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Transaction costs of Tradable White Certificate schemes: The Energy Efficiency Commitment as case study

Mundaca, Luis LU (2007) In Energy Policy 35(8). p.4340-4354
Abstract
This paper analyses the nature and scale of transaction costs (TCs) borne by obliged parties under a "Tradable White Certificate" (TWC) scheme. Taking the first phase of the Energy Efficiency Commitment (EECl) in Great Britain as a case study, several sources of TCs were considered, such as search for information, persuasion of customers, negotiation with business partners, and measurement and verification activities. Information was obtained through interviews and a questionnaire distributed to obliged parties. Results show that the most significant sources of TCs were related to search for information, persuading customers and negotiating with managing agents/contractors to implement energy efficiency measures. Perceived high TCs related... (More)
This paper analyses the nature and scale of transaction costs (TCs) borne by obliged parties under a "Tradable White Certificate" (TWC) scheme. Taking the first phase of the Energy Efficiency Commitment (EECl) in Great Britain as a case study, several sources of TCs were considered, such as search for information, persuasion of customers, negotiation with business partners, and measurement and verification activities. Information was obtained through interviews and a questionnaire distributed to obliged parties. Results show that the most significant sources of TCs were related to search for information, persuading customers and negotiating with managing agents/contractors to implement energy efficiency measures. Perceived high TCs related to contract negotiation and liability risks slightly reduced the low trading level. The scale of TCs was estimated to be around 10% and 30% of total investments costs for the lighting and insulation segments, respectively. The results indicate that, despite the presence and scale of TCs, the EECl scheme generated energy savings that yielded net societal benefits. Estimated financial benefits range from 0.6 to 6 p/kWh for insulation and lighting savings, respectively. When avoided external costs due to electricity savings are included, estimated economic benefits range from 3 to 8 p/kWh. Several lessons from the EECl can be drawn for TWC schemes. Among others, it is found that informative policy instruments to raise awareness among end-users are critical if a TWC scheme is to deliver cost-effective energy savings. In all, the nature and scale of TCs under TWC schemes will differ because of a number of endogenous and exogenous determinants. (c) 2007 Elsevier Ltd. All rights reserved. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
energy efficiency, Tradable White Certificates, transaction costs
in
Energy Policy
volume
35
issue
8
pages
4340 - 4354
publisher
Elsevier
external identifiers
  • wos:000247881800034
  • scopus:34248598916
ISSN
1873-6777
DOI
10.1016/j.enpol.2007.02.029
language
English
LU publication?
yes
id
51b52b8f-c7cb-4463-85e6-966a504d3c62 (old id 692675)
date added to LUP
2007-12-14 13:51:29
date last changed
2017-11-19 04:07:28
@article{51b52b8f-c7cb-4463-85e6-966a504d3c62,
  abstract     = {This paper analyses the nature and scale of transaction costs (TCs) borne by obliged parties under a "Tradable White Certificate" (TWC) scheme. Taking the first phase of the Energy Efficiency Commitment (EECl) in Great Britain as a case study, several sources of TCs were considered, such as search for information, persuasion of customers, negotiation with business partners, and measurement and verification activities. Information was obtained through interviews and a questionnaire distributed to obliged parties. Results show that the most significant sources of TCs were related to search for information, persuading customers and negotiating with managing agents/contractors to implement energy efficiency measures. Perceived high TCs related to contract negotiation and liability risks slightly reduced the low trading level. The scale of TCs was estimated to be around 10% and 30% of total investments costs for the lighting and insulation segments, respectively. The results indicate that, despite the presence and scale of TCs, the EECl scheme generated energy savings that yielded net societal benefits. Estimated financial benefits range from 0.6 to 6 p/kWh for insulation and lighting savings, respectively. When avoided external costs due to electricity savings are included, estimated economic benefits range from 3 to 8 p/kWh. Several lessons from the EECl can be drawn for TWC schemes. Among others, it is found that informative policy instruments to raise awareness among end-users are critical if a TWC scheme is to deliver cost-effective energy savings. In all, the nature and scale of TCs under TWC schemes will differ because of a number of endogenous and exogenous determinants. (c) 2007 Elsevier Ltd. All rights reserved.},
  author       = {Mundaca, Luis},
  issn         = {1873-6777},
  keyword      = {energy efficiency,Tradable White Certificates,transaction costs},
  language     = {eng},
  number       = {8},
  pages        = {4340--4354},
  publisher    = {Elsevier},
  series       = {Energy Policy},
  title        = {Transaction costs of Tradable White Certificate schemes: The Energy Efficiency Commitment as case study},
  url          = {http://dx.doi.org/10.1016/j.enpol.2007.02.029},
  volume       = {35},
  year         = {2007},
}