Tradable white certificate schemes: what can we learn from tradable green certificate schemes?

Abstract

In this paper, we analyze the experiences gained from tradable green certificate (TGC) schemes and extract some policy lessons that can lead to a successful design of a market-based approach for energy efficiency improvement, alias tradable white certificate schemes. We use tradable green certificate schemes existing in the Netherlands and Sweden as case studies. Departing from an assessment of both TGC schemes, we identify several institutional and market aspects that have affected their performance. We conduct the analysis by addressing key evaluation criteria (i.e., cost and energy effectiveness, administrative burden, technological innovation, political feasibility, and transaction costs). It is not our intention to demonstrate to the reader a normative aspect of designing tradable white certificate schemes. Rather, we identify some key policy lessons which can be summarized as: a binding long-term target must be clearly expressed in terms of policy time frame and certainty, a proper liquid market must be ensured for tradability of certificates, the scheme should be technology neutral, transaction costs should be kept low, and the energy efficiency target should not only address 'low hanging fruits' but also promote innovation.

Transaction costs analysis of low-carbon technologies

“…This also applied to TGC schemes that have been established in several countries, including the Netherlands and Sweden. 14 Under the Swedish and Dutch schemes, TCs were characterized as additional costs to be met by obligated parties beyond the costs of meeting the obligation itself (Oikonomou & Mundaca, 2008). In Sweden, TCs represented the administrative costs met by electricity producers and suppliers in handling the renewable energy quota obligation on behalf of end-users (Kåberger, Sterner, Zamanian, & Jürgensen, 2004;Bergek & Jacobsson, 2010) 15 .…”

“…In Sweden, the TGC scheme was introduced in 2002 and was more generally accepted than other economic instruments(Oikonomou & Mundaca, 2008). In the Netherlands the scheme was introduced in three phases, starting in 1998, on a voluntary basis for distribution companies.…”

Energy Efficiency Governance

“…Advancing this idea, Oikonomou & Mundaca (2008) analyse what can be learnt from green certificates for the application of white certificates (see also Harrison et al 2005;Sorrell et al 2008) 129 Perrels (2008) argues from an economic viewpoint that the WCI is an option to correct market imperfections inhibiting the efficiency of an energy tax. Already in 2005, Bonneville et al introduced the white certificate as one of three interacting sustainable energy instruments.…”

“…These factors include the expression of a binding long-term target in terms of a policy time frame and certainty, a proper liquid market in order to ensure tradability of certificates, keeping the scheme technology-neutral and transaction costs low, and finally ensuring that the energy-efficiency target not only addresses 'lowhanging fruit' but also promotes innovation. Oikonomou & Mundaca 2008) or evaluating the better alternative (e.g. Transferring insights from one policy instrument to the other is possible only within boundaries.…”

Energiepolitik: Erfolgreiche Energiewende nur im europäischen Kontext

“…Die Mengensteuerung ist ebenso wie die derzeitigen Einspeisevergütungen nicht frei von Problemen, die durch den speziellen institutionellen Rahmen, etwa durch das Marktdesign, addressiert werden müssten (Menanteau u. a., 2003; Oikonomou und Mundaca, 2008; Frontier Economics, 2011). Damit die Preisschwankungen bei den Grünstromzertifikaten nicht zu groß ausfallen, sollte die Möglichkeit bestehen, die Zertifikate periodenübergreifend zu handeln.…”