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

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 cost-effective potential of energy savings above 30% (compared to the baseline) is observed. In environmental terms, the resulting greenhouse gas emission reductions are around 200 Mt CO_2-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 of market 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.     

The economics of UK solar energy schemes

This paper establishes a framework for evaluating the cost-effectiveness of solar energy systems, using standard methods of discounted cash flow (DCF) analysis. Application of DCF analysis to solar energy requires that account is taken of its special nature and of its interactions with other components in energy supply systems. The discussion is restricted to the use of solar energy in space and water heating in domestic dwellings, but the general approach is applicable to other solar systems and to other energy systems based on ambient energy. The procedures suggested for evaluating the cost-effectiveness of solar schemes also have important implications for their design.     

Market behaviour and the to-trade-or-not-to-trade dilemma in ‘tradable white certificate’ schemes

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.

A Danish case: portfolio evaluation and its impact on energy efficiency policy

A political agreement from 2005 stated that an evaluation of the entire Danish energy efficiency policy portfolio must be carried out before the end of 2008, with the aim to assess the following: (1) Is the policy portfolio sufficient to meet the energy efficiency targets? (2) Do the policies enable the national goals to be met in a cost-effective manner? (3) Is the overall design of the policy portfolio appropriate? The evaluation gave recommendations on how to improve and develop the portfolio, mainly using cost-effectiveness as criteria. The evaluation was completed in December 2008, and this paper presents the main findings and the subsequent impact on Danish policy. A key lesson learned is the importance of including all energy efficiency policies in the evaluation. Examining the entire portfolio of policies (as opposed to only selected policies) gave way to findings that would otherwise not have been captured. With its broad perspective, the evaluation found that the policy instruments prioritised the commercial and industrial sectors less than the household and public sectors. The recommendations made by the authors contributed to the implementation of new taxes for the commercial and industrial sectors together with the reform of the Electricity Saving Trust to a Centre for Energy Savings charged with energy savings within all sectors, except transport—both which have been important steps towards a more cost-effective solution.     

Transaction costs of Tradable White Certificate schemes: The Energy Efficiency Commitment as case study

This paper analyses the nature and scale of transaction costs (TCs) borne by obliged parties under a “Tradable White Certificate” (TWC) scheme. Taking the first phase of the Energy Efficiency Commitment (EEC1) in Great Britain as a case study, several sources of TCs were considered, such as search for information, persuasion of customers, negotiation with business partners, and measurement and verification activities. Information was obtained through interviews and a questionnaire distributed to obliged parties. Results show that the most significant sources of TCs were related to search for information, persuading customers and negotiating with managing agents/contractors to implement energy efficiency measures. Perceived high TCs related to contract negotiation and liability risks slightly reduced the low trading level. The scale of TCs was estimated to be around 10% and 30% of total investments costs for the lighting and insulation segments, respectively. The results indicate that, despite the presence and scale of TCs, the EEC1 scheme generated energy savings that yielded net societal benefits. Estimated financial benefits range from 0.6 to 6 p/kWh for insulation and lighting savings, respectively. When avoided external costs due to electricity savings are included, estimated economic benefits range from 3 to 8 p/kWh. Several lessons from the EEC1 can be drawn for TWC schemes. Among others, it is found that informative policy instruments to raise awareness among end-users are critical if a TWC scheme is to deliver cost-effective energy savings. In all, the nature and scale of TCs under TWC schemes will differ because of a number of endogenous and exogenous determinants.     

White certificate schemes: Economic analysis and interactions with the EU ETS

This paper examines the economic, environmental and distributional impacts of an idealised tradable white certificate (TWC) scheme and shows how the impacts are modified when the scheme operates in parallel with the EU emissions trading scheme (EU ETS). It uses simple graphical techniques to assess whether a TWC scheme will increase, decrease or have an ambiguous effect on electricity demand, wholesale and retail electricity prices, carbon emissions and investment in energy efficiency, paying particular attention to the interpretation of ‘additionality’.     

基于改进物元可拓模型的水资源配置方案评价

为获得最优水资源配置结果,将物元可拓模型与水资源配置方案评价相结合,根据可拓学的物元分析原理将决策问题可拓为多维度的物元结构,采用定性与定量方法对传统物元可拓模型分析改进,构建了水资源配置方案评价的多维度改进物元可拓模型,并以台兰河灌区水资源配置方案为例,运用两种模型方法对比分析评价其水资源配置方案,优选最佳方案结果表明,两种模型方法结果基本一致,该方法有效、合理。     

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

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

A multi-criteria evaluation of policy instruments for climate change mitigation in the power generation sector of Trinidad and Tobago

Even as small island developing states (SIDS) like Trinidad and Tobago (T&T) increase industrialization and grapple with the challenges of increased pollution, few studies provide guidance to policy makers of such countries on appropriate policy measures and instruments that can be implemented to mitigate greenhouse gas emissions. Here we apply a multi-criteria evaluation methodology to ascertain preferences for policy measures and instruments in the power generation sector. Four broad policy measures and twelve policy instruments are assessed on criteria of environmental performance, feasibility of implementation and political acceptability. This method proves useful in T&T, since typical to many SIDS, the intensive data required by other policy assessment methods is unavailable. Results indicate little difference in preference among the four policy measures thereby indicating that a multi-pronged approach on several policy fronts is required. The most preferred policy instruments to operationalize measures included provision of subsidies for energy saving technologies, creating an industry wide carbon trading scheme and implementing a feed-in tariff to increase the use of renewable energy sources. This study therefore provides specific insights for policy makers in Trinidad and Tobago while also providing power generation sector specific guidance to other rapidly industrializing small island developing states.     

基于粗糙熵理论的平原河网防洪规划方案评估模型

平原河网地区城市防洪规划方案的评估是模糊多目标多准则决策问题,其影响因素众多,情况复杂多变,针对目前防洪规划方案评估方法存在的不足,分析了城市防洪规划方案影响因素,建立了评估指标体系,将粗糙集和信息熵理论相结合,构建了基于粗糙熵理论的平原河网防洪规划方案评估模型,并将其应用于苏州市防洪规划方案评估中。结果表明,基于粗糙熵的防洪规划方案评估模型在保证了稳定性的同时也具有较高的精度,能为城市防洪规划方案的评估提供指导。     

Prioritizing sustainable electricity production technologies: MCDM approach

Economic, technological, social, and political developments stressed the need for shifts in energy-mix. Therefore it is important to provide a rationale for sustainable decision making in energy policy. The aim of this paper is to develop the multi-criteria decision support framework for choosing the most sustainable electricity production technologies. Given selection of sustainable energy sources involves many conflicting criteria, multi-criteria decision methods MULTIMOORA and TOPSIS were employed for the analysis. The indicator system covering different approaches of sustainability was established. The analysis proved that the future energy policy should be oriented towards the sustainable energy technologies, namely water and solar thermal ones. It is the proposed multi-criteria assessment framework that can constitute a basis for further sub-regional optimization of sustainable energy policy.     

光伏系统经济性评价体系及其方法研究

讨论了在选择光伏系统安装站址时影响光伏系统经济性的各种因素，提出一种多层次多目标的光伏系统经济性综合评价体系结构，并介绍相应的评价方法。     

TVD schemes for unstructured grids

A number of approaches have evolved over the last decade for the implementation of total variational diminishing (TVD) schemes within an unstructured grid finite volume method framework. Unfortunately none of these approaches has been comprehensive enough to permit the general implementation of TVD-based schemes in unstructured grids, and/or accurate enough to recover the exact TVD formulation in structured grids. In this paper we propose a simple method that allows the implementation of the full spectrum of TVD schemes in unstructured grids, while recovering their exact formulation on structured grids. Four schemes implemented using this approach, TVD-MINMOD, TVD-MUSCL (monotonic upstream-centered scheme for conservation laws, MUSCL), TVD-SUPERBEE, TVD-OSHER, are tested and compared to Bruner’s TVD formulation [Parallelization of the Euler equations on unstructured grids, AIAA paper 97-1894, 1995], and to the Barth and Jesperson linear reconstruction scheme [The design and application of upwind schemes on unstructured meshes, AIAA paper 89-0366, 1989] by solving four pure advection problems. Results indicate that the Bruner formulation yields, for the same original TVD scheme, overly diffusive results when compared to the current method. The BJ-MUSCL and TVD-MUSCL are shown to be comparable and more accurate than the OSHER scheme. The SUPERBEE performs best though showing tendency for stepping the modeled profile. In all tests the current method is found to retain the behavior of the structured grid TVD formulation.     

Multi-criteria evaluation for the optimal adoption of distributed residential energy systems in Japan

Evaluation of sustainable residential energy system is complex process, in which not only the economic aspect, but also the energetic and environmental effects should be taken into consideration. In this paper, an integrated design and evaluation model has been developed, by combing linear programming and multi-criteria evaluation method, in order to determine the optimal residential energy system while considering different types of information. As an illustrative example, an investigation is conducted for a typical residential building in Kitakyushu, Japan. A set of residential energy alternatives, including both conventional energy and renewable energy applications, are assumed for adoption. Based on the optimal design results from the linear programming, the various alternatives have been assessed against economic, energetic and environmental criteria. According to the evaluation results, currently, renewable energy systems are not competitive unless strong attention is paid to the environmental benefits. All electric system may be a transitional consideration before reaching an actual low carbon residential energy system. Furthermore, the evaluation result is greatly influenced by the criteria priority, as well as the evaluation method.     

The relative importance of external and internal transport phenomena in three way catalysts

The conversion efficiency of three way catalyst (TWC) depends on chemical reaction and transport limitations. This paper reports a quantitative analysis of the relative importance of these limiting processes based on experimental data obtained under real world vehicle operating conditions. The main conclusions are as follows: (i) above light-off temperature the mass transport phenomena overlaps the kinetic limitation but pure external mass transfer control is hard to attain in TWC operating under real world automotive conditions, even when both space velocity and operating temperature are very high; (ii) above light-off temperature the automotive TWC operates in a mixed regime with both internal and external mass transfer playing important roles; (iii) the internal mass transfer limitation is more important to control conversion in the TWC than the external mass transfer limitation but the relative importance of the external mass transfer increases as the temperature rises; (iv) the internal mass transfer limitation cannot be disregard in TWC modeling studies and (v) the results show that the current generation of TWC is over designed from an external mass transport viewpoint so that future improvements of these devices can be achieved with porous washcoat with improved transport proprieties.     

A methodological framework for comparative assessments of equipment energy efficiency policy measures

When government policy-makers propose new policies, they need to assess the costs and benefits of the proposed policy measures to compare them to existing and alternative policies and to rank them according to their effectiveness. In the case of equipment energy efficiency regulations, comparing the effects of a range of alternative policy measures requires evaluating their effects on consumers’ budgets, on national energy consumption and economics, and on the environment. A useful methodology to perform such policy analysis should represent in a single framework the characteristics of each policy measure and provide comparable results. This paper presents an integrated methodological framework for the prospective assessment of the energy, economic, and environmental impacts of a variety of equipment energy efficiency policy measures. The framework is a comparative assessment tool for energy efficiency policy measures that (a) relies on a common set of primary data and parameters; (b) follows a single functional approach to estimate the energy, economic, and emissions savings resulting from each assessed measure; and (c) summarizes results in a set of metrics to facilitate comparative assessments. It provides a general methodology useful for evaluating a broad range of policies to promote greater equipment energy efficiency and the capability to further compare the impacts of such market interventions. The paper concludes with a demonstration of the use of the framework to compare the estimated impacts of 12 policy measures focusing on increasing the energy efficiency of gas furnaces in the USA.     

Interactions of white certificates with other policy instruments in Europe

In a tradable white certificate (TWC) scheme, each certificate issued represents a certain amount of energy saved. Used in conjunction with an energy-saving obligation on certain parties in the energy supply chain and with rules for trading, monitoring and verification established, an efficient market for energy savings in sectors not covered by the European Union (EU) Emissions Trading Scheme can be established. However, a plethora of other mechanisms are already in place to promote a more sustainable use of energy in Europe. This paper analyses the interactions (both potential and realised in existing schemes) between TWCs and other policy instruments including tradable green certificates, the European Union Emissions Trading Scheme, the European Union Energy Performance in Buildings Directive as well as taxes, subsidies and loans. Measures implemented through a TWC scheme that reduce the consumption of electricity can make targets under a tradable green certificate scheme easier to attain. Where a tradable green certificate scheme contains relative targets, the target should be increased to achieve the same absolute amount of renewable power. A TWC scheme can also reduce the number of allowances electricity generators will need to surrender under the EU Emissions Trading Scheme. By reducing the available emission rights in the National Allocation Plans, this effect is possible to counteract.

The problem of windfarm location: A social multi-criteria evaluation framework

Although wind energy has the green image, the location of windfarms is always a source of local conflicts. Opposition may depend on the extensive land use of windfarms, their possible impacts on tourism or their visual impact, as well as NIMBY (Never In My Back-Yard) behavior. On the other hand, some social actors are normally in favor of wind parks because they perceive them as a possibility of development or simply a source of income. In these situations, the management of the energy policy process involves many layers and kinds of decisions, and requires the construction of a dialogue process among many social actors, individual and collective, formal and informal, local and non-local. This implies that the political and social framework must find a place in evaluation exercises. This is the objective of social multi-criteria evaluation (SMCE). In this article, SMCE is proposed as a general framework for dealing with the problem of wind park location. The major strength of SMCE is the possibility of integrating both socio-economic and technical dimensions inside a coherent framework. A real-world case study is used as an illustrative example.     

Why is South Korea's renewable energy policy failing? A qualitative evaluation

This study explores the causes of the South Korean government's failure to successfully deploy its renewable energy policy. Despite the South Korean government’s ongoing efforts since 2002 to promote the deployment of renewable energy, the established deployment target has not been met and the share of renewable energy supply in total primary energy supply is poor compared to peer countries with a similar level of economic development. Therefore, we attempt to find the causes of this policy failure using qualitative evaluation methods. Through the analyses, conducted using focused interviews and secondary data, we found that the domination of the fossil fuel and nuclear power industry's interests, inconsistent policy shifts, policy design that lacks sufficient support schemes, poorly coordinated government activities, and unsystemic and untimely monitoring and feedback have led to the failure of renewable energy deployment policies in South Korea. To overcome these problems, we suggest that the South Korean government should set more ambitious policy goals, establish a new independent organization that focuses on energy policy issues, use a varied policy mix, and secure political support from diverse policy actors.     

Congestion measurement for regional industries in China: A data envelopment analysis approach with undesirable outputs

The industry in China has been developing extensively in the last few decades. Large investments in China's industry may cause congestion because congestion is a widely observed economic phenomenon in such a scenario. In order to know the performance and allocate resources well, it is necessary for the Chinese government to measure congestion of the industry. Many scholars have studied this topic by means of data envelopment analysis (DEA). However, previous studies only pay attention to the framework of desirable outputs. In fact, undesirable outputs often accompany desirable outputs in production. Thus, in this study, a new approach for measuring congestion with undesirable outputs is proposed and applied to analyzing congestion of the industry in 31 administrative regions of China. The results show that five regions have congestion in their industry in 2010. Besides, the regions located in the east of the country perform the best in ecological efficiency, followed by regions in central and west China. Based on these findings, this paper proposes some political schemes to improve regional industrial efficiency.