baa,
  abstract     = {Recent developments in European energy policy reveal an increasing<br/><br>
interest in implementing the so-called ‘Tradable White Certificate’<br/><br>
(TWC) schemes to improve energy efficiency. Based on three evaluation<br/><br>
criteria (cost-effectiveness, environmental effectiveness and<br/><br>
distributional equity) this paper analyses the implications of<br/><br>
implementing a European-wide TWC scheme targeting the household<br/><br>
and commercial sectors. Using a bottom-up model, quantitative results<br/><br>
show significant cost-effective potentials for improvements (ca. 1400<br/><br>
TWh in cumulative energy savings by 2020), with the household sector,<br/><br>
gas and space heating representing most of the TWC supply in terms of<br/><br>
eligible sector, fuel and energy service demand, respectively. If a single<br/><br>
market price of negative externalities is considered, a societal costeffective potential of energy savings above 30% (compared to the<br/><br>
baseline) is observed. In environmental terms, the resulting greenhouse<br/><br>
gas emission reductions are around 200Mt CO2-eq by 2010, representing<br/><br>
nearly 60% of the EU-Kyoto-target. From the qualitative perspective,<br/><br>
several embedded ancillary benefits are identified (e.g. employment<br/><br>
generation, improved comfort level, reduced ‘fuel poverty’, security of<br/><br>
energy supply). Whereas an EU-wide TWC increases liquidity and<br/><br>
reduces the risks ofmarket power, autarky compliance strategies may be<br/><br>
expected in order to capture co-benefits nationally. Cross subsidies could<br/><br>
occur due to investment recovery mechanisms and there is a risk that<br/><br>
effects may be regressive for low-income households. Assumptions<br/><br>
undertaken by the modelling approach strongly indicate that high<br/><br>
effectiveness of other policy instruments is needed for an EU-wide TWC<br/><br>
scheme to be cost-effective.},
  author       = {Mundaca, Luis},
  issn         = {0140-9883},
  keyword      = {Energy efficiency
Energy policy
Ex-ante evaluation
EU-wide tradable white certificate scheme},
  language     = {eng},
  number       = {6},
  pages        = {3016--3043},
  publisher    = {Elsevier},
  series       = {Energy Economics},
  title        = {Markets for energy efficiency: Exploring the implications of an EU-wide 'Tradable White Certificate' scheme},
  url          = {http://dx.doi.org/10.1016/j.eneco.2008.03.004},
  volume       = {30},
  year         = {2008},
}