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Energy supplier obligations and white certificate schemes: Comparative analysis of experiences in the European Union

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Abstract

A number of Member States of the European Union (EU) have introduced market-based policy portfolios based on quantified energy savings obligations on energy distributors or suppliers, possibly coupled with certification of project-based energy savings (via white certificates), and the option to trade the certificates or obligations. The paper provides an up-to-date review and analysis of results to date of white certificate schemes in the EU.In the EU supplier obligations and white certificate schemes have delivered larger savings than originally expected with obliged companies exceeding targets and, in some cases, at cost below what policy makers have anticipated. Supplier obligations foster the uptake of standardised energy efficiency actions often targeting smaller energy users (residential sector), lowering the transaction costs and contributing to market transformation. The role of certificate trading is more ambiguous. Trading can bring benefits where the target is set sufficiently high with respect to the energy-saving potential in the sectors covered. Theoretically trading may be better suited for broader systems with comprehensive coverage, but even in smaller schemes trading may reduce the transaction costs of compliance for obliged actors without sufficient expertise on end-use energy efficiency. Yet, trading increases the administrative cost ratio of energy-saving obligations.

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... Improving EE can contribute to meet several goals such as energy security, economic efficiency, technological development, business competitiveness, job creation and consumers' welfare (Bertoldi & Rezessy, 2006, IEA 2012. EE is one of the main goals of the EU's Energy Union Strategy (Energy Union Package 2015): energy-saving targets are currently set at 20% by 2020, and they are expected to raise at 30% by have currently implemented a WC scheme, with other three expecting to start shortly. 2 The UK, Italy, France, Denmark, and the Flemish region of Belgium, are those countries that have for a long-time implemented WC scheme (Bertoldi et al., 2010;Stede, 2017). Italy shows a good performance in terms of reduction in both primary and final energy consumption since 2005 (Fig. 1). ...
... Italy shows a good performance in terms of reduction in both primary and final energy consumption since 2005 (Fig. 1). The Italian WC scheme has been the subject of several studies during the recent years (Pavan, 2008, Bertoldi et al., 2010, Giraudet and Finon, 2015, Stede, 2017, Di Santo, 2017, Di Santo et al., 2018a, 2018b, Di Santo and De Chicchis 2019. ...
... The authors focus on the case of Netherlands by means of a theoretical analysis and an empirical bottom-up model, and they find that in combination with existing Dutch policies for EE improvement in the built environment, the contribution of the WC scheme can enhance the accomplishment of energy efficiency targets. Duzgun and Komurgoz (2014) evaluate the applicability of a WC scheme in Turkey, with respect to electricity and natural gas markets, in terms of market conditions, choice of obligated participants, and barriers, concluding that WC improve EE. Bertoldi et al. (2010) and Bertoldi et al. (2015) offer a cross-country comparisons of different EE programs in the EU, in terms of sectoral coverage, involved actors, eligible projects, evaluation techniques, baseline and additionality, sanctions, trading rules, and the role of public authorities. In particular, Bertoldi et al. (2010) point out the attention on the ambiguous role that trading may play in altering the equilibrium of the WC market: trading can bring benefits if energy-saving targets are set sufficiently high with respect to the energy-saving potential of each sector, but it may also increase the administrative cost ratio of the scheme. ...
Article
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The goal of this paper is to analyze the equilibrium of the Italian market of white certificates (WC) during the 2006–2021 period by relying upon granular data of prices, traded volumes, demand, supply, and information on regulatory interventions. It emerges that market forces, represented by an infinitely inelastic demand curve and a convex supply function, describe the trends of prices and traded volumes up to mid-2016, while they do not during the following biennium. We suppose that the remarkable and sharp fluctuations of the WC price observed in 2016–2018 are due to decreasing returns that energy companies face in energy efficiency investments and to exogenous shocks caused by poorly designed regulatory interventions. It turns out that the equilibrium is the results of interactions between market forces and public intervention, as well as their related failures, aiming to a self-sustainable mechanism oriented to technological innovation.
... In the literature the major recent papers are Bertoldi et al (2010), Eyre (2009) and Mundaca (2008). ...
... In the EU, Italy and France are the only countries where fully tradable white certificates are part of the policy portfolio to meet energy savings obligations, see Bertoldi et al (2010). The Table 2 summarizes the key design features of the currently im- plemented systems in UK, Italy, and France based on Bertoldi (2010) and Eyre (2009). ...
... In the EU, Italy and France are the only countries where fully tradable white certificates are part of the policy portfolio to meet energy savings obligations, see Bertoldi et al (2010). The Table 2 summarizes the key design features of the currently im- plemented systems in UK, Italy, and France based on Bertoldi (2010) and Eyre (2009). Table 2 summarizes the major features of these programmes. ...
Conference Paper
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In recent years promotion systems based on quotas and trading of (green or white) certificates for increasing electricity from renewable energy sources (RES) or for achieving demand-side energy conservation (DSC) have received attention to meet related EU policy goals. The objective of this paper is to summarize the major lessons learned from both of these markets and to look at their effectiveness and economic efficiency compared to other policy measures like feed-in-tariffs or targeted investment subsidies. We analyse the lessons learned with Green and White certificates in UK, Sweden, Italy, France and Belgium. The method of approach is based on dynamic cost-resource curves for RES and DSC markets based on BAU developments without and with certificate trade. A major result is that the following requirements have to be fulfilled in every trading system to be effective (bring about a significant change) and efficient (in a least-cost way): (i) avoid free riders and adverse selection, (ii) implement high penalties, (iii) ensure sufficiently large markets to avoid market power. The major conclusions are: • Trading systems do depend significantly on the potential-the cost curve-of the resource. E.g. Green certificates in Sweden were cheap because the available potential for RES is large and (rather) cheap; • At present, Tradable Green Certificate (TGC) systems show a low effectiveness although comparably high profit margins are possible. Market mechanisms seem to fail in TGC-systems, mainly due to a risk premium in the expected revenues of the investors. • The final major perception is that the following potential backlashes exist causing high costs for the public from certificate trading: (i) Free riders (customers who would have installed a RES-E system or a DSC measure also without a certificate); (ii) Non-liquid markets, which lead to a lack of competition, high rates-of-return and too short depreciation times; (iii) penalties for not meeting the quota are to low.
... Due to the low-cost nature of the mentioned policies, they are adopted in many countries, in particular, in the least developed ones. Tradable white certificates (TWCs) are also one of the most popular instruments that have been applied in most of the developed countries, e.g., Belgium, France, Denmark, USA, Australia, and Italy (Bertoldi et al., 2010;Duzgun and Komurgoz, 2014;Franz� o et al., 2019). For example, the French government implemented a white certificate scheme which had targeted 54 TWh lifetime-discounted savings for the energy suppliers who sold a minimum of 0.4 TWh per year (Bertoldi et al., 2010). ...
... Tradable white certificates (TWCs) are also one of the most popular instruments that have been applied in most of the developed countries, e.g., Belgium, France, Denmark, USA, Australia, and Italy (Bertoldi et al., 2010;Duzgun and Komurgoz, 2014;Franz� o et al., 2019). For example, the French government implemented a white certificate scheme which had targeted 54 TWh lifetime-discounted savings for the energy suppliers who sold a minimum of 0.4 TWh per year (Bertoldi et al., 2010). Furthermore, there are some main factors for TWCs including the energy-saving obligation, trading mechanism, verification regulation, cost recovery mechanism, and supervisory mechanism (Stede, 2017). ...
... The identified examples Financial Direct subsidy , , (Nie et al., 2018), (Yang, 2006), (Hafezalkotob, 2018) Tax subsidy , (Valentov� a et al., 2018) White certificate (Stede, 2017), (Bertoldi et al., 2010), (Duzgun and Komurgoz, 2014), (Transue and Felder, 2010), (Mundaca and Neij, 2009), ( Oikonomou et al., 2009b) Other certificates Henriksson et al. (2014) Rebate policy (Choi et al., 2018), (Transue and Felder, 2010), (Datta and Filippini, 2016), (Qiu et al., 2015) Energy tax (Ekins and Etheridge, 2006), (Hafezalkotob, 2018) Resource tax Tax deduction (Ekins and Etheridge, 2006), , (Henriksson et al., 2014) Energy and product pricing policy , (Yang, 2006), (Safarzadeh and Rasti-Barzoki, 2019a), (Safarzadeh and Rasti-Barzoki, 2019b), (Hafezalkotob, 2018), (Hafezalkotob, 2017), (Alcorta et al., 2014) Benchmarking , (Andersson et al., 2018a) Informational Arising awareness , (Duc Luong, 2015) Energy-efficiency standards (Shi, 2015), (Mahlia et al., 2002), (Ni, 2013), (Shi, 2014), (Duc Luong, 2015), (Verma et al., 2018), (Croucher, 2012), (Mahlia and Saidur, 2010), (Zhu and Chertow, 2017) Energy-efficiency potentials assessment (Dalzell et al., 2017;Nehler and Rasmussen, 2016), (Yu et al., 2015), (Aro, 2009), (Feng et al., 2018b) Energy-efficiency technologies assessment (Cao et al., 2016), (Yang, 2006), (Gerstlberger et al., 2016) EAP (Zhu et al., 2018), (Harris et al., 2000), (Andersson et al., 2018b), (Feng et al., 2018a), (Feng and Wang, 2017), , (Henriksson et al., 2014), (Thollander et al., 2007), (Fleiter et al., 2012), (Thollander et al., 2015), (Paramonova and Thollander, 2016), (Chiaroni et al., 2017) ...
Article
Industrial energy-efficiency programs (IEEPs) are defined as one of the most popular government policies that aim to reduce energy consumption in industrial energy-intensive sectors. In this paper, we review and classify the most important academic studies that have addressed the environmental and economic aspects of IEEPs using a systematic review. The classification of energy policy instruments has been developed based on an analytical approach. We discuss also the outputs, benefits, and barriers of IEEPs, besides a comprehensive argument about the restrictive policies on the rebound effects made after the implementation of these programs. The results disclose that China, USA, and Sweden are the most addressed countries on IEEPs and their applications. In this regard, incentive energy policies e.g., voluntary agreements and subsidies have been applied more than others in the last decade. Furthermore, most of the reviewed studies emphasize energy price reform as an effective practical policy while a few analytical methods can be seen to help policy-makers determine the optimal levels of decision variables. Finally, according to the state-of-the-art analysis, the authors provide some novel recommendations to improve the performance of IEEPs, using some restrictive policies on the negative impacts of rebound effects.
... Those schemes are commonly called white certificate scheme and are used, e.g. in Italy, France and some states of Australia. As with the capand-trade scheme, the aspect of trading opens up an opportunity to any energy efficiency improvement and any energy consumers, which in theory could equalise the marginal cost of energy savings and lead to the fewest compliance costs (Bertoldi and Rezessy 2008;Bertoldi et al. 2010). Moreover, if trading is allowed, the more trading happens, the more widely the problem of non-additional energy savings can be spread. ...
... First of all, for the purpose of implementing energy efficiency measures on a large scale and reducing the monitoring and verification costs as well as other transaction costs, standardised baselines are applied. They can be implemented as deemed values of energy savings or engineering-based metered savings (Di Santo et al. 2011;Bertoldi and Rezessy 2008;Bertoldi et al. 2010;Stede 2017;ENSPOL 2015). 6 Secondly, the subsidy mechanisms of these energy efficiency policies are essentially the same. ...
... The following papers are related to setting the baseline for energy efficiency policy. According to Bertoldi et al. (2010), the current way of setting the energy efficiency baselines for consumers is based on the 5 It is generally not straightforward to see why utility companies can solve the information problems associated with energy conservation programs compared to a government that possesses the legitimacy and information advantage. Hirst (1992) provides the justifications, and Tietenberg (2009) and Wirl (2015) provide some discussions on this issue as well. ...
Article
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This paper examines the ‘additionality’ of energy savings in energy efficiency subsidy programs. ‘Additionality’ refers to the energy savings caused by actions beyond what would have occurred in the absence of the policy program. We characterise energy consumers’ strategic response to the subsidies in a formal adverse selection model and show how the subsidy program may fail to satisfy the additionality criterion. This occurs when energy consumers, who partake in the program, have different preferences for energy efficiency technologies that are unobservable. To resolve this, we propose an incentive compatible solution within the subsidy program that can mitigate the non-additionality problem and improve the effectiveness of the scheme.
... Therefore, complementary instruments are needed to improve their effectiveness [14] along with other policy measures such as regulations at the technical level [15]. It follows that some European countries have introduced market-based policy portfolios based on the quantified energy savings obligations of energy distributors or suppliers, often jointly with the certification of energy savings [16] and the possibility of negotiating certificates. This paper focuses on Italy's white certificate scheme because it is among the longestlived and has achieved notable results. ...
... The choice of primary or final energy affects the balance between electricity and gas savings. Regarding the obligated parties, in the UK and France, they are the suppliers of gas, electricity and heat, while in Italy, they are the distributors of electricity and gas [16]. In Italy, the existence of energy services companies has made it possible to expand the scope of projects in the medium term. ...
Article
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Market-based instruments such as white certificates offer the potential to increase efficiency gains, reduce primary energy consumption and make energy systems more resilient. The purpose of this paper is to provide insights into the white certificate scheme through a case study analysis. In light of increasing decarbonization and energy efficiency targets, it is important to rethink the role that policy instruments play in the energy transition, including the energy efficiency obligation schemes within which white certificate schemes fall. We focus on Italy’s white certificate scheme because it is among the longest-lived and has achieved notable results. The scheme is characterized by annually increasing energy savings targets, flexibility, the opportunity to include many interventions, and the role of energy services companies. We provide evidence based on an empirical survey and fill the research gap left by the latest updates to the scheme along with an appraisal of those updates, which covers prominent scheme innovations such as its stability mechanism. Our research can serve as a baseline for policymakers in designing white certificate schemes in countries with little related previous experience and provide useful information from countries where similar schemes have been implemented to fine-tune similar market-based mechanisms to improve energy efficiency.
... The certificate can be used as a book-keeping instrument to confirm in accordance with energy saving objectives or other liabilities. The threshold value of the certificate and the validity period of a certificate are crucial for the parties who can issue certificates [23]. ...
... Participants gained White Certificates for their energy savings. Almost half of the certificates were issued in response to savings in the residential sector [23]. ...
Article
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As environmental problems such as global warming has become increasingly prevalent, and with the rise in foreign dependence on fossil fuels, energy efficiency and energy saving programs and research have risen. This global focus on energy efficiency has accelerated studies on this subject in order to decrease foreign dependency on fossil fuels, to protect the environment, to minimize the effect of energy costs to national economies, and to assure the energy supply. With increasing population and fast economic development, energy consumption in Turkey has increased significantly. Therefore, current policies need to be updated and additional measures need to be implemented. The Energy Efficiency Strategy document states that Turkey aims to decrease its energy intensity by 20% by 2023, and accordingly new policies and strategies are being carried out in every sector to achieve this result. The uninterrupted, cost-effective, and globally sustainable energy supply is at the heart of national energy policies globally. The Energy Efficiency Obligation Scheme (EEOS) is among the fundamental tools created to increase energy efficiency in the European Union (EU). Many EU countries have successfully implemented EEOS, and further white certificate markets as a central tool for increasing energy efficiency. For example, Italy has seen particularly positive achievements with a white certificate market by avoiding consumption of 6.7 million tons of oil equivalent (TOE). The implementation of National Energy Efficiency Action Plan (NEEAP) in terms of energy saving was a great step in Turkey. In this document, EEOS has been analyzed in detail. All of these studies are expected to shed light on the energy efficiency liability system to be implemented in Turkey in the future. For this purpose, it is thought that the inclusion of energy service companies into these models will have a positive effect on the success of the system. Within the scope of this study, it has been concluded that energy resources and technologies should have the flexibility to be localized and to resist unexpected changes. Another reason to encourage incentive policies in energy efficiency will be to reduce energy importation.
... It refers to potential flexibility mechanisms to support obligated parties in achieving energy savings targets, such as the trading of energy savings among obligated parties and between obligated parties and voluntary third parties (e.g., ESCOs) comprehensive literature review on the cost-benefit analyses of WCSs [2,10,45]. Regarding the costs, Giraudet, Bodineau and Finon [46] argue that total costs (encompassing all capital and installation costs) should reflect the cost of EEMs compared with a reference situation, i.e. the absence of EEMs or the installation of a comparable low-efficient solution. Such costs impact numerous stakeholders, mainly customers and obligated parties, who also bear other indirect costs to inform customers on energy efficiency programs and activities such as project development, marketing, and reporting [47]. ...
... The last avenue for future research is the application of our evaluation framework in other countries in which White Certificates Schemes have been adopted. However, given that each national scheme has been adapted to suit the idiosyncrasies of the local context, e.g. in terms of different energy market structures and regulations [23,45,88], the results from applying our framework should be compared with caution. ...
Article
There is growing interest worldwide in more effective policies to promote industrial energy efficiency and mitigate climate change. The White Certificates Scheme is a market-based mechanism aimed at stimulating the adoption of Energy Efficiency Measures. The Italian White Certificates scheme - one of the most long-standing and articulated - is a successful example of industrial energy efficiency policies, considered an interesting and remarkable case by other countries, especially due to its robustness in terms of the volume of certificates traded. Despite the considerable interest in White Certificates, an in-depth analysis of the economic efficiency of the mechanism from the perspective of different stakeholders is still lacking. To address this gap, this study develops a cost-benefit evaluation framework and a multi-stakeholder economic efficiency analysis of the Italian White Certificates scheme focusing on the Italian State, utilities, players in the energy efficiency value chain, and energy users. Our findings (also corroborated with sensitivity analyses) show that the White Certificates Scheme has led to several positive impacts for almost all stakeholders involved, with the exception of energy utilities that have suffered a major economic loss mainly due to a reduction of energy sold to end users. Such loss is likely to promote a deep change in the role of utilities in the energy market in terms of the services they offer and their business models. Our findings, in addition to providing useful directions for future research, offer interesting insights and implications for policymakers who may take inspiration from the pros and cons of the Italian White Certificates scheme when promoting energy efficiency through incentive mechanisms.
... Since the process of normalisation offers an opportunity for adjustment of the targets, it is likely that the obligated plants may attribute the cause of the plants' non-conformance to the adverse working conditions, and seek correction in the targets within the normalisation framework. Furthermore, adjustment of efficiency realisation at a later stage is likely to distort the expected certificate entitlement, and therefore, may result in uncertain trading phase [17,6]. ...
... Similarly, in the UK, the baseline efficiency is standardized considering the technology used and fuel type [16]. However, normalisation or standardization of efficiency realisation during monitoring and verification phase alters the market expectations because the adjustments made through normalisation distorts the outcome of the tradable efficiency scheme [17,6]. Therefore, for a credible energy efficiency scheme and predictable certificate market, the normalisation mechanism should be designed in such a manner that normalisation should not result in substantial alteration of expected efficiency realisation. ...
... The French EEO scheme will not be described here as it was already presented in various paper (Bertoldi et al. 2010, ENSPOL 2015, Rosenow & Bayer 2017, Osso et al. 2020, Osso et al. 2021). An important point to note is that since 2016 there is an additional obligation related to fuel poverty (low-income EEOs) associated with higher grants leading to two types of certificate. ...
Conference Paper
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The package of legislative proposals under the designation "fit for 55", emphasize the acceleration of the decarbonisation of sectors such as the building sector with increasingly demanding climate standards. Then, it is important to drive investments into the renovation of building stocks and to stimulate the refurbishment demand and ensure that the measures implemented are cost and environmental effective. Thus, under the Energy efficiency Directive, the energy-saving obligation scheme (EEO) in France launched in 2006 incentivise the renovation of dwellings as around 70% of EEO delivered concern the households. In that sense, the knowledge of renovation costs and their integration in techno-economic studies are key components to evaluate efficient measures. In this context, we have been monitoring the prices of housing renovations carried out under the EEO scheme since 2009. We have carried out statistical analyses on a large sample to follow the evolution of prices (average growth rate) as well as the structure of the price distribution. These prices are compared to market prices outside the EEO scheme. Thus, some renovation measures show various price evolutions and rarely a smooth evolution. These contrasting evolutions are analysed regarding the modification of the available financial incentives (EEO, tax credit) as well as the type of EEO (low-income vs. standard EEOs).
... The EEO schemes have been part of widespread market mechanisms in many countries (Rosenow et al. 2017) for a very long 3. POLICY, FINANCE AND GOVERNANCE time (Bertoldi et al. 2010). To date, 15 European EEO schemes are identified and 54 worldwide (IEA 2017). ...
Conference Paper
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Since its implementation in 2005, the French EEO scheme has gone through 4 levels of obligation and is preparing for a fifth in 2022. At each period, the consultation showed disagreements between stakeholders to specify the level of obligation for the next period. In 2019-2020 adjustments have been necessary to enable the achievement of the obligation. Different approaches could be implemented to determine the obligation: • To set the obligation level to fulfil the requirement of the article 7 of the Energy Efficiency Directive. • To assess the necessary obligation level in order to achieve an energy policy target (e.g. carbon neutrality in 2050 and building mass-retrofit). • To simply extend the trend thanks to sufficient historical hindsight today without questioning the context. • To assess the technical energy-savings potentials and accessibility. • To propose an economic analysis by taking into account market volumes and the level of financial incentive paid by all households for the investments to be triggered. Some drawback of these methods will be discussed (energy vs. carbon target, contribution of an EEO scheme to a climate policy, lack of economic assessment or understanding of the main driver of an EEO scheme …) and comparative advantages will be presented. The purpose of this paper is to question the different approaches to open the debate and underlines the necessity to include economic analyses to define an adequate level of obligation. A certainty is that changes in the operating conditions during the EEO period for the purpose of achieving the obligation level lead to uncertainty, and do not secure nor energy savings achievement and nor carbon savings in the long term. Moreover, a self-fulfilling obligation scenario based on price as an adjustment variable is not enough reliable to sustain the scheme. This means that a low EEO price leads to a lack of incentives for customers and a high EEO price leads to a too high cost on the energy bill.
... First, grid connection policies ranging from grid connection guarantees or competitive mechanisms, and network-specific technical requirements imposed on systems above a certain size influence the feasibility and cost of grid connection (Ahl et al., 2019;Anaya & Pollitt, 2015;Hirsch et al., 2018;Meyer, 2007;Roberts et al., 2019). Second, power purchase guarantees (Haas et al., 2004;Lindahl & Stoltz, 2018;Yin, 2013), and supplier obligations for energy savings and renewable electricity (Bertoldi et al., 2010;Burke & Stephens, 2017;Hain et al., 2005;Inês et al., 2020;Yin, 2013) determine whether and to what extent energy savings or electricity offtake is remunerated. Third, the availability of advanced metering infrastructure and associated regulation ensuring access to consumer meter data (to multiple or third parties) has also been influential in determining whether peer-to-peer service providers, aggregators, and community-based implementing organisations have access to necessary consumption, grid-export, diagnostic and status data, and the means to manage energy flows (Berka et al., 2020a;Inês et al., 2020;Stagnaro & Benedettini, 2020) (Table 2). ...
Preprint
Inclusive innovation, defined by wider and deeper forms of civic engagement in socio-technical change processes, is often seen as an effective and underutilised pathway to accelerate a transition to a low carbon society. However, evidence suggests that its role in energy transitions has been limited as well as unique to specific material-economic, actor-institutional and discursive contexts. Here we characterise inclusive versus exclusive transition pathways in relation to governance and policy. First, we characterise policy mixes that can be used to analyse and compare inclusive climate change and energy policy across regional or country context, by drawing on existing innovation policy frameworks and the rich literature analysing the barriers and enabling policies for civic energy. Second, we develop ideal type pathways and policy predictions for inclusive versus exclusive governance contexts by synthesising existing theoretical and empirical contributions on participation in transitions, inclusive innovation, and the politics of institutional change, showing how inclusivity of the policy mix is likely to shape the emergence and diffusion of different forms of civic energy. We outline a research agenda enabling translation of best-practice policy across contexts and understanding the relationship between the inclusivity of low carbon innovation and the political viability and speed of transitions.
... Finally, the Ministry has to increase the capacity and ability to communicate and support EEOS parties actively. This will be in line with experience gained in other countries that have successfully implemented an EEOS, such as France, Denmark, UK, USA, Italy, and Australia [5,6,[8][9][10]. ...
Article
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Evidence collected by researchers over several decades suggests that the successful implementation of the Energy Efficiency Obligation Scheme (EEOS) may deliver significant, cost-effective energy savings over many years. However, before starting EEOS in Latvia, predictions by energy efficiency policy researchers envisaged that it is at high risk of savings shortfalls. This study aims to carry out an ex-post policy evaluation of EEOS in Latvia and assess its ability to deliver significant savings in the first phase of the new EEOS. This paper questions whether the new EEOS can reach savings goals without prior experience with voluntary agreement schemes and emulation of successful EEOS from other countries. The second goal of the research is to create a web-based optimization tool as an Interactive Learning Environment to help policymakers and EEOS-obliged parties to create goal-oriented strategies. The study has found that, contrary to expectations, Latvia has reached and even overfulfilled EEOS saving goals. Estimated cumulative savings obtained during the starting phase (329.2 GWh) are 68% higher than the cumulative savings planned by the policymakers for 2020 (234 GWh). This success is related to the enforcement of a stick-type approach in the policy. However, the study also revealed the dark side of EEOS implementation by discussing different types of energy efficiency measures applied by EEOS and the role of implementing and monitoring institutions. The ex-ante evaluation projected that 50% of the EEOS savings would be derived from information and education measures and 50% through contributions to the Energy Efficiency Fund or by implementing the most cost-effective energy efficiency measures. The ex-post evaluation shows that around 95% of savings are achieved through information measures and the rest by introducing energy efficiency measures on the consumer side. EEOS parties do not contribute to the Fund because the cost of information measures (on average 4 EUR/MWh) is significantly lower than the contribution to the Fund (70 EUR/MWh).
... Early privatisation and re-regulation of the energy sector in the 1990s prompted the UK to be the first country in the world to use energy efficiency obligations (EEOs) on electricity and gas companies in liberalised markets from 1994. These were increased in size over many years up to 2012 (Rosenow, 2012) and influenced the development of similar policies in other countries (Eyre et al., 2009;Bertoldi et al., 2010;Fawcett et al., 2019). The scale of obligations has been reduced substantially in recent years as part of the unsuccessful Green Deal policy package (Rosenow & Eyre, 2013). ...
Article
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In April 1989, the UK Prime Minister, Margaret Thatcher, convened a full cabinet meeting on climate change addressed by leading scientists. The presentation on mitigation of carbon dioxide emissions was made by the Head of the Energy Technology Support Unit (ETSU), Ken Currie, and identified the key potential options for mitigation by 2020. In this paper, we compare the mitigation potential identified for each proposed option with the 2019 outturn. The largest mitigation options identified were improved end use energy efficiency across the economy and the generation and use of low carbon electricity. Our analysis finds that these have been the key options adopted. Reductions in primary energy use, resulting from improvements in energy efficiency were concentrated in the period 2005–2012 which in 1989 were widely considered to be ambitious. Decarbonisation of electricity has been achieved by the displacement of coal, initially by gas and more recently by renewable electricity. Renewable electricity has exceeded 1989 expectations in the last 5 years and is now the biggest source of CO 2 reductions from electricity generation. The contribution envisaged by nuclear electricity has not occurred, largely due its failure to compete in liberalised generation markets. In all cases, the policy environment has been important. We draw lessons for mitigation options to achieve the goal of net zero emissions in the next 30 years. The contribution of demand side and other modular options will remain crucial, as mass-produced technologies tend to improve more quickly than those requiring large construction projects. Environmental, social and political factors will be important, so analysis should not be a purely techno-economic assessment.
... In their report on market-based instruments for energy efficiency, the IEA reviewed auction-based and obligation schemes for nearly forty countries or federal states, most of which were in the U.S. and Europe [24]. Insights on characteristics and best practices for designing and implementing obligation schemes in a total of more than 30 jurisdictions around the globe were compiled by both the Regulatory Assistance Project [33] and ENSPOL [34], and for Europe by Bertoldi et al. [35], Giraudet and Finon [36] or in the projects ENSMOV [37] and again ENSPOL [38]. ...
Article
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Energy efficiency programmes (EEPs) are schemes operated by utilities or other bodies in order to incentivize energy efficiency improvement, in particular by adoption of energy-efficient products and typically by means of an economic reward. Ample experience has been gained, especially in the U.S., where EEPs have been in use for decades, with the rationale of avoiding additional energy supply by improving energy efficiency. More recently, EEPs have been implemented in Europe and in Switzerland. This review paper presents insights from the U.S., the EU and especially from Switzerland, with a focus on levelised programme cost of saved energy (LPC) as a key performance indicator. These LPC values, which take the perspective of the programme operator, are typically low to very low compared to the cost of electricity supply, thereby representing an important argument in favour of their use. The country examples show that EEPs are being effectively and successfully put into practice, for example, in Switzerland both as (i) a national tender-based scheme (called ProKilowatt) and in the form of a (ii) utility-operated obligation-based scheme (in Geneva). EEPs not only call for diligent implementation but also for suitable legal settings, e.g., in the form of mandatory energy efficiency savings targets (as realised for energy efficiency obligations, EEOs) in combination with programme cost recovery. The main criticism of EEPs is the free-rider effect, which needs to be minimised. On the other hand, EEPs are accompanied by significant co-benefits (environmental, health-related and social) and spillover effects. In their currently prevalent form, EEPs allow one to effectively save energy at a (very) low cost (“low-hanging fruit”). They can hence play an important role in fostering the energy transition; however, they should be implemented as part of a policy portfolio, in combination with other policy instruments.
... To decide upon whether to undertake energy savings works, the consumer should balance today's investment cost and the discounted value of the future energy savings. expected energy savings shows that investments have been profitable(Rezessy and Bertoldi, 2010). However, with actual savings well below the expected ones, the true average performance of the national systems is negative. ...
... EEOS gives its parties the freedom to choose how to achieve their goals, so ensures to optimize the cost/benefit of energy efficiency actions. The structures of EEOS for the countries that implement the system are given in Table 1 (Bertoldi and Rezessy 2008;Bertoldi et al. 2010;Crossley et al. 2012;Giraudet et al. 2012;Pavan 2012;Bertoldi et al. 2015;Broc et al. 2015;ENSPOL 2015a, b;ENSPOL 2016;Deconninck et al. 2017;European Commission 2017, 2018Fawcett et al. 2019;Broc et al. 2020). Briefs in Table 1 present the below findings about EEOS structure and implementation methods are given below: ...
Article
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To achieve energy efficiency and to develop supporting policy tools have become priorities worldwide. In this respect, one of the important energy efficiency policy tools is Energy Efficiency Obligation Scheme (EEOS). Turkish Government, dealing with regulations about energy efficiency since 2007, has placed EEOS in the current agenda in parallel with the global improvements. The authorities agree that EEOS could be a proper mechanism for Turkey to achieve its targets on energy efficiency. This study aims to propose a possible basic EEOS structure for Turkey as well as to present a comparative analysis of the design and implementation of the EEOS’s best practices and key issues. Hence, in addition to the review of the EEOS, currently active in the European Union (EU), proper alternatives for Turkish EEOS were enlightened through expert analysis. In order to evaluate the expert opinions, Bayesian Belief Network (BBN) is implemented as a framework for uncertainty. The possible basic structure of Turkish EEOS, involving responsible authorities, related parties, support mechanisms, and basic properties of the scheme, is constructed according to experts’ opinions. Related BBN analysis reveals the success probability of this structure as about 84%. Moreover, for the improvement of this success, the following implications can be considered from the best practices in the EU: the scheme must be compatible with the country’s specific circumstances and have flexibility in application, promotive opportunities, and deterrent penalties and should be open for improvement.
... The description of the French scheme has been already provided in several papers (Bertoldi et al. 2010;ENSPOL 2015;Giraudet, Bodineau, and Finon 2012;Bodineau, and Bodiguel 2009;Lees 2014). As a descriptive and a historical review of the French EEO scheme was recently carried out (Osso, Laurent, and Nösperger 2019) we will only detail in this document the most recent development. ...
Conference Paper
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Since its inception in France in 2006, the Energy Efficiency Obligation (EEO) scheme has been subject to a growing obligation in each new period. However, the scheme has experienced different historical phases with low or more recently high prices (a fourfold increase of the price index was observed between January 2017 and December 2019) that show different contexts depending on the year reflecting in a first approximation the ease or otherwise of fulfilling the obligation. In parallel with standardized actions mainly used in the scheme, specific programmes have been set up in a marginal way. Historically, these programmes include actions concerning information, and training of professionals. Today, these programmes are also used to manage the EEO scheme by facilitating the issuance of certificates or to target specific actions (e.g. disappearance of fuel oil or coal space heating). In that way, a new programme concerning the energy renovation of housing allowing for an additional bonus was implemented above expectation at the beginning of the year 2019 with large impact on the retrofit market. This paper reviews the positive outcomes and the unexpected problems and their impacts on the energy renovation market (increase of retrofit market, orientation towards different technical solutions, up-front cost coverage structure, targeted customer, quality problem, lack of a long-term vision, etc.). These impacts show how difficult it is for public bodies to manage a scheme based on an obligation on utilities in connection with a market driven by other economic actors. On the long-term, the main question is how to manage the EEO price between too low incentive and high impact on energy price to transform the building renovation market.
... They can support efficiency improvement measures acting both on the legislative and on the financial side. Policymakers can for instance emits energy saving obligations, which oblige energy companies to realize energy savings [54,60] and can allow or forbid companies to charge higher energy prices to the customers. Furthermore, they can support or prescribe DH connections in new buildings and specify legal requirements for heating installations. ...
Article
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Temperature reduction plays a key-role in increasing the energy efficiency of existing European district heating (DH) systems and, most important, in allowing a higher and more cost-efficient integration of sustainable low-temperature sources. However, technical, economical and legal barriers hamper the necessary investments. Purpose of this study is the elaboration of business models encouraging a substantial temperature reduction in existing DH systems and enabling the transition towards the 4GDH. Particular focus is paid on solutions incentivizing the deep implementation of measures on the demand side to reduce the network return temperatures. The information collected through the review of international success stories and through interviews with stakeholders is used to derive recommendations for business models and propose new ideas for Austrian DH utilities, though the replicability in other countries is not excluded. The elaborated solutions are intended to overcome the main barriers acting in synergy on three levels: 1) customers’ engagement in fault detection and in temperature reduction; 2) financing of fault detection and optimization measures through strategic partnerships and crowdfunding platforms; 3) Energy Saving Contracting, especially (but not only) to solve the split incentive issue in rental homes.
... tries investment in a few key end-use technologies (high saving potential) and describe the consequences for cost efficient saving allocation to industrial subsectors and the residential sector. We quantify the difference in average savings costs for the two sectors if the results were to be used for allocating savings obligation (see use in EU in Bertoldi et. al. 2010) to the sectors. ...
Conference Paper
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Energy savings are a key element in reaching ambitious climate targets and may contribute to increased productivity as well. For identification of the most attractive saving options cost curves for savings are constructed illustrating potentials of savings with associated costs. In optimisation modelling these cost options are then compared with the cost of producing energy and all savings with negative costs and cost below the cost of producing the energy including the associated externality costs are expected to be implemented. There are however several methodological issues associated with constructing and applying the cost curves in modelling: • Cost curves do not have the same cost interpretation across economic subsectors and end-use technologies (investment cost for equipment varies-including/excluding installation-adaptation costs-indirect production costs) • The time issue of when the costs are incurred and savings (difference in discount rates both private and social) • The issue of marginal investment in a case of replacement anyway or a full investment in the energy saving technology • Implementation costs (and probability of investment) differs across sectors • Cost saving options are not additive-meaning that marginal energy savings from one option depends on what other options implemented We address the importance of these issues and illustrate with Danish cases how large the difference in savings cost curves can be if different methodologies are used. For example, the difference between marginal investment costs in residential heating of a more efficient building element (windows) in a larger renovation project compared to the costs of just replacing the windows. This is done based on some of the results from Zvingilaite & Klinge Jacobsen 2016. We compare to the results found for residential savings in Giraudet et. al. 2012 and Amstalden et. al. 2007. For our case the resulting savings potential below a given level of costs can be up to a factor of 5 times larger if only the marginal cost measure is used. For national energy plan strategies this results in much more emphasis on energy savings, than renewable energy expansion as a way to achieve fossil fuel reductions if it is possible to implement all heating savings with their marginal costs. As saving potentials are not additive for savings in a specific end-use entity it is difficult to compare savings in one sector comprising many options together and single options in another sector. We illustrate that a saving option in one sector (eg a more efficient pump) would be difficult to compare with the savings from replacing an entire production line in a factory with a more efficient one. If the average cost of the two are compared then probably the efficient pump would be preferred due to low costs compared to the full production line. This would leave out the elements of the production line where independent savings investments might have cost that are just as low as for the pump. We argue that comparing across sectors should be carried out with similar sets of savings options (small individual replacements in each sector, and comparable larger technology switches in each sector). Methods We begin by outlining the different methodologies that typically are used for identifying the costs of saving energy in different sectors and exemplified by Danish sectoral saving potentials and associated cost curves. Residential heat savings with rich detail and a lot of potentials in various categories of buildings are compared to residential electricity savings associated with marginal investment in more efficient appliances when it is being replaced anyway. Then we compare these cost curves to cost curves for two Danish industries investment in a few key end-use technologies (high saving potential) and describe the consequences for cost efficient saving allocation to industrial subsectors and the residential sector. We quantify the difference in average savings costs for the two sectors if the results were to be used for allocating savings obligation (see use in EU in Bertoldi et. al.
... In more mature ESC markets (e.g. Italy), certificates are eligible only when the energy saving takes place [39,40], with obvious positive effects in limiting the uncertainty on the certificates value over the years [41][42][43][44]. Equation (3) expresses the corrected discount factor dependence on the technological life of the investment, the financial life of certificates (Lfinan, 5-8 years during which they are recognized) and the base discount factor (τ). ...
Article
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The compressed air sector is currently responsible for up to 10% world-wide overall industry electricity consumption, 30% of which ascribable to the compressor technology alone. Such a datum makes the saving potential from a proper compressor selection (30-35% overall consumption) as appealing as those associated with other energy measures and in line with the 20-20-20 timeline. Plus, every electricity saving on the compressor virtually corresponds to an income from selling Energy Saving Certificates (usually referenced as White Certificates) and CO 2 quotas from avoided emissions on dedicated markets, which can eventually reduce the payback time of the additional investment. Outsourcing in the CAS is addressed as the most effective alternative to efficiency ownership and its development is supported by the common perception of the compressed air as a utility, analogously to electricity and thermal energy. An in-depth net present value analysis is performed on market compressors for industrial purposes, based on the environmental market model, the electricity cost and compressors market policy in the average European context. In addition to the financial advantage from White Certificates and Carbon markets, the outsourcing always benefits from the lower investment cost on the compressor and the higher compressors efficiency: this results in lower sale prices for the cubic meter of compressed air, with little or no difference among different machine types. The relative importance of energy and investment-related costs is assessed as well. The outsourcing allows a m ³ cost reduction with respect to the purchase of new compressors in the 15-20% range, dependently on the machine size and operation regime.
... While the general description of the French scheme has been provided in several papers (Bertoldi et al. 2010, ENSPOL 2015, Giraudet et al. 2012, Bodineau and Bodiguel 2009, Lees 2014, few publications have provided a detailed description of the CEE procedures, which for outsiders may seem nebulous or complex (UFC-Que Choisir 2018). However, additional papers dealing with the CEE scheme rely more on evaluating the scheme or comparing it to another energy efficiency policies (Giraudet and Quirion 2008, Giraudet and Finon 2015, Gazeau et al. 2014, Rohde et al. 2015, Duval and Charru 2018, Rosenow and Bayer 2017. ...
Conference Paper
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The energy-saving obligation scheme in France launched in 2006 was revised each three-year period. The majority of EEOs issued are based on standardised action valued according to deemed energy savings. These revisions have made it possible to correct errors, to value new actions and to update eligible actions according to changes in the context and regulations. After more than 10 years of operation, and a potential extension of the scheme beyond 2020, it is interesting to look at the lessons of the past. For this purpose, we look at the evolution of the system through the prism of iconic actions. The assessment of a renovation action in the EEO scheme consists of 2 parts: the technical part helps to calculate energy savings (calculation sheet), the second deals with the verification of the eligibility of the works (certificate on honour). Both have evolved over time. The estimation of energy savings have evolved for technical reasons: reduction of the heating degree-day, decrease of the space heating reference consumption and modifications of other coefficients. If these modifications were made for objective reasons, others have been made to explicit unexplained values. In addition, the EED directive has helped to modify energy saving to value only marginal savings (i.e. beyond the performance of Ecodesign). Recently, the problem of fraud has led to the simplification of modulating energy savings due to the impossibility of verifying certain criteria while adding constraints on the execution of work (proof, on site-visit). Effectiveness of these changes should be studied to ensure this scheme still fosters energy retrofit of the building stock. This study could help to make a relevant trade-off between process simplification and the valuation of accurate energy savings. In summary, the EEO scheme will always be a work in progress and the preparation of the next period will not escape it but lessons from the past should enlight future developments.
... The Energy Efficiency Directive (Directive 2012/27/EU; EED) sets new targets to increase energy efficiency in the EU Member States. The preferred instrument to achieve these new savings is the introduction of energy efficiency obligation (EEO) schemes, frequently also known as "white certificates" (Bertoldi et al. 2010, Lees 2012, Staniaszek and Lees 2012. According to Article 7, paragraph 1 of the EED, energy distributors and/or retail energy sales companies should be committed to new annual energy-savings of 1.5% of the energy sales by volume, averaged over the most recent three-year period prior to 1 January 2013. ...
... To assess the robustness of the results under uncertainty a uniform distribution is assumed with sample values in the range [0.8, 1.1]. Drawing from the discussions of Bertoldi et al. [91] on discounting in energy savings investments, and similarly to DeLlano-Paz et al. [92] and Yushchenko and Patel [93]; it was decided not to discount data in this short-term (2018e2020) application. ...
Article
The European Union has set specific targets for reducing energy consumption, shifting the main focus of European energy policy towards a firm commitment to enhancing energy efficiency. In light of the limited progress reported in Greece's energy efficiency action plan, the objective of this paper is to help redesign the near-term national policy framework. In this respect, a risk-oriented optimisation model is developed to support the optimal budget allocation to energy efficiency measures, with a view to achieving the 2020 national targets. The transdisciplinary methodological framework initially builds on the Energy Efficiency Action Plans for Greece and involves stakeholder engagement, multiple-criteria decision making and portfolio analysis. The evaluation of the policy instruments is based on two criteria, namely energy savings and implementation risk, under a set of technical and financial constraints. Finally, the robustness of both the optimal policy portfolios and the individual policies composing these portfolios is assessed. The results indicate that, given the financial and technical constraints , the 2020 target cannot be achieved. By stochastically analysing the impact of external uncertainty , three policies emerge as the most robust, while portfolios achieving savings of more than 1000 kTOE until 2020 are found highly vulnerable to underlying uncertainties.
... There is currently no database in Europe similar to the ACEEE and LBNL evidence discussed above. Data on the costs of MBIs in Europe is scarce and there are few academic assessments (Bertoldi et al. 2010;Eyre et al. 2009;Giraudet et al. 2012). The most recent study (Rosenow and Bayer 2017) provides data on the savings, costs, and cost-effectiveness for EEOs in Austria, Denmark, France, Italy, and the UK. ...
Article
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Across the world, an increased uptake of the so-called market-based instruments (MBIs) for energy efficiency, such as energy efficiency obligations and auctions, can be witnessed. So far, a global assessment of those instruments is absent. In this paper, we analyse the most recent data across the world for all MBIs for energy efficiency. Whilst most of the 52 instruments identified can be found in the USA and in Europe, they are now operational on all continents. We estimate that globally around $26 billion of investment in energy efficiency is delivered through these instruments—this equates to more than 10% of the global annual investment in energy efficiency. There is considerable variation in costs among programmes. The available data show that expenditure by obligated parties and payments to auctions winners (programme costs) average around 0.013 USD/kW and are below the typical costs of producing a kWh in most sectors and locations.
... Ez azt a kötelezettséget rója a közösségi intézményekre, hogy a Közösség többi politikájának kialakításában is vegyék figyelembe a környezetvédelmi szempontokat. Az integrációt egyesek a fenntartható fejlődés szinonimájaként, 35 mások a fenntartható fejlődés megvalósításához szükséges eszközként kezelik. 36 Ezt azért is fontos rögzíteni, mert csak az integráció alapelvének erősítése (megfogalmazás javítása, külön cikkbe való kiemelése) mutatja azt a folyamatot, amelynek keretében a környezetvédelem és ezzel együtt a fenntartható fejlődés gondolata egyre fokozódó hangsúlyt kapott az EK Szerződésben. ...
Book
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Kutatásom tárgya mindenekelőtt az energiafelhasználás csökkentésére ható, valamint a megújuló energiaforrások térnyerését ösztönző nemzetközi, európai uniós és magyar jogi szabályozás. A téma bemutatása szükségszerűen maga után vonja az ide kapcsolódó számtalan előírás rendszerezésének szükségességét is, így ezt is célkitűzésként fogalmaztam meg. Önmagában ez a két cél igen alapvető, teljesítésük mégis hiánypótló jellegű a magyar jogi szakirodalomban. Ennek ellenére nem álltam meg ezen a szinten, és egy igen szokatlan mércét választottam e szabályozási terület értékeléséhez: az ökológiai fenntarthatóságot (mint az a későbbiekből kiderül, ez lényegében a fenntartható fejlődés szigorú értelmezése). Nem is sejtettem, hogy ezzel milyen összetett és kényes dologra vállalkozom. A kutatásom ennek ellenére erre a követelményre épült. Hipotézisem ugyanis egyfelől az, hogy a nemzetközi jog, az európai uniós és magyar jog nem deklarálja az ökológiai fenntarthatóság elvét, másfelől az, hogy az energiafelhasználás csökkentésére és a megújuló energiaforrásokra vonatkozó nemzetközi, európai és magyar szabályozás nem felel meg az ökológiai fenntarthatóság követelményének. A könyv arra világít rá, hogy e feltevések beigazolódtak. Egyrészt nem találkoztam olyan jogi előírással, amely az ökológiai korlátok tiszteletben tartása érdekében megfogalmazta volna a környezeti szempontok elsődlegességét. A fenntartható fejlődés elve, amelynek egyébként még a jogi minősége is vitatott, csupán a környezeti, társadalmi és gazdasági szempontok azonos figyelembevételét követeli meg. Másrészt ahhoz, hogy az energiafelhasználás csökkentésére vonatkozó szabályozás megfeleljen az ökológiai fenntarthatóság követelményének, mindenekelőtt az szükséges, hogy a negatív visszahatások elkerülése érdekében célként jelenjen meg az energiafelhasználás teljes csökkentésének a követelménye. Ez (pontosabban az energiafelhasználás stabilizálásának igénye) ugyan az Európai Unió jogában az EED elfogadásával már megjelenik abban a formában, hogy maximalizálták az EU energiafelhasználását 2020-ra, de elméleti alapokat nélkülöző módon. Ugyanakkor nemzetközi szinten egyáltalán, a hazai jogban pedig csak érintőlegesen találkozni az energiafelhasználás teljes csökkentésének igényével. Márpedig az önkorlátozás az energiafelhasználás terén fontos mérföldköve lenne a társadalom fejlődésének. A megújuló energiaforrásokkal kapcsolatos szabályozás az ökológiai fenntarthatóság követelményének két egymásra épülő feltétellel tenne eleget. Az első annak deklarálása, hogy a megújuló energiaforrások felhasználásának ösztönzése csak az energiafelhasználás teljes csökkentése mellett érdemes, a másik, hogy a megújuló energiaforrások részarányát növelni kell, méghozzá egy térség földrajzi adottságaihoz és területi potenciáljához igazodó mértékben. A megújuló energiaforrásokra vonatkozó nemzetközi szabályozás nemcsak e két feltételnek nem tesz eleget, de kijelenthetem, hogy feltűnően hiányos is e téren. Az Európai Unió szabályozása már jóval komolyabb, azonban hiába fejleszti a megújuló energiaforrások részarányának növelésére ható szabályozást, az teljesen kisiklik abból adódóan, hogy azt nem kapcsolták össze az energiafelhasználás teljes csökkentésének igényével. A nemzeti szabályozás e tekintetben hasonló hiányossággal küzd, mint az uniós szintű, s ezen felül a hatályos szabályozás - figyelembe véve az ország megújuló energetikai potenciálját - nem is kellően hatékony.
... In the case of the residential sector, emissions can be reduced through a mix of regulatory instruments such as standards and labels for buildings and appliances (Zhou et al. 2011), economic instruments such as saving feed-in tariffs (Bertoldi et al. 2010(Bertoldi et al. , 2013, and financial instruments such as investment subsidies or low-interest loans to finance retrofits (Harmelink et al. 2008;McGilligan et al. 2010). Households may be reluctant to adopt energy-efficiency measures due to high upfront costs and delayed benefits . ...
Article
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Achieving an emission pathway that would be compatible with limiting the global temperature increase to 1.5 °C compared with pre-industrial levels would require unprecedented changes in the economy and energy use and supply. This paper describes how such a transition may impact the dynamics of sectoral emissions. We compare contrasted global scenarios in terms of the date of emission peaks, energy efficiency, availability of low-carbon energy technologies, and fossil fuels, using the global integrated assessment model IMACLIM-R. The results suggest that it is impossible to delay the peak of global emissions until 2030 while remaining on a path compatible with the 1.5 °C objective. We show that stringent policies in energy-demand sectors—industry and transportation especially—are needed in the short run to trigger an immediate peak of global emissions and increase the probability to meet the 1.5 °C objective. Such sector-specific policies would contribute to lowering energy demand and would reduce the level of the carbon price required to reach the same temperature objective. Bringing forward the peak of global emissions does not lead to a homothetic adjustment of all sectoral emission pathways: an early peak of global emissions implies the fast decarbonization of the electricity sector and early emission reductions in energy-demand sectors—mainly industry and transportation.
... 8 White certificates often imply a legal obligation for energy companies (suppliers and retailers or distributors, usually electricity and gas utilities) to undertake energy efficiency activities with their customers. For a broad overview at the EU level of legal regulation and diffusion see Bertoldi et al. (2010). 9 Today this appears even more relevant in light of the impacts of the recent economic and financial crisis, which have affected both the environmental and economic dimensions resulting, among other, in a decreasing energy demand and an increasing unemployment rate. ...
Article
This paper aims at investigating the main effects on EU employment dynamics related to private and public actions for energy efficiency. The econometric analysis relies on a sector-based panel dataset for 15 EU countries over the time span 1995-2009. The empirical analysis shows that after accounting for the role played by sectoral output growth, investment and innovation activities, sectoral energy efficiency gains display a negative effect on employment growth, in particular in energy intensive industries. On the contrary, we find that public actions towards energy efficiency may produce positive effects on employment dynamics. In particular, the higher incidence of taxation on energy costs, the effort towards energy efficiency gains realized in the public sector industries and the implementation of a comprehensive policy mix for energy efficiency at the country level, are factors positively influencing employment growth. This evidence highlights the complexity of the nexus between energy efficiency and employment dynamics, suggesting that superior employment performances can be achieved when complementarity effects between productivity enhancing activities and energy efficiency actions are realized.
... There are estimated to be around 46 EEOS across the globe (IEA 2017). EEOS were promoted at EU level primarily because there is good quality evidence, from the EU and beyond, that well-designed EEOS can deliver significant, costeffective energy savings over many years (Bertoldi et al. 2010;ENSPOL 2015a, b;RAP 2012). The evidence base for the social and economic value of EEOS is strong and growing (e.g. ...
Article
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EU member states have been encouraged to introduce energy efficiency obligation schemes (EEOS) to help meet energy saving objectives. As a result, there are now 15 EU EEOS in existence, compared with just six prior to the introduction of the 2012 Energy Efficiency Directive. At the same time, the long-standing EEOS in Denmark and the UK have faced challenges because of concerns over increasing costs. This paper considers the role of EEOS in current and future EU and national policy. Firstly, this paper sets out in more detail the place of EEOS in EU energy policy. Then, the future of longer-established EEOS is explored, using Denmark and the UK as case studies. Recent and planned redesigns in these two countries are detailed, with analysis of the factors which led to changes in policy ambition. For new EEOS, key risks to delivery of savings are an over-ambitious delivery target and time line in the absence of policy learning opportunities. The policy risk for nine EEOS is assessed, with savings being most at risk in Croatia, Latvia and Spain. The paper concludes with an analysis of EEOS within the future policy mix. The discussion considers the place of EEOS in evolving EU policy, future savings from EEOS, their relationship with energy companies and the possible influence of different framings of energy efficiency. The continuing need for EEOS is explored, with concluding ideas about how to secure a strong and effective future for this policy tool.
... In Italy, certificates are eligible only when energy is saved, i.e. the reward is provided at the same pace the energy savings happen [29]. Hence the uncertainty about the certificates value during years, due to market price fluctuations is the key for ESCs' market success [32] as in various comprehensive analysis [33,34,35,36]. Equation (2) becomes: ...
Article
Full-text available
The transition towards a more sustainable energy scenario calls for both medium-to-long and short term interventions, with CO2 reduction and fossil fuel saving as main goals for all the Countries in the World. Among all others, one way to support these efforts is the setting-up of immaterial markets able to regulate, in the form of purchase and sales quotas, CO2 emissions avoided and fossil fuels not consumed. As a consequence, the upgrade of those sectors, characterized by high energy impact, is currently more than an option due to the related achievable financial advantage on the afore mentioned markets. Being responsible for about 10% electricity consumption in Industry, the compressed air sector is currently addressed as extremely appealing, when CO2 emissions and burned fossil fuels saving are in question. In the paper, once a standard is defined for compressors performances, based on data from the Compressed Air and Gas Institute and PNEUROP, the achievable energy saving is evaluated along with the effect in terms of CO2 emissions: with reference to those contexts in which mature intangible markets are established, an estimation of the financial benefit from savings sale on correspondent markets is possible, in terms of both avoided CO2 and fossil fuels not burned. The approach adopted allows to extend the analysis results to every context of interest, by applying the appropriate emission factor to the datum on compressor specific consumption.
... The Energy Efficiency Directive (Directive 2012/27/EU; EED) sets new targets to increase energy efficiency in the EU Member States. The preferred instrument to achieve these new savings is the introduction of energy efficiency obligation (EEO) schemes, frequently also known as "white certificates" (Bertoldi et al. 2010, Lees 2012, Staniaszek and Lees 2012. According to Article 7, paragraph 1 of the EED, energy distributors and/or retail energy sales companies should be committed to new annual energy-savings of 1.5 % of the energy sales by volume, averaged over the most recent three-year period prior to 1 January 2013. ...
Conference Paper
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In France, within the frame of White Certificate scheme, a specified amount of energy savings has to be achieved over three-year periods. The main participants to this system are public authorities, who set the level of energy savings, energy companies, who must reach the target, manufacturers, who develop energy-efficient products and the end-users of the efficient solutions. The third period of this scheme has started in 2015, with a target of savings of around 700 TWhcumac. This paper is unusual , because it focuses on industry and services, which now count for more than 20 % of the total savings. The aim of the study is to propose a new methodology to analyze and predict the White Certificates flows in industry and services and give an overview of the preliminary results obtained in this frame. First, the scheme participants were interviewed in depth to identify its main drivers. Then, a system dynamics method was used to split those significant factors in temporal functions such as marketing information, learning effect and financial incentives effect, and to model their evolution. These functions come from the Bass Diffusion Model, which describes the process of how new products are adopted. The challenge was to collect data to calibrate the model, in particular the savings potential for each energy-efficient action, the energy savings flows observed in the past and the commercial incentives over time. The data used for this study come from public authorities (source: EMMY) and the French electricity company EDF. The first results confirm the significant role of marketing information in the adoption of energy-efficient actions and highlight counter-intuitive side effects such as the impact of financial incentives: they do not seem to be the main drivers, but function as an accelerator role. With the developed method, it is now possible to split and mathematically describe the main drivers of the mechanism. This is useful to qualify the potential impact that some changes in the scheme could have (update of energy savings actions, new level of obligation, evolution in financial incentives and others). The results given by the model can thus provide guidance for the next regulatory period.
... These countries have quite different energy use and energy efficiency policies compared to the oldest EU members at the bottom of the distribution (Cornillie and Fankhauser, 2004). Furthermore, some of the countries with low energy intensity (Denmark, France, Italy and United Kingdom) have introduced a Tradable White Certificates 9 (TWC) scheme for energy efficiency (Bertoldi et al., 2010) ...
Article
This paper investigates inequality in energy intensity between EU-28 member countries over the 2007-2012 period. Inequality in energy intensity is measured by using the Zenga inequality index. The analysis is carried out by measuring inequality from the bottom of the energy intensity distribution to the top. This approach enables to identify the most unequal portions of the energy intensity distribution. To provide information on the causes of inequality at every point of the distribution, we show that inequality can be broken down into three components explaining the roles played by energy transformation, final energy intensity and their interaction in determining inequality in energy intensity. This decomposition reveals the impact of each component of inequality from the bottom of energy intensity distribution to the top. Results show that final energy intensity plays a major role in explaining inequality in the energy intensity distribution. The interaction component explains that EU-28 countries with low energy intensity are more efficient in energy transformation and less energy-intensive in enduse sectors than EU-28 countries with high energy intensity. The energy transformation component is higher when measuring inequality between the countries at the bottom of the distribution and those in the rest of the distribution, suggesting that disparities in energy transformation efficiency play an important role in determining inequality in energy intensity between the least energy-intensive countries and the other countries. The high inequality at the top of the distribution is due to the lower efficiency in energy transformation in the most energy-intensive countries, which reinforces the effect of disparity in final energy intensity between the countries at the top of the distribution and the other countries.
... A market-based energy efficiency scheme is constructed with five basic elements: overall target, a framework for selecting an obligated unit under the scheme, apportionment of targets within the obligated entities, methodology of certificate allocation, and rules of the market transaction (Langniss and Praetorius, 2006). Various studies however suggest that, the overall target in such a market-based scheme is the most vital design element, as it determines the program cost, realisable energy saving, technological penetration for energy efficiency, and the market behaviour (Farinelli et al., 2005;Vine and Hamrin, 2008;2009;Transue and Felder, 2010;Bertoldi et al., 2010). In the case of European Union White Certificate scheme, Farinelli et al. (2005), has shown that a low target such as 1% per annum for six years results in negative program cost, and a higher target involves positive program cost. ...
Article
The market-based Perform Achieve and Trade (PAT) scheme was introduced in India to enhance the energy efficiency through a unit-wise reduction in heat rates of thermal power plants regarding targets, within the framework of a tradable certificate scheme. International experience suggests that effectiveness of such schemes is greatly influenced by the target and the assigned targets for the obligated units. Therefore, setting rational targets and appropriately assigning them is one of the key aspects of successful implementation of the scheme. In this study, we examine the rationality of the target based on comparing it with energy saving potential of the plants, and on the relative assignment of targets amongst the plants. Data Envelopment Analysis models are applied to examine various aspects of the PAT implementation. The study results indicate that in most cases the targets have been weakly set compared to the actual potentials of the thermal power plant, and there exist substantial inefficiencies within the system in both energy use and managerial dexterity. Lastly, the study estimates that, if the sector realizes its full potential, then the Energy Saving Certificate market may witness a surplus of 4.7 million certificates because of thermal power sector alone.
... These are more common in Europe. 'White' certificates can be used in such schemes to certify energy savings made which can then be tradeable and be used within energy saving obligation schemes (see for example, Bertoldi et al. 2010, for further description and analysis). When considering the income distribution effect of energy efficiency policies it is necessary to not only understand the impact of the efficiency measure (where and how much energy saved), but also the funding mechanism and source -for example is the funding from general taxation or from a levy on energy bills? ...
Conference Paper
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Recently, there has been an increasing focus on the wider impacts of energy efficiency policy – beyond reducing costs and carbon emissions. Amongst these impacts is the effect of energy efficiency (EE) policies on income distribution – do they help to reduce or widen the difference in incomes across the region's population; that is, are they progressive or regressive within the region they are implemented? It is generally recognised that household income has an effect on how consumers use energy and how citizens respond to energy policy. For example, it is hypothesised that lower income groups are generally less able to access the benefits of EE, partly as a result of their lower ability to fund up-front costs of measures. This hypothesis has been tested by researchers for some climate change and EE policies using a variety of theoretical and empirical approaches, producing mixed results. Whilst some studies provide evidence to support the hypothesis, others have found evidence that EE policies focussed on lower income residents have reduced income inequality for targeted households, and some studies suggest that in some countries EE appliances do not in practice incur higher up-front costs and so may not incur distributional impacts. However, for product policy specifically (including minimum energy performance standards (MEPS), labels, grants), there appears to be a paucity of research using data to evaluate the impacts on income distribution. The few investigations of such impact that have been found tend to be theoretical and focus on implied consumer discount rates and MEPS.
Conference Paper
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One way to contribute to carbon neutrality in 2050 is to reduce energy consumption but this will not be enough. To this end, many energy policy instruments (regulations, taxes, incentives, etc.) have been used for many years and well before the goal of carbon neutrality and need to be reassessed to be in line with decarbonisation especially in the context of the EED review. In many European countries, energy efficiency obligation schemes (EEOs) are used in line with EED Article 7. These schemes are usually expressed in terms of primary energy savings as in Italy or final energy savings as in France and to our knowledge only one which has been expressed in terms of carbon as in the UK. Initially the UK EEO was expressed in energy and moved from energy to carbon. However, this movement has not been followed in Europe, even though European policy is increasingly focused on reducing carbon emissions. There are several ways of integrating carbon into an EEO scheme: from the simplest by considering the carbon content of energy when sharing the level of obligation among obligated parties to the most complex by valuing the certificates directly in carbon units. By considering both energy and carbon in the same EEO scheme, a double reward is possible to reduce consumption and promote low carbon energy. In this way, new energy savings and carbon reduction potentials could be incentivised, especially in industry and transport in case of fuel switching. Including carbon in the scheme also means putting a price on carbon in the market, beyond a shadow value for sectors not covered by the historical EU-ETS I without the need to extend the EU-ETS to the building and transport sectors (EU-ETS II). This paper aims to challenge this situation and to propose a shift from energy to carbon in an EEO scheme. To do so, we propose to take the case of the French EEO as an example and to assess how this existing scheme can evolve to better integrate the carbon dimension and contribute effectively to the national carbon mitigation strategy.
Article
In the last decades, due to the increasing environmental concerns such as energy-resource depletion and global warming, energy efficiency instruments and renewable energy production has been promoted more than ever. This paper investigates a comprehensive comparison between two energy markets, i.e., the tradable white certificate (TWC) market and the tradable green certificate (TGC) market. How to coordinate the two energy markets and what the coordination impacts become the main issues under a reward-penalty mechanism. This multi-agent problem is discussed in an electricity supply chain consisting of two populations of traditional energy suppliers who want to decide about using one of them under government intervention. In this regard, the behavior of the suppliers is analyzed under three different Scenarios, including traditional power generation, energy efficiency program (EEP), and renewable portfolio standards (RPSs). An evolutionary game is applied to formulate the problem. The results show that a mandatory fine policy is more useful than an energy-saving subsidy to motivate the traditional suppliers to move toward sustainable energy generation. This policy also helps governments to meet their sustainable-oriented goals, as we discussed in this work. The findings can be applied to extend sustainable-based energy projects in developing countries.
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The draft Digital Marketss Act, published in 2020, promises specific market regulation tools to shape the market behaviour of global platform providers, reflecting the European Commission's previous competition rulings on platform providers. It is a market regulation solution which seeks to avoid abuses of dominant position by platform providers through ex ante instruments, in particular in related markets where operators base their business models on the use of platforms and where platform providers themselves may offer their own services. The study analyses the background, regulatory concept and main provisions of the draft regulation.
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Energy efficiency programme monitoring is often based on ex-ante saving estimations. These estimations lack standardization, are prone to parameter errors, and neglect rebound effects. Moreover, a comparison with ex-post estimations is not systematically done. This paper proposes a simple methodology to assess ex-ante against ex-post estimations, using the distribution of the energy savings deficit, i.e. the normalized difference between reported and metered savings. This methodology is applied to a dataset of lighting renovation measures to first assess calculated savings against utility meter data. The mean energy savings deficit amounts to 39% for measures in small to medium enterprises and to 28% in common areas of buildings. Further analysis shows that this overestimation arises from both significant calculation errors and rebound effects. These analysis and findings are the first of their kind for these sectors. The methodology is further used to assess deemed savings approaches. The results show that coefficients based on time-of-use and the type of replaced technology provide a precision comparable to calculated savings. Further limitations of ex-ante quantitative monitoring are identified based on empirical observations of a utility-driven programme. This suggests that, instead of current practices, quantitative monitoring should focus on ex-post analysis of meter data. This would free up resources for a more qualitative follow-up of measure impacts to better inform programme and policy design.
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Este artículo explora la manera en la que las autoridades de la Unión Europea afrontan el riesgo de un efecto rebote que dificulte la efectividad de los esfuerzos hechos para mejorar la eficiencia energética. La elección de la zona de la UE se debe a su liderazgo internacional en la batalla contra el calentamiento global y el cambio climático. El artículo hace una mención específica a España por ser uno de los estados miembros de la UE más concernidos por estos problemas. Para hacer esto se realiza una sistemática revisión de la literatura siguiendo las técnicas avanzadas que recomienda el estado del arte. Después de esto, los principales hallazgos del artículo son 1) existe un amplio consenso académico en torno a la importancia del efecto rebote como barrera en la mejora de la eficiencia energética, 2) existe una falta de consenso sobre su tamaño, 3) los textos legales que abordan los objetivos en materia de eficiencia energética habitualmente ignoran el problema del efecto rebote.
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The Paris Agreement goals require net‐zero CO2 emissions by mid‐century. The European Commission in its recent proposal for climate and energy strategy for 2050 indicated the need for more intensified actions to substantially improve the energy performances of buildings. With the rate of new construction in Europe, the challenge is to increase both the pace and depth of building energy renovations. Several barriers inhibit the wide uptake of comprehensive energy renovations, including the inability or inertia to finance upfront costs of energy renovations. Despite various policies implemented to address some of these barriers, current investments in buildings remain at suboptimal levels. The paper reviews current financing practices for energy renovations and investigates some innovative instruments with a special focus on their applicability to residential buildings. In addition to “traditional” financial schemes such as subsidies, tax incentives, and loans, the paper assesses innovative financing schemes: On property tax and on‐bill financing, energy efficiency mortgages, and energy efficiency feed‐in tariffs. The paper also investigates the concept of one‐stop shops for building renovations and crowdfunding. The paper offers an assessment of the characteristics, benefits, and challenges of each analyzed financing instrument and provides policy recommendations for their successful implementation. In general, as financing instruments involve different stakeholders and due to complex nature of the sector, there is no single solution to accelerate energy renovation investment in buildings. The emerging financial models offer the potential to address the long‐standing barriers to investment in energy efficiency. This article is categorized under: • Energy Efficiency > Economics and Policy • Energy Efficiency > Climate and Environment • Energy and Climate > Economics and Policy Abstract The paper provides an EU‐wide review and assessment of various financial instruments, discussing their uptake, characteristics, benefits, and challenges as well as applicability for various segments of the residential building stock. The current financial instruments supporting energy renovations in the EU are classified according to market saturation (traditional, growing and new) and type (non‐repayable reward, debt financing, and equity financing).
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Limiting global warming below 2°C would require absolute global emission reductions of about 30–40 GtCO2e)/year by 2030. Emissions from developed countries have already plateaued at around 20 GtCO2/year. Even if developed countries reached net zero emissions, the world would still fail to meet the goals of the Paris Agreement. The global mitigation challenge requires that developing countries manage to shift to a low-carbon development path, and soon. As no less than two-thirds of global emissions are from fossil fuels, there is no solution to global climate change without drastically reducing the net CO2 emissions generated by energy production and consumption in the developing world. Thus the central question: how can efforts to mitigate carbon emissions be reconciled with development? Can the objective of reducing emissions be pursued alongside the priorities reflected in the energy policies of developing countries? These questions are the focus of this report. Putting a price on carbon is one of the main instruments that countries have used or considered to reduce emissions. An increasing number of developing countries are considering carbon pricing instruments. An illustration of this effort is the Partnership for Market Readiness (PMR), a global program supported by the World Bank and 13 contributing OECD economies. One set of questions relates to the interaction of carbon-pricing instruments with existing sector markets, policies and instruments. This is particularly relevant for energy production and consumption. Moreover, does this interaction facilitate the achievement of the expected reductions of emissions, or does it undermine the effectiveness of these instruments? For instance, in a volatile environment where oil prices can fall by more than $50 per barrel in a few weeks, what impact can one expect from a carbon price of $20/tCO2, considering that the combustion of a barrel of oil releases less than half a ton of CO2? These questions are addressed in first Part I of this study. Part II considers a number of questions that follow from Part I. How can emissions reductions strategies, particularly putting a prince on carbon, be reconciled with existing energy objectives in developing and emerging economies? Part III goes one step further and considers a new, integrative approach to both energy and climate policies. The report puts forward several pricing and non-pricing instruments that can be combined or even merged together to generate an effective package of energy and climate policies. By integrating climate considerations into the development of energy policies, and vice versa, a more effective outcome can be achieved. In conclusion, the report proposes a roadmap for climate and energy practitioners of the developing world, which translates the report’s main findings into to a set of actionable guiding principles. A 30 pages Summary for Practitioners is also provided at the beginning of the report.
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The paper investigates the European space heating (SH) and domestic hot water (DHW) market in order to close knowledge gaps concerning its size. The stimulus for this research arises from incongruences found in SH and DHW market's data in spite of over two decades of scientific research. The given investigation has been carried out in the framework of the Hotmaps project (Horizon 2020-H2020), which aims at designing an open source toolbox to support urban planners, energy agencies, and public authorities in heating and cooling (H&C) planning on country, regional, and local levels. Our research collects and analyzes SH and DHW market data in the European Union (EU), specifically the amount of operative units, installed capacities, energy efficiency coefficients as well as equivalent full-load hours per equipment type and country, with a bottom-up approach. The analysis indicates that SH and DHW account for a significant portion of the total EU energy utilization (more than 20%), amounting to almost 3900 TWh/y. At the same time, the energy consumption provided by district heating (DH) systems exceeds the one of condensing boilers. While DH systems applications are growing throughout the EU, the replacement of elderly, conventional boilers progresses at a slower pace.
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Business and policy models to incentivise utilities to engage with demand-side management (DSM) have received more attention in the grey literature than the academic literature. This review paper contributes to filling this gap by reviewing theoretical frameworks for four key categories of business models and how they relate to policy models that enable their implementation. The paper proposes a theoretical lens through which to visualise the different frameworks. The review discusses the key benefits and challenges for utilities to engage with DSM, and finds that deferred investment in new generation capacity, new business opportunities and services, and dealing with variable power production are the primary benefits, and limited incentives to invest in markets based on the quantity of energy sold and cost recovery issues (such as DSM programme costs) are the main challenges. The paper reviews four primary business and policy models: decoupling, demand-side participation in capacity markets, utility obligations and Energy Service Companies (ESCOs), and finds that despite the limitations of the evidence base on the applicability of decoupling in fully liberalised markets, demand-side participation in capacity markets, utility obligations and ESCOs appear to be applicable across contexts.
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Electric utilities play a crucial role in designing and deploying electricity conservation programs. However, because people can freely decide to participate in such programs or not, better understanding what types of programs appeal to specific groups of customers is fundamental. The authors therefore explore preferences of likely subscribers for electricity-saving programs defined by various features (such as goal setting, tailored feedback provision, or reward and penalty schemes), and use a latent class approach to capture heterogeneity and detect segments of people that share similar preferences. The segments are subsequently profiled in terms of socio-demographic and psychographic characteristics. Overall, results show that there is considerable heterogeneity in tastes for different features of electricity-saving programs. The findings allow identifying individual characteristics that influence the likelihood to adopt different forms of programs. On this basis, electric utilities may design electricity-saving programs that better satisfy customer needs and effectively tailor marketing and communication programs to the specific target groups.
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Increasing the adoption of energy efficient technologies by households is one of the formulated strategies to reduce greenhouse gas emissions. This paper presents a systematic review of agent-based modelling studies on the adoption of energy efficiency by households. It starts with an overview of barriers for adoption, of energy efficiency policies, energy efficiency model types. Afterwards, an analysis is given of technologies modelled, policies simulated, decision-making theories included, and the use of empirical data. An overview is presented of how technologies, barriers and policies relate in the models. Furthermore, the core policy recommendations from existing models are presented. The analysis shows that the reviewed studies predominantly focus on a subset of barriers – a lack of capital, a lack of information, high upfront cost, ignorance, inertia and other priorities. So far, agent-based models have focused on how subsidies, technology bans and information campaigns influence energy efficiency adoption. There is ample opportunity for future agent-based modelling research on energy efficiency adoption policy by studying other residential technologies, other barriers, and other policies that fit the agent-based modelling paradigm well.
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Purpose This study reviews present trends, barriers and outlooks for the future as seen by actors in the energy advice services market in Germany. As Germany is one of Europe’s leading markets for energy services, this review aims to highlight energy sector management issues that exist throughout Europe. Design/methodology/approach This study combines qualitative and quantitative research approaches, using seven qualitative stakeholder interviews and a semi-structured survey covering over 500 energy advisors. Based on the present market, this study seeks to identify barriers against further market development, regulatory measures that can promote market development and business models for energy services likely to emerge in the future. Findings Significant barriers persist, despite a strong government commitment to support development of the energy services markets. The barriers encourage market actors to maintain the status quo rather than use innovate new service models. To support innovative business models, action is needed by both industry associations and the government to create a stronger demand pull for advice services. Originality/value This paper provides a new sectoral overview of Europe’s biggest energy service market as seen from a market actor perspective. It focuses on the analysis of barriers and business models to derive needs for further capacity building within the sector and for political governance to trigger further market dynamics.
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Increasing energy efficiency and savings will play a key role in the achievement of the climate and energy targets in the European Union (EU). To meet the EU’s objectives for greenhouse gas emission reductions, renewable energy use and energy efficiency improvements, its member states have implemented and will design and implement various energy policies. This paper reviews a range of scientific articles on the topic of policy instruments for energy efficiency and savings and evaluates the strengths and weaknesses of different measures. The review demonstrates the variety of possible instruments and points to the complex policy environment, in which not a single instrument can meet the respective energy efficiency targets, but which requires a combination of multiple instruments. Therefore, the paper in particular focuses on assessing potential interactions between combinations of energy efficiency policies, i.e. the extent to which the different instruments counteract or support one another. So far, the literature on energy efficiency policy has paid only limited attention to the effect of interacting policies. This paper reviews and analyses interaction effects thus far identified with respect to factors that determine the interaction. Drawing on this review, we identify cases for interaction effects between energy efficiency policies to assess their potential existence systematically and to show future research needs.
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There has been an increasing movement toward retrofitting existing (in-use) buildings to achieve a significant reduction in energy consumption and greenhouse gas emissions in the building sector. When planning retrofits for public buildings, decision-makers are required to make rational decisions that will achieve four critical objectives: minimize energy consumption, reduce CO2 emissions, mitigate retrofit costs, and maximize thermal comfort. This study aims to solve this four-objective optimization problem (so-called the problem of many-objective optimization) for retrofit planning in public buildings via an evolutionary many-objective optimization (EO) algorithm that handles these objectives at the same time. This study involves the application of EO algorithms (NSGA-II, MOPSO, MOEA/D, and NSGA-III) and the evaluation of their performance. A description of these algorithms is presented, and each algorithm is implemented in a public-building retrofit project. The algorithms’ performances were analyzed, and the results were compared based on two aspects: diversity and convergence. The results indicated that NSGA-III can be used to derive a comprehensive set of trade-off alternatives from possible retrofit scenarios, thereby serving as a useful reference for retrofit planners. These decision-makers can then utilize the provided references to select optimal retrofit strategies and satisfy stakeholders.
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This article takes stock of the white certificates (CB) used to promote energy savings in Italy and proposes a solution to limit the fluctuation of CB prices. After having illustrated the variants of the CB mechanism and the evolution of Italian choices, the results obtained so far are presented. Since CBs are based on subsidies paid by consumers, a method is proposed to calculate their social benefits. Having identified a price range justified from the point of view of general interest, we analyze the trend of the demand-supply equilibrium to try to explain why the current price of CBs is above this price range. Finally, we propose to set a maximum and minimum price for CBs to respect the principle that costs do not outweigh the benefits and to give greater stability to the mechanism. L’articolo analizza i certificati bianchi (CB) usati per promuovere il risparmio energetico in Italia e propone una soluzione per limitare l’oscillazione dei prezzi dei CB. Dopo aver illustrato le varianti del meccanismo dei CB, le scelte dell’Italia e la loro evoluzione, vengono presentati i risultati ottenuti finora. Poiché i CB sono uno strumento basato su un sussidio pagato dai consumatori, viene proposto un metodo per calcolare il beneficio ottenuto dalla collettività. Individuata una fascia di prezzo giustificata dal punto di vista dell’interesse generale, si analizza l’andamento dell’equilibrio domanda-offerta per cercare di spiegare perché il prezzo attuale dei CB sia al di sopra di tale fascia. Infine viene avanzata la proposta di fissare un prezzo massimo e minimo dei CB per rispettare il principio che i costi non superino i benefici e per dare maggiore stabilità al meccanismo.
Article
India's flagship scheme for energy efficiency is Perform, Achieve and Trade (PAT). Under PAT, obligated industries are required to achieve targets either by implementing energy efficient technologies or by purchasing energy efficiency certificates (ESCerts). We ask two questions: is PAT effective so far? Is PAT likely to be effective in future? We conclude the following: the targets are not strict enough to add energy efficiency activities beyond business-as-usual; long-term investment in energy efficiency may not happen; the PAT market may not form; many equity issues remain unaddressed; and, it is too early to assess transaction costs. Based on best practices, the policy implications are: set additional targets that account for rising energy costs; promote long-term investments via clear and consistent goals; create a functioning PAT market platform to ensure cost-effectiveness; reduce equity concerns via normalized targets and standardized auditing; and, keep transaction costs low.
Thesis
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This doctoral thesis explores the implications of establishing tradable certificate schemes for improving energy efficiency (so-called ‘Tradable White Certificate’ [TWC] schemes). Carrying out different case studies, a set of complementary evaluation methods is applied in conducting ex-ante and ex-post evaluation studies. To analyse the attributes and complexities of TWC schemes, the thesis focuses on several aspects, including (i) the modelling of potential impacts, (ii) the identification and analysis of transaction costs, (iii) the investigation of trading patterns and other flexibilities used to achieve cost-effective compliance, (iv) the level of energy-saving effectiveness under TWC schemes, (v) the use of cost-benefit analysis, and (vi) the application of multi-criteria evaluation. The findings help answer questions concerning the impacts and outcomes of TWC schemes and identify critical endogenous and exogenous conditions that affect their performance. Furthermore, the research assists in developing an understanding of what aspects of TWC schemes need to be evaluated and how.
Article
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This paper takes the view that energy markets and markets for energy efficiency have significant imperfections, including ones that cannot be repaired through prices alone. The acknowledgement of the various market imperfections, however, does not endorse automatically the use of various instruments, such as tradable white certificates (TWC). Therefore, it is necessary to clarify under what conditions a TWC system can have equal or superior effectiveness and economic efficiency as compared to other instruments. The article explains the principles of a TWC system in terms of market functioning and price formation. It also highlights some key assumptions regarding additionality of energy savings, transaction cost, free riding, target setting and regulatory predictability. Subsequently, the paper illustrates how a TWC system interacts with other energy efficiency policy instruments, in particular standards and taxes. After these explanatory sections the article turns to the modelling of actual TWC price formation in selected countries and subsequently presents a comparative assessment of a TWC system with an energy tax for Finland and the Netherlands.
Conference Paper
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Ten groups of policy instruments for promoting energy efficiency are actively used in Denmark. Among these are the EU instruments such as the CO2 emissions trading scheme and labelling of appliances, labelling of all buildings, combined with national instruments such as high taxes especially on households and the public sector, obligations for energy companies (electricity, natural gas, district heating, and oil) to deliver documented savings, strict building codes, special instructions for the public sector, and an Electricity Saving Trust. A political agreement from 2005 states that an evaluation of the entire Danish energy efficiency policy portfolio must be carried out before end 2008 and put forward for discussion among governing parties no later than February 2009. A consortium comprising Ea Energy Analyses, Niras, the Department of Society and Globalisation (Roskilde University) and 4-Fact was assigned with this task. The evaluation aimed to answer the crucial questions: * Is the overall design of the portfolio of instruments appropriate? * Does the impact of the instruments justify the costs, so that we reach the national goals in a cost efficient way? * Will the current instrument portfolio be able to meet the required reduction in final energy consumption (goal for 2013) and in primary energy consumption (with goals in 2011 and 2020) as planned by parliament? Recommendations were made on how to improve and develop the portfolio using cost effectiveness as well as organisational clarity as criteria in developing the recommendations. The evaluation was completed in December 2008, and this paper presents the main findings and proceeds to discuss the issues from an EU perspective.
Article
A number of European countries have introduced market-based instruments to encourage investment in energy efficiency improvement and achieve national energy savings targets. Some of these schemes are based on quantified energy savings obligations imposed on energy distributors or suppliers, coupled with a certification of the energy savings (via white certificates), and a possibility to trade certificates. The paper describes the concept and the main elements of a tradable white certificate scheme, where appropriate giving examples from existing schemes in Europe. It discusses design and operational features that are key to achieve the overall savings targets, such as delineation of the scheme in terms of obliged parties, eligible projects and technologies, institutional structure, and processes to support the scheme, such as measurement and verification. Finally, the paper looks at a number of open issues, most importantly the possibility of creating a voluntary market for white certificates via integration into the carbon market.
Article
Utility financed and/or operated energy efficiency schemes have a long history going back to the first energy crisis in 1973. It is therefore appropriate to ask what is new about the recent raft of white certificate schemes and whether there is anything that makes them more effective than the older approaches. This paper attempts to answer these questions by reviewing the experience with earlier utility schemes and comparing them with the more recent schemes implemented on both sides of the Atlantic as well as Australia. Up-to-date results are reported on utility programme impact in all the regions, including a new indicator analysis of the collective, long-term impact of such schemes in the USA. From this it is clear that both the new and old schemes are highly effective in delivering substantial, sustained and cost effective energy savings and associated reductions in CO2 emissions. A key component of programme impact, including cost-effectiveness, is the effective alignment of utility commercial incentives with the delivery of energy savings. There are essentially two new elements of the recent utility energy efficiency schemes: i) mandated energy savings obligations and ii) the flexibility to trade the obligations. The mandated savings obligation, when linked to a suitable non-compliance penalty structure, seems to be an especially effective means of ensuring that public policy objectives for energy efficiency are met. The importance of allowing obligations to be traded for programme success is not yet clear and will require more time before proper longitudinal evaluations can be attempted.
Article
Increased efficiency of energy demand is generally recognized as a very cost-effective strategy to reduce energy requirements and the related environmental impacts (e.g. the greenhouse effect). In order to improve energy efficiency the use of innovative market mechanisms, such as the White Certificates (WhC), has been proposed. The basic idea underlying this policy instrument is that specific energy saving targets are set for energy suppliers or energy distributors. These requirements must be fulfilled in a predefined time frame. The focus of this paper is on the effect on energy efficiency improvement, on the behavior of the end consumers and the market of energy efficiency measures. Furthermore, we study the possible effects of WhC in The Netherlands by means of a theoretical analysis and an empirical bottom-up model. We compare concrete energy efficient technologies in terms of cost-effectiveness and energy efficiency improvement. In combination with existing Dutch policies for energy efficiency improvement in the built environment, the contribution of this innovative scheme could enhance the accomplishment of energy efficiency targets. In this paper, two packages of energy saving measures of a WhC scheme are studied for Dutch households. The costs of these technologies are estimated through the use of different discount rates, which imply overcoming of the market barriers through the use of the WhC. A scheme that includes all available technologies as flexible options appears as a realistic solution and can generate cost effectively up to 180 PJ primary energy savings and 4550 M€ cumulative net savings in the year 2020, at a discount rate of 5%, under the precondition that the policy and administrative costs can be kept low.
Design of white certificates
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Market mechanisms for white certificate trading
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White certificates: the Italian experience gained in regulation, monitoring and verification and electricity market contexts. IEA-DSM and CESI Ricerca Workshop
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Pavan, M., 2008. White certificates: the Italian experience gained in regulation, monitoring and verification and electricity market contexts. IEA-DSM and CESI Ricerca Workshop, Milan, 22 October 2008.
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Pavan, M., 2004. The Italian White Certificates System: measurement and verification protocols. EU and ECEEE Expert Seminar on Measurement and Verification in the European Commission's Proposal for a Directive on Energy Efficiency and Energy Services, Brussels.
Italian energy efficiency obligation and white certificates: measurement and evaluation. European Parliament Workshop on Case studies of Current European Schemes for the Measurement and Verification of Energy Efficiency Improvements
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Pavan, M., 2005. Italian energy efficiency obligation and white certificates: measurement and evaluation. European Parliament Workshop on Case studies of Current European Schemes for the Measurement and Verification of Energy Efficiency Improvements, Brussels.
Distributor obligations and white certificates in Italy. Presentation at the JRC workshop on White Certificates, Utility and Supplier Obligations
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Markets for Energy Efficiency Exploring the new horizons of tradable certificate schemes. IIIEE dissertations 2008:1, The International Institute for Industrial Environmental Economics
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Mundaca, L. (2008). Markets for Energy Efficiency. Exploring the new horizons of tradable certificate schemes. IIIEE dissertations 2008:1, The International Institute for Industrial Environmental Economics, University of Lund.
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The French Energy Savings Certificates Scheme. Presentation at the JRC workshop on White Certificates, Utility and Supplier Obligations
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