Interaction and integration of white certificates with other policy instruments

8/14/2019 Interaction and integration of white certificates with other policy instruments

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Interaction and integration of White Certificateswith other policy instruments

Recommendations & guidelines for decision makers

These guidelines are printed in the scope

of EuroWhiteCert project.

For more details on the project and its

project partners please visit the project

website or contact the project manager at

[email protected]


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Contents

1. Introduction ................................................................................................................2

2. Scheme design .............................................................................................................32.1 Design Considerations ................................................................................................3

2.2 Practical considerations .............................................................................................5

2.3 Minimising Transaction Costs...................................................................................7

3. Interaction with other instruments ...........................................................................9

3.1 EU ETS ........................................................................................................................9

3.2 Green Certificates.....................................................................................................11

3.3 Other instruments.....................................................................................................12

Definition of terms used .....................................................................................................14

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1.Introduction

Recommendations and guidelines reported in the present document are based on a systematic

analysis of the possible interaction of white certificates (TWC) with other market-based

mechanisms that are promoting sustainable energy in the EU. In such analysis considerationwas given to existing and planned policy instruments at both national and European levels to

identify where and how white certificates could work alongside these instruments. The focus

was on economic and practical implementation issues; detailed legal analysis was outside the

scope of the work.

Five main areas of work were undertaken:

Interactions between tradable white certificate schemes and the EU ETS - thisconsidered, amongst other factors, the policy objectives and statutory foundation of the

two schemes; the market demand and market structure for both and target setting and

apportionment for each.

Interactions between a potential white certificate scheme and existing national tradablegreen certificate (TGC) schemes in Europe this considered national TGC schemes

which have been implemented in some European countries so far and what would happen

to these schemes if TWCs were introduced.

Interactions between a potential white certificate scheme and other existing andupcoming policies and instruments at a national and European level this analysed

instruments currently being used in Member States and considered what would happen to

them (in terms of the energy saving potential; the volume of cost and its distribution over

parties) if White Certificates were introduced.

Integration of White Certificate schemes this involved the preparation of case studies(for Hungary, Bulgaria and the UK) to analyse the possibility and desirability of whitecertificate schemes in three countries. These aimed to test the generalised conclusions of

the work described above by analysing how, in practice, TWC could be implemented,

taking into account specific national energy efficiency programmes.

Finally, work was undertaken to identify and review quantitative estimates of transactioncosts (TCs) related to the development of energy efficiency (EE) projects

delines for decision makers on the desirability of TWCs and

how they can best be introduced.

This document draws upon the reports and briefing papers produced within EuroWhiteCert

project by the lead partners for each of the areas of work described above1

and aims to

provide recommendations and gui

1 These individual reports and reports from other project work-packages are all available on the EuroWhiteCert

project website.

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2.Scheme design

2.1 Design Considerations

Economic costs and benefits

The economic arguments for Tradable White Certificates (TWCs) are well known, with the

potential benefits based on the efficiency gains that such a system may realise in comparison

with existing instruments. A certificate system will create a market for energy efficiency and,

as such, is likely to lower the overall amount of transaction costs2

through:

coordinating supply and demand, leading to more efficient allocation of resources

creating economies of scale by pooling demand for energy efficiency measures

decreasing production costs through specialisation in certain measures or markets;

However, white certificate schemes also create transaction costs as a result of the need for

monitoring, validation, marketing and overall administration of the system among the

obligated parties. These activities also exist in relation to many of the other instruments that

are currently used, but the nature of a white certificate system demands significantly more

igorous and systematic monitoring and validation than these other instruments do.r

Even though the unit-cost of newly introduced energy-saving solutions with a sizeable

potential can diminish significantly over time and thereby postpone the cost increases, it

should be anticipated that the price of certificates will sooner or later start to rise steadily, if

hite certificate systems are used in conjunction with regularly tightened targets.w

The structure of the energy markets, notably those of electricity and natural gas, can have

significant influence on the effectiveness of the white certificate system and on the

distribution of the net benefits. The tariff structure for end-users and the cost attribution

echanisms when moving from wholesale to retail markets deserves particular attention.m

Last, but not least, from an overall economic point of view it should be kept in mind that a

white certificate scheme obliges energy companies to invest in projects that probably did not

get the highest rating as regards return on investment (ROI) of the obliged party. The

overall economic assessment of white certificates should take account of the fact that the

reallocation of investments of the energy companies could cause a negative margin in

comparison to the reference ROI (prior to the introduction of TWC).

TradabilityA further consideration is the value that is attached to the tradability of a white certificate.

Across the various member states, which are already running or seriously contemplating a

2 Transaction costs (TCs) can be defined as the costs of arranging a contract ex ante and monitoring and

enforcing it ex post, as opposed to production costs.

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white certificate system, there is a remarkable difference in the value that is attached to

tradability. If this is mainly seen as a safety valve in the system with which opposing parties

can be convinced of the limited risks of the scheme, a white certificate scheme becomes like

some kind of action plan organised through the energy supply sector, along the lines of for

example the EEC in the UK, the Environmental Action Plans (MAPs) in the Netherlands (in

the 1990s) and the more comprehensive DSM programmes in some areas of the United

tates.

g of

white certificate systems and the possible linkages to EU ETS would be even less likely.

heap TWCs and investors from CEE will be able to invest in

ergy efficiency measures.

S

In this case a TWCs can be seen as lifting negotiated agreements to a new level. While

certification and validation would still be very useful, a scheme set up under this model would

not need the level of rigour which a trade oriented system would require. Consequently

transaction costs would fall, but cost minimisation options would be reduced as well, and the

incitement for end-users to engage in TWC eligible energy saving would be taken out.

Obviously, if trading is not a key issue in the design both the international interlinkin

Winners and losers of a pan-European scheme

Questions also remain about so called winners and losers from an EU wide scheme. Forexample, it is assumed that the Central and Eastern European (CEE) countries will generate

cheap TWC, because their current energy efficiency is relatively low and they can offer a

large volume of TWC at a relatively low price, because of the lower investment cost in these

countries. This will lead to a twofold advantage: the obliged parties in the EU will be able to

meet their obligation with c

en

However the opportunity for free transfer of TWC among the countries could be a real

disadvantage for the obliged parties in the CEE countries, who are not in a position to invest

in energy efficiency measures and would like to buy TWCs from the market. In this case they

will have to compete with obliged parties from the EU, who are much more powerful and

economically sound. For this reason, it is recommended that serious consideration is given

to capping the amount of trading that is allowed between countries in a pan-European

scheme.

I

ature technologies with a large energy saving potential in the

ergyconsumption in the EU but also act to reduce the total amount of energy consumed

Innovative technologiest is reasonable to assume that European energy policy should primarily:

promote already mature energy efficient technologies in the short term

promote not yet m

medium/long term

promote not only energy efficiency and reductions in the rate of growth of en

Through a TWC scheme, the same price is applied to energy savings whatever the technology

or measure generating these savings. It can be assumed therefore that they tend to promote

mature and competitive or almost competitive technologies. Furthermore, trading might

favour only standardised monitoring and verfication methodologies thereby disfavouring

more complex system-wide measures (e.g. whole building retrofits). Based on these

assumptions, it is recommended that TWCs are integrated with other policy instruments

(e.g. subsidies and tax deductions) that promote new and emerging technologies and

system-wide measures.

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New market players and ESCOs

It is generally assumed that certificate schemes will open a market to new players as they

provide new and additional income through the sale of certificates e.g. ESCOs might gain

competitive advantage by looking for the most efficient and economic way to achieve

savings, in comparison to energy suppliers whose core business is energy supply rather than

energy savings.

However, market participation of independent parties would increase competition, increasing

efficiency and lowering prices, which is not in the interest of the incumbent market player.

Incumbent players in oligopolistic market structures tend therefore to protect their market

share; thus keeping independent competitors out of it. For example, energy suppliers may

carry out energy saving projects with their own customer base rather than buying certificates

generated by independent parties even if marginal costs would suggest otherwise. Thus the

hopes that ESCOs will receive a noticeable share of the certificate market might not be

realised. In this case, additional measures should be considered to secure market entrance

to the ESCOs.

2.2 Practical considerations

The work undertaken through the EuroWhiteCert project highlighted that developing a pan-

European scheme is an enormous challenge. Of prime importance is the need to have clearly

defined objectives for the White Certificate scheme. In the design of a European-wide White

Certificate scheme, it is essential therefore to decide if the scheme designed to save energy

only or does it have other objectives, for example,

Is there to be a social objective (e.g. improved warmth for residents)? This might mean that

energy savings are lower but that citizens are warmer and healthier

Is employment creation in individual Member States a key objective? This might place

restrictions on how far obliged parties should be able to meet their obligations through

investment in other Member States.

A clear understanding of the objectives of the scheme and their relative importance will help

to determine other areas of the scheme design e.g. scope, eligible measures and integration

with other policy instruments.

Further, the work undertaken in the EuroWhiteCerts indicated that there are a number of

practical considerations that need to be taken into account in developing a pan-EU scheme:

Experience of Market Based Instruments experience of market based instruments(MBIs) is mixed across Member States. This variation in experience will affect the speedwith which a European-wide White Certificates scheme could be introduced. The case

studies also highlighted some of the concerns that stakeholders have regarding MBIs;

these were particularly apparent in the countries that had limited experience of MBIs to

date and illustrate the significant effort that will be required to overcome perceived and

actual barriers.

Potential for energy savings the case studies clearly illustrated that Member Stateshave recognised the clear need and potential for energy savings in different sectors.

What was also highlighted however was that different Member States have different

priorities in terms of focussing effort for energy savings, often related to their perceived

objectives of a White Certificate scheme.

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Sectors, measures and technologies to be covered - Different priorities in differentMember states could lead to schemes that cover different sectors, measures and

technologies. Considering the case studies and existing White Certificate schemes in

France and Italy, an area of consensus is measures and technologies relating to buildings.

There was less agreement in including transport and industry not covered by the EU ETS.

e case studies and consideration of existing TWC schemes highlightsObliged parties ththe different approaches being taken and the need for a consistent approach in a pan-

European scheme.

body to take the role of administrator of a

Administration identification of a suitable

TWC scheme was not an issue in the case studies. Of more importance however were the

suggestions for measuring energy savings.

In light of the above, a suggested first step is for member states to develop their own

schemes before integrating them into a pan-European scheme at a later date. Obviously

for integration to be possible, each scheme will need to be developed (or, for existing

schemes, modified where appropriate) to a common set of guidelines concerning e.g. the

objectives of the sche that are covered and measureme, the sectors ment of energysavings, and based on the recommendations below:

Clear consensus emerged that the deemed savings approach should be favoured for the

design of a European TWC scheme since it reduces costs for energy suppliers and providescertainty to investors through ex-ante evaluation of the eligibility of the energy efficiency

project. It was felt that a standardised list of energy efficiency measures should be created

distributor is using innovative measures it

e energy savings from an

to simplify this process and that if an energy

should provide, as in the UK scheme, independent verification of th

accredited body.

Figure 1: A route map towards a European White Certificate Scheme

Definition of agreed common policy objectives of a European wide WhiteCertificate scheme (energy saving, GHG reductions, employment creation,

security of supply etc.) and their relative importance

Development of common set of guidelines regarding the design of the White Certificatescheme, covering eligible technologies and measures, measurement of energy savings,

obliged parties etc.

Establishment of White Certificate schemes in individual Member States (or modification ofexisting schemes) according to common guidelines and policy objectives

Modification of schemes in Member States to form pan Europeanscheme and to allow trading between countries

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2.3 Minimising Transaction Costs

When it comes to the development of energy efficiency (EE) projects, transaction costs can be

related to, for example, gathering and assessing the information about the equipment; getting

agreements in order to carry out and enforce the contract; monitoring and verifying the actual

level of EE improvement; etc.

TCs can make EE measures appear to be more expensive than conventional measures

(meaning that non-efficient technologies may be favoured) due to the problems with

imperfect and asymmetric information. Looking at the lifecycle of TWC (see figure 3.1), one

can immediately observe that the first three phases are inherent to the development of EE

projects.

Figure 2: Life cycle of Tradable White Certificates3

Planning

Implementation

M & VTrading

Redemption

Issuance

While it can be concluded that much more research is needed in order to better understand the

nature, scale and burden of transaction costs (TCs) of energy efficiency (EE) projects, in

particular if one keeps in mind the main focus of this EU project: tradable white certificates

(TWC), some general conclusions can be drawn:

there are related economies of scale for EE projects when TCs are considered. To someor to a large extent, the reviewed estimations indicate that there is a negative direct

correlation between the burden of TCs and the size and performance of EE projects. In

other words, due to the fact that the scale of certain TCs may be a fixed component of EE

projects, it is possible to observe that the larger the amount of energy savings, the

lower the burden of TCs. Due to the relatively recent emergence of TWC schemes, itremains to be seen whether economies of scale will actually take place in these markets.

If we take into account the lifecycle of TWC, TCs affecting the development of EEprojects (i.e., planning, implementation and M&V) are just part of a wider set of TCs

affecting the creation of TWC and its remaining phases (i.e., issuance, trading and

3 Mundaca,L., N., Lena (2005) Transaction costs of tradable white certificate schemes, working paper. Lund,

International Institute for Industrial Environmental Economics.

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redemption). Therefore, it would also be possible to expect that the learning process that

reduces TCs for the development of EE projects could also apply to the case of TWC.

Apart from the above-mentioned economies of scale, we could also expect that in the

context of TWC schemes, the further development of ESCOs markets, competition

among consultancies as well as brokers; including a higher involvement of the EE

equipment industry, could also have a positive impact on the scale and thus the burden of

certain TCs (e.g., because of consolidated procedures for negotiation, baseline, M&V,

trading, etc). Our hypothesis is that as TWC markets mature, the burden of TCs

decreases. Certainly, further research is thus needed to test it.

bundling or pooling of EE projects is likely to reduce TCs . The adoption of thisstrategy could be taken as the first step in the context of TWC schemes, for instance for

reducing the burden of TCs related to M&V activities.

an ex-ante M&V approachneeds to be considered as an important strategy for reducingTCs; in particular when analysing EE measures whose performances are well known.

For measures where performance is less well known, an engineering approach, such as

that adopted in the Italian scheme, is a good compromise between a pure ex ante and a

pure ex post approach.

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3.Interaction with other instruments

All the policy instruments examined during the course of this research were found to have

broadly similar objectives: to promote cost effective energy saving measures and/ or to reduce

emissions of harmful greenhouse gases. No fundamental conflicts between the objectives ofWhite Certificate schemes and other policy instruments were identified, for example:

A White Certificate scheme would aim to encourage energy saving measures to deliverend-use energy savings, reducing energy consumption and CO2 emissions

The EU ETS aims at promoting reductions of greenhouse gases emissions in a costeffective and economically efficient manner.

Tradable Green Certificates aim to promote renewable electricity generation andreductions in greenhouse gases associated with the generation of electricity from fossil

fuels

However, while greenhouse gas mitigation might be the main driver, it is important to

remember other objectives such as security of supply and risk mitigation against fluctuating

energy also play a role in existing and future policy instruments.

3.1 EU ETS

Direct interaction between TWC and the EU ETS is limited by the fact that the obligations

introduced by the two directives concern separate sectors (power producers and energy-

intensive industries vs. energy distributors). However, the electricity supply companies are

often directly linked in ownership terms with power generators or possess their own

lectricity generation capacity and therefore can participate in both schemes simultaneously.e

The implementation of the EU ETS will affect energy end use efficiency and the operation of

a possible TWC scheme in a number of ways, e.g.

An increase in energy prices due to the implementation of the EU ETS might triggerenergy efficiency measures and/or increase the demand for TWCs. Furthermore, if the

retail price for energy goes up, the TWC price goes down and hence obligated parties

may get more interested doing TWC eligible projects. Yet, for obligated parties somehow

linked to the production side, it depends also on the competitiveness of the energy market

and its own position.

Assuming that a TWC is reasonably successful and acquires a certain market volume, it

could lead to a reduction in the overall consumption of electricity in the EU. Assuming

that, in the main, fossil fuel capacity is switched off; this in turn will lead to reductions ofCO

ances. It could also

sures stimulated by the

2 emissions by power generators. This could reduce the allowance needs of power

generators, and would therefore help to control the price of allow

mean that power generators could meet their targets at a lower cost.

Electricity prices could also be affected depending on the degree of competitiveness and

the shape of the marginal cost curve of power production. In addition, there are many

examples of vertical integration in the energy sector with an energy supplier owned,

wholly or partly, by a power generation company. In this case, while their EU ETS

compliance costs may be reduced through a reduction in electricity supplied as a result of

a TWC scheme, overall costs may increase as the cost of mea

TWC scheme may be higher than meeting targets in other ways.

There is potential overlap between TWCs and the issuing of ERUs (Emission Reduction

Units) from JI (Joint Implementation) project activities in installations in Member States

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and particularly the new Member States and accession countries soon to join the EU. At

present, however, the incentives provided by the Kyoto mechanisms, including the

possible use in the EU ETS of credits generated through JI or CDM project activities are

not sufficient to support energy efficiency projects. This is particularly the case for

small scale energy efficiency projects where the transaction costs are too high to make

2008-2012) of the EU ETS, when new gases and activities may be included

the scheme.

commendations can be made regarding TWC and the possible

tegration with the EU ETS:

use of JI. This means that in practice this is not likely to be a big issue.

It is worth noting that overlap between the two schemes may increase in the second phase of

implementation (

in

At this stage, the following re

in

Member states should first learn to deal with TWCs (and many of them also still with

EU ETS) as separate schemes. Linking of the two schemes would require robust

tracking and data management across markets and will increase the administrative

complexity. Furthermore, if not properly designed, it may even undermine the overalleffectiveness of the instruments, for example if the issuance of credits under the two

schemes is affected by double-counting. It is felt that the complications that integration

would entail are not conducive to the overall objective to get emissions down and less

(fossil) fuel intensive at this stage

result of the EU ETS, so that

It is important to define the baseline and the additionality of TWC-qualifying measures.

Energy efficiency measures triggered by the rise in electricity price brought about by the

EU ETS will, if also eligible for TWC, potentially lower the price of a White Certificate.

To reduce this effect, the TWC baseline should take account of the increase in cost-

effective energy efficiency measures that occur as a

measures that qualify for a TWC are additional to this.

he liquidity of the carbon market and

In the longer term, co-ordination between the two schemes may help address specificissues, and more generally improve the performance of the two schemes, through, for

example, increasing compliance options, boosting t

improving market stability.

It is suggested that one-way fungibility, between TWC and the EU ETS is adopted

whereby energy suppliers that receive and trade TWCs are allowed to transfer them into

the EU ETS scheme (and eventually convert them to allowances) only if the original

TWC stem from a threshold of overcompliance of their energy efficiency target, and the

conversion of each surplus TWC into allowances can take place only one-way hence

allowances cannot be re-converted into TWCs. This will ensure that the energy

efficiency target will be always met through the TWC scheme. [Further study is required

on the marginal cost of projects]

In order to reduce the impact of price volatility on the amount of energy efficiency

measures entering the EU ETS, one-way fungibility could be combined with set-aside

quotas, where a certain share of total allowances could be kept by the EU ETS

administrator and dedicated to certified CO2 emission reductions from end-use energy

efficiency and renewable energy. This would ensure that a certain number of energy

efficiency measures enters the EU ETS independently from price fluctuations of EUAs

and TWCs, thus achieving benefits for both schemes.

Harmonisation of the commodities traded within each scheme and establishment of

agreed baselines are essential to allow conversion between different types of

certificates. This can be achieved only if a common way of estimating the climatebenefit is determined and an accurate conversion of the embodied CO2 of a TWC is

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possible. In particular, with an ex ante system, where no actual energy savings are

measured, it is impossible to say with certainty the actual energy savings that will be

achieved. One way to overcome this is to take low, safe estimates of the CO2 saved but

s of trade value.this would mean some los

3.2 Green Certificates

Interactions occur between TWC and TGC schemes if the TWC target can be met by

easures that reduce consumption of electricity. The following tables summarise the effects

Table 3.1: Ways of expressing TWC targets and r pa

m

of these potential interactions:

esulting effects from a rallel TGC

terms relative to

TWC target terms relative to to ytal energy supplabsolute terms

expressed in total energy supply minus renewable

energy supply

not influence not influence decreaseIntroduction of

a TGC will absolute level of

TWC target

absolute level of absolute level of

TWC target TWC target

Tab f expressing TGC targets and r pale 3.2: Ways o esulting effects from a rallel TWC.

terms relative to

TGC target terms relative to total energy supplyabsolute terms

expressed in total energy supply plus energy

savings from TWC

not influence not influenceIntroduction of decrease absolute

a TWC will absolute level of absolute level of

level of TGC targetTGC target TGC target

A

s e

f TWC targets only in very limited cases, if at

an

number of recommendations can be made regarding the design of a White Certificate

ch me and potential interactions with TGCs:

Particularly with regard to setting a TWC target, one has to be aware that it may lower

the ambition level of a TGC target. With a TGC target set in terms relative to electricity

supply, the introduction of a TWC will decrease demand and thus prices on the TGCmarket, thereby putting investments in renewable energy plants on risk. In contrast, TGC

targets will influence the ambition level o

all. Setting absolute TGC targets is the easiest way to avoid unintended interdependencies

between TWC and TGC targets entirely.

Introducing a TGC simultaneously with a TWC or after a TWC gives the best

opportunity to consider the influence of TWC targets on relative TGC targets. Then the

target level in absolute numbers could be kept by increasing the relative TGC target. Of

course, TGC targets can also be increased after a TWC has been established. However,

this has to be done very carefully not to disturb TGC markets. One may consider

upcoming TWC without knowing the TWC target by referring the relative TGC target to

a formula based on the electricity supply plus possible savings from the future TWC.

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till, the extra benefit for RE operators to have the possibility to get

supported if TWC were allowed to be traded into the TGC market.

Usually, the eligibility for TGC and TWC should be strictly separated. EE measures

should only be eligible for TWC and RE measures should be only eligible for TGC. This

way, there would be no interactions between both systems due to the measures. However,

there are some reasons for making certain RE measures eligible for both TWC and TGC.

In this case, an individual measure should either receive a TGC or a TWC to avoid

double counting. Sawarded TWC instead of TGC is admittedly small. Usually, the income from TGC

marketing will be higher than from TWC marketing, so there will be no reason to switch

over to the TWC.

So far no experiences have been made integrating TWC and TGC markets. Markets have

been kept entirely separated. TWC and TGC systems are addressing different

technologies. Integration of markets would dilute the aspired targets. Particularly, fewer

RE projects would be

Cost savings by introducing TWCs into TGC markets will be realised at the expense of

fewer RE deployment. We therefore recommend keeping TGC and TWC markets

entirely separated.

A certificate system is managed by appointed institutions responsible for the whole lifecycle of certificates from issuing, monitoring, verification and registration till

redemption. Institutions can either be public or private as long as they are independent

from the certificate market. However, since the system should run at the least transaction

costs, a single institution for the management of both TGC and TWC seems best.

Parallel institutions would increase the costs for administration and exchange of

information and the risk of the double counting of measures. As far as the integration of

national certificate markets into one European market is concerned, it would be best to

have a single registration system. If this is not possible, national registration systems

der to avoid double counting of measures in different national

registration systems.

instruments

must be synchronized in or

3.3 Other

The

instr

following conclusions can be drawn from the review of a number of other policy

uments:

aused by

The interaction between white certificates and energy taxes is in principle

complementary. The reduction in energy tax revenues as a result of the achieved energy

savings, over and above what other instruments would have achieved, are presumably

compensated by ies and by some extra revenues ca reduction in public subsid

reallocated expenditures subjected to other indirect taxes (VAT, other excise duties). The

reduction of energy tax revenues should only be accounted to the extent that a white

certificate system is expected to cause more energy saving than its alternatives.

Even though subsidies and tax deductions would simply double up the cost reducingeffect of white certificates, it is unlikely and economically questionable that such support

schemes would be continued for projects eligible for white certificate schemes.

Consequently, subsidy schemes and tax deductions have to be adapted to avoid overlap.

g of the white certificate market.

Energy audits are however an application for which continuation of subsidy would be

important for the adequate functionin

Soft loans and loan guarantees, which can be seen as a kind of subsidies, do not suffermuch from this type of problematic interaction and can be mostly continued with little or

few adaptations.

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gs in the Netherlands, do not combine well with white certificates. The

Performance standards for equipment do not interact much with white certificates, as

long as they are meant to keep the least efficient models from the market. In case of more

ambitious performance standards there would be competition, in which case a labelling

system is recommended as an alternative (not conflicting with white certificates).

Comprehensive performance standards, such as the Energy Performance Standard (EPN)

for new buildinidea of additionality gets lost in this case, meaning that it simply becomes hard to apply

white certificates in a transparent manner. Use of white certificates may even lead to

slower introduction of some energy saving options. In contrast to new buildings white

certificates are applicable to measures in the existing building stock. In that case they

may replace some of the public funding schemes (but with continuation of support for

energy audits).

Information provision is only a support to the functioning of white certificates (or anyother instrument) in as far as it enhances transparency in energy efficiency markets.

Obviously there is not any problematic interaction. As regards education, there may be a

reinforcing effect in as far as energy efficiency schooling projects can produce tractable

savings and are replicable. Policies that support research, development and demonstration (RD&D) could be

better tuned to the expectations concerning needs for new energy saving solutions given a

multi-year TWC target. RD&D efforts would need to address both the energy saving

capacity of new options as well as the unit-cost of these new solutions.

n how additionality is defined with

regard to energy savings realised under the agreements. If all investments made to reach

the target were considered additional, they would be eligible for support from obligated

parties. The situation would not change essentially, if only a part of the target energy

savings would be eligible for white certificates. It would require the specification of abaseline within the voluntary agreement. Where voluntary agreements involve subsidies

and tax deductions, adaptations have to be made.

Voluntary agreements constitute a platform with a collection of measures, forms of co-

operation etc. As an organisational model it can also function in the context of white

certificates. The interaction with TWC depends o

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4.Definition of terms used

Additionality: projects implemented in white certificate schemes should realise savings that

are additional to savings that would be realised in the absence of the white certificate scheme.

Baseline: the reference energy use in a specific project or scheme

Energy Service Company (ESCO): a natural or legal person that delivers energy services

and/or other energy efficiency improvement measures in a user's facility or premises, and

accepts some degree of financial risk in so doing. The payment for the services delivered is

based (either wholly or in part) on the achievement of energy efficiency improvements and on

the meeting of the other agreed performance criteria

Ex-ante calculation of energy savings: a calculation method that pre-defines the amount of

energy used and saved by a measure before its implementation.

Ex-post calculation of energy savings: calculation of savings after the measure has been

implemented

http://www.eurowhitecert.org

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EuroWhiteCert is supported by the European Commission and several national governments.

It is conducted under the auspices of the Intelligent Energy for Europe (IEE) Programme of the European

community and fifteen national agencies: Austria AEA, the Austrian Energy Agency; Bulgaria EnEffect,Centre for Energy Efficiency; ESD Bulgaria Ltd, Energy for Sustainable Development; Finland VATT, the

Government Institute for Economic Research; France ARMINES, Contract research organisation of the

Ecole des Mines de Paris; ADEME, French Agency for Environment and Energy Management; Germany

ZSW, Centre for Solar Energy and Hydrogen Research; Greece CRES, Centre for Renewable Energy

Sources; Hungary CEU, Department of Environmental Sciences and Policy of the Central European

University; Italy eERG, end-use Efficiency Research Group of Politecnico di Milano with the support of

la220; APAT, the Italian Agency for Environmental Protection and Technical Services; The Netherlands -

Ecofys, international consultancy company specialised in sustainable energy and climate change issues;

Portugal ISR-UC, research and technology transfer institute associated with the University of Coimbra;

Sweden IIIEE, the International Institute for Industrial Environmental Economics with the support of

ELFORSK (Swedish Electrical Utilities R&D Company) and STEM (Swedish Energy Agency); United

Kingdom ESD, Energy for Sustainable Development Ltd with the support of DEFRA (Department for

Environment, Food and Rural Affairs)

The sole responsibility for the content of this document lies with the authors. It does not represent the opinion of the

European Communities. The European Commission is not responsible for any use that may be made of the information

contained therein.

Interaction and integration of white certificates with other policy instruments

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