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

  • Luis Mundaca
Publishing year: 2008
Language: English
Pages: 3016-3043
Publication/Series: Energy Economics
Volume: 30
Issue: 6
Document type: Journal article
Publisher: Elsevier

Abstract english

Recent developments in European energy policy reveal an increasing

interest in implementing the so-called ‘Tradable White Certificate’

(TWC) schemes to improve energy efficiency. Based on three evaluation

criteria (cost-effectiveness, environmental effectiveness and

distributional equity) this paper analyses the implications of

implementing a European-wide TWC scheme targeting the household

and commercial sectors. Using a bottom-up model, quantitative results

show significant cost-effective potentials for improvements (ca. 1400

TWh in cumulative energy savings by 2020), with the household sector,

gas and space heating representing most of the TWC supply in terms of

eligible sector, fuel and energy service demand, respectively. If a single

market price of negative externalities is considered, a societal costeffective potential of energy savings above 30% (compared to the

baseline) is observed. In environmental terms, the resulting greenhouse

gas emission reductions are around 200Mt CO2-eq by 2010, representing

nearly 60% of the EU-Kyoto-target. From the qualitative perspective,

several embedded ancillary benefits are identified (e.g. employment

generation, improved comfort level, reduced ‘fuel poverty’, security of

energy supply). Whereas an EU-wide TWC increases liquidity and

reduces the risks ofmarket power, autarky compliance strategies may be

expected in order to capture co-benefits nationally. Cross subsidies could

occur due to investment recovery mechanisms and there is a risk that

effects may be regressive for low-income households. Assumptions

undertaken by the modelling approach strongly indicate that high

effectiveness of other policy instruments is needed for an EU-wide TWC

scheme to be cost-effective.


  • Social Sciences Interdisciplinary
  • Energy efficiency Energy policy Ex-ante evaluation EU-wide tradable white certificate scheme


  • ISSN: 0140-9883
Luis Mundaca
E-mail: luis.mundaca [at]

Senior lecturer

The International Institute for Industrial Environmental Economics

+46 46 222 02 57



International Institute for Industrial Environmental Economics (IIIEE)

Lund University P.O. Box 196, 22100 Lund, Sweden
Visiting Address: Tegnérsplatsen 4,Lund

Telephone: + 46 46 222 00 00 Fax: + 46 46 222 02 10