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Lena Neij

Lena Neij

Professor

Lena Neij

Market behaviour and the to-trade-or-not-to-trade dilemma in 'Tradable White Certificate' schemes

Author

  • Luis Mundaca
  • Lena Neij
  • Nicola Labanca
  • Bruno Duplessis
  • Lorenzo Pagliano

Summary, in English

This paper provides an empirical analysis of

market behaviour under ‘Tradable White Certificate’

(TWC) schemes. It focuses on the entire set of ‘flexibilities’

granted to obliged parties to meet a mandatory

energy-saving target cost-effectively, i.e. range eligible

measures, eligible end-use sectors, banking provision,

market engagement of non-obliged parties, and trading as

such. We found that market behaviour responds to the

unique design and context in which TWC schemes are

implemented. Contrary to expectations, limited trading is

observed so the ‘to-trade-or-not-to-trade’ dilemma is

further analysed. A real TWC market has emerged only

in Italy, where obliged parties (i.e. energy distributors)

show preference towards ‘to-trade’. In Great Britain and

France, an autarky compliance approach is identified,

with obliged parties (i.e. energy suppliers) showing preference

towards ‘not-to-trade’ driven by, among many

factors, commercial benefits of non-trading (e.g.

increased competitiveness). At the same time, results

show clearer indications of cost-effectiveness for Great

Britain than for Italy. In general, high energy-saving effectiveness

is observed, but low ambitious saving targets

and pitfalls in the regulatory framework need to be

considered to further develop TWC markets. Initial

market and institutional conditions strongly suggest that

trading might not be an immediate outcome. Ambitious

energy targets can trigger a more dynamic usage of all

flexibilities by eligible parties and thus active behaviour

in TWC markets.

Department/s

  • The International Institute for Industrial Environmental Economics

Publishing year

2008

Language

English

Pages

323-347

Publication/Series

Energy Efficiency

Volume

1

Issue

4

Document type

Journal article

Publisher

Springer

Topic

  • Social Sciences Interdisciplinary

Keywords

  • Tradable white certificate schemes . Market behaviour . Commercial benefits of nontrading. Ex-post policy evaluation

Status

Published

ISBN/ISSN/Other

  • ISSN: 1570-646X