White Certificates for energy efficiency improvement with energy taxes: A theoretical economic model

In this paper we analyze interactions of two energy policy instruments, namely a White Certificates (WhC) scheme as an innovative policy instrument for energy efficiency improvement and energy taxation. These policy instruments differ in terms of objectives and final impacts on the price of electricity. We examine the effect of these policy instruments in the electricity sector, focusing on electricity producers and suppliers in a competitive market. Using microeconomic theory, we identify synergies between market players and demonstrate the total effect on the electricity price when suppliers internalize the behaviour of producers in their decisions. This model refers to an ideal market situation of full liberalization. The cases we examine consist of electricity producers with and without a carbon tax, electricity suppliers with and without an electricity tax, and with WhC obligations. Furthermore, we present a parallel implementation of WhC for electricity suppliers with carbon tax on electricity producers and an electricity tax with WhC obligations to electricity suppliers. We demonstrate differences in optimization behaviour of producers and suppliers. Based on a couple of cases of WhC with carbon and electricity taxes, various positive and negative effects of both schemes in terms of target achievement and efficiency are present, which can lead to an added value of such schemes in the policy mix, although uncertainties of outcomes are quite high. A basic finding is that in a merit order several parameters can increase final electricity price after the implementation of different policies: demand for electricity and electricity supply cost at a large scale and then follow the level of level of obligation for energy saving, level of penalty, and price of WhC (representing the marginal costs of energy saving projects). The impact magnitude of parameters depends on the values chosen and on the initial position of suppliers (i.e. if their actual behaviour deviates from full compliance with targets).     

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.     

Energy sales targets: An alternative to White Certificate schemes

White Certificate schemes are currently being implemented or proposed in a growing number of jurisdictions as a means to drive greater energy efficiency uptake. After briefly discussing some of the strengths and weaknesses of such schemes, this paper outlines a proposed alternative approach—the use of Energy Sales Targets. This approach essentially involves the imposition of a cap on the greenhouse gas (GHG) emissions associated with annual energy sales and, in its simplest version, requires no tradeable certificates or permits. The proposed approach creates a clear measurable link between how compliance is enforced (the retailers’ targets) and the desired outcomes of the scheme (measurable reductions in GHG emissions). This drives physical additionality of the scheme, including negation of any rebound effect within the covered sectors. It also avoids the need to define the activities eligible to create certificates, and likewise, no deeming, auditing, monitoring or verification would be required by government beyond ensuring retailer compliance—significantly reducing administration costs. There does not appear to be a clear precedent for this type of scheme anywhere in the world, and so this paper should be seen as a preliminary scoping of options that are deserving of more in-depth assessment.     

The potential for energy efficiency gains in the Canadian commercial building sector: A stochastic frontier study

The achievement of energy efficiency in commercial buildings is a function of the activities undertaken, the technology in place, and the extent to which those technologies are used efficiently. We study the factors that affect efficient energy use in the Canadian commercial sector by applying a stochastic frontier approach to a cross-section of Canadian commercial buildings included in the Commercial and Institutional Building Energy Use Survey (CIBEUS). Structural and climate-control features of the buildings as well as climatic conditions are assumed to determine the location of the frontier, while management-related variables including such factors as ownership type and activities govern whether or not the maximally attainable efficiency along the frontier is achieved. Our results indicate that although, on average, buildings appear to be fairly efficient, certain types of operations are more likely than others to exhibit energy efficiencies that are significantly worse than average. These results, along with those related to the effects of physical characteristics on the stochastic efficiency frontier, suggest that there is scope for focused policy initiatives to increase energy efficiency in this sector.     

The impact of Energy Performance Certificates on the rental and capital values of commercial property assets

This paper focuses on the effect of energy performance ratings on appraised capital values, rental values and equivalent yields of UK commercial property assets. The study is based on a cross-section of 708 commercial property assets. Incorporating a range of potential confounding factors such as unexpired lease term, vacancy rate and tenant credit risk, we use hedonic regression procedures to estimate the effect of EPC rating on rental and capital values. The study finds no evidence of a significant relationship between environmental and/or energy performance and rental and capital values. A small subset of 24 BREEAM-rated assets is also tested for significant price effects but a statistically significant effect is only confirmed for equivalent yields. Similarly, there was no evidence that the EPC rating had any effect on Market Rent or Market Value with only minor effects of EPC ratings on equivalent yields. The preliminary conclusion is that energy labelling is not yet having the effects on Market Values and Market Rents that would be expected if high EPC ratings were associated with substantial cost savings that are fully reflected in capital values and/or were readily available and taken into account by prospective tenants and buyers.     

Development of energy efficiency improvement in the Tunisian hotel sector: a case study

Tunisia expects a very large growth in energy demand but Tunisian' indigenous energy resources are limited. Today Tunisian' energy resources meet the total primary energy demand. In short time Tunisia will become an importer country for primary energy.Energy consumption and conservation in Tunisia has received growing attention in recent years. This paper presents the results and analysis from the data collected during the energy audits of a hotel unit located in the center of Tunis during the years 1987, 1996 and 2002. Two energy conservation measures were carried out to investigate the energy savings after two energy audits. The objective was to obtain a quantified energy saved from the effects of efficient technologies.Based on the findings presented in this paper it is suggested there exists significant energy savings potentials for the Tunisian hotel industry.     

The implementation of a multi-annual agreement for energy efficiency in The Netherlands

The paper analyses the implementation of the second multi-annual agreement for energy efficiency concluded in the Netherlands with industrial sectors for the period 2002–2010. It aims to investigate whether the multi-annual agreement MJA2, as a voluntary instrument, is sufficiently stimulating behavioral change at the target group level, and sustained transformation of production and management patterns towards significant gains in energy efficiency. The analysis uses a Structure–Conduct–Performance analytical framework for implementation processes in order to: (a) analyze the setting of implementation, actor roles, attitudes and interactions; (b) discuss emerging obstacles and positive experiences with the implementation of the three core policy instruments envisaged: energy management system, process efficiency measures, and ‘expansion themes’ measures. Based on this policy recommendations are formulated regarding voluntary agreements in general, using the Structure–Conduct–Performance framework of implementation analysis, and regarding how the implementation process of MJA2 in particular could be improved.     

The role of hydrogen in the road transportation sector for a sustainable energy system: A case study of Korea

This study analyzes the impact of the introduction of hydrogen as fuel in the road transportation sector of Korea. Since this sector is completely dependent on petroleum and alternative technologies such as fuel cell vehicles, hydrogen is one alternative fuel that could meet the challenges that Korea is facing due to rising oil prices. This study uses a scenarios-based energy economic model including the hydrogen path way as a sub-energy system to explore the energy system of Korea through 2044. This study also constructs six scenarios consisting of three government policies concerning carbon dioxide reduction and two oil price scenarios in order to assess the impact on hydrogen as fuel in the road transportation sector. The results of this study show that in a particular case (high Btu tax and oil prices) the share of hydrogen would reach 76% of the road transportation sector, and hydrogen would be produced mainly from renewable and nuclear resources via electrolysis facilities. It is also revealed that hydrogen is effective at reducing carbon dioxide, improving energy efficiency and contributing to the energy security of Korea.     

An estimation of the energy and exergy efficiencies for the energy resources consumption in the transportation sector in Malaysia

The purpose of this work is to apply the useful energy and exergy analysis models for different modes of transport in Malaysia and to compare the result with a few countries. In this paper, energy and exergy efficiencies of the various sub-sectors are presented by considering the energy and exergy flows from 1995 to 2003. Respective flow diagrams to find the overall energy and exergy efficiencies of Malaysian transportation sector are also presented. The estimated overall energy efficiency ranges from 22.74% (1999) to 22.98% (1998) with a mean of 22.82±0.06%$22.82\pm 0.06\%$ and that of overall exergy efficiency ranges from 22.44% (2000) to 22.82% (1998) with a mean of 22.55±0.12%$22.55\pm 0.12\%$. The results are compared with respect to present energy and exergy efficiencies in each sub-sector. The transportation sector used about 40% of the total energy consumed in 2002. Therefore, it is important to identify the energy and exergy flows and the pertinent losses. The road sub-sector has appeared to be the most efficient one compared to the air and marine sub-sectors. Also found that the energy and exergy efficiencies of Malaysian transportation sector are lower than that of Turkey but higher than Norway.     

Improving the institutional structures for disseminating energy efficiency in emerging nations: a case study for energy agencies in South Africa

Emerging nations are typically characterised by highenergy intensities despite significant energy efficiency potentials and numerous project oriented efforts to introduce energy-efficient technologies. The paper argues that successful technology dissemination needs appropriate institutional structures to reduce the related transaction cost. While a project-by-project approach risks to evaporate after completion, an energy agency would allow to bundle the know-how and information gained, ease access to funding and thus reduce information search cost and increase availability of efficient technologies. In a case study for South Africa, we examine the appropriateness of this concept for emerging nations. We discuss the underlying incentive problem from a new institutional economics perspective and suggest an approach to the design and implementation of operable energy agencies.     

The potential for greenhouse gases mitigation in household sector of Iran: cases of price reform/efficiency improvement and scenario for 2000–2010

Iran's demographic profile is sharply youth oriented and this upcoming generation's needs for employment and housing, coupled with low-energy efficiency vectors and consumption patterns, has created a constant rise in energy demand and greenhouse gas (GHGs) emissions in the residential sector. Improved energy efficiency as a national policy lynchpin for demand reduction and GHGs mitigation, has become commonplace. OPEC countries however, Iran included, suffer an obvious lack of consumer incentive because of low fuel prices. This study evaluates the twin impacts of price reform and efficiency programs on energy carriers’ consumption and GHGs mitigation in the Iranian housing sector. For this purpose, the demand functions for energy carriers, has been developed by econometrics process models.     

Energy use efficiency in the Indian manufacturing sector: An interstate analysis

This paper approaches the measurement of energy efficiency from a production theoretic framework and uses Data Envelopment Analysis to measure energy efficiency in the Indian manufacturing sector. Using data from the Annual Survey of Industries for the years 1998–99 through 2003–04, the study compares the energy efficiency in manufacturing across states, based on several models. The results show considerable variation in energy efficiency across states. Comparing the results across our models, we find that the relative pricing of energy does not provide the appropriate incentives for energy conservation. A second-stage regression analysis reveals that states with a larger share of manufacturing output in energy-intensive industries have lower energy efficiency. Also, higher quality labor force associates with higher energy efficiency. Finally, the power sector reforms have not yet had any significant impact on achieving energy efficiency.     

Energy performance based connection fees : A case study in New York State

Energy connection fees and rebates, based on the projected energy load or efficiency of new buildings are currently being considered as a policy option for promoting greater energy efficiency in new construction. In theory, a well designed system of connection fees and rebates could provide states and utilities with a revenue neutral means of creating direct financial incentives for the construction of more energy-efficient buildings. However, a recent case study in New York State found that, in practice, many of the most important features affecting building energy efficiency could not be easily incorporated in connection fee programmes, and that implementation of even a scaled down programme would require a level of administrative commitment and resources which would be difficult to maintain. Instead of implementing connection fee programmes, the authors recommend devoting more resources to an approach based on the combined use of building energy rating systems, enhanced codes with better enforcement, and strategically placed financial incentives and design assistance.     

How to use the clean development mechanism in the residential sector? The case of Brazilian refrigerators

The definition of simple and reliable emission baselines is crucial to foster clean development mechanism (CDM) projects. This paper assesses a project methodology that could boost large-scale energy-efficiency projects in the sector of domestic appliances. The baseline appliance is defined a priori in a “conservative” manner as the design option minimizing life-cycle social costs. The project methodology consists in a program which rebates new appliances according to their emission savings compared to the baseline. Is the proposed baseline acceptable? What could be the impact of such project on emissions? To address these questions, we look for insights from a hypothetical case on Brazilian refrigerators. A rational choice model is developed which assumes that households select design options minimizing life-cycle private costs. Results suggest that electricity tariff distortions and financial constraints might hamper project performances and allow significant free-riding. Low income households remain trapped into low-efficiency choices and high income households adopt outperforming appliances, whether rebated or not. However, simple solutions likely to improve the project methodology do exist.     

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.     

Barriers to energy conservation — the case of the Netherlands social housing sector

Energy conservation policy, more than energy supply policy, poses severe problems to both policy instruments and administrative organization. Barriers to effective policy derive from inadequate control structures and rationality types, as well as from social psychological factors. This case study on the Dutch housing sector considers policy organization, regulation and finance. Main barriers to effective conservation policy were found in three areas: the centralization and prevailing decomposition of control tasks, acting as a source of ineffectivity; the predominantly substantial rationality underlying regulation; and finally, the way people involved in the building industry make their interpretations of regulations and regulatory organizations.     

Accelerated electricity conservation in Juneau,Alaska: A study of household activities that reduced demand 25%

An avalanche destroyed the main hydroelectric transmission line to Juneau, Alaska in April, 2008. Diesel-generated electricity was substituted, causing electricity prices to increase 500% for 45 days. Electricity demand fell by 25% during the supply disruption. Most of the reduction occurred before the higher rates were implemented. Some conservation – about 8% of historic consumption – persisted after the transmission line was repaired and prices returned to normal. Consumers reduced energy use through a combination of new habits and technical improvements. A survey of residential consumers indicated that the average household undertook 10 conservation actions, with major changes in lighting, space heating, fuel switching, and water and appliance use. We propose a method for prioritizing conservation actions for promotion according to their impact in electricity savings (as a function of popularity, effectiveness, and persistence) and a dynamic framework for electricity use before, during, and after a supply disruption (i.e., both the magnitude and rates of change in electricity conservation).     

The role of hydrogen for the long term development of sustainable energy systems—a case study for Germany

Based on different current long-term energy scenarios the paper discusses the future perspectives of hydrogen in the German energy system as a representative example for the development of sustainable energy systems. The scenario analysis offers varying outlines of the future energy system that determine the possible role of hydrogen. The paper discusses the possibilities of expanding the share of renewable energy and the resulting prospects for establishing clean hydrogen production from renewable energy sources. Emphasis is given to the questions of an ecologically efficient allocation of limited renewable energy resources that can only be assessed from a systems analysis perspective. Findings from recent studies for Germany reveal a strong competition between the direct input into the electricity system and an indirect use as fuel in the transport sector. Moreover, the analysis underlines the paramount importance of reducing energy demand as the inevitable prerequisite for any renewable energy system.     

Developing sustainable residential buildings in Saudi Arabia: A case study

This paper assesses the energy and water consumption practices of existing housing in Saudi Arabia, with the ultimate aim of establishing guidelines for delivering sustainable residential buildings in the near future. In order to achieve this aim the current status of a typical Saudi residence (i.e. an apartment complex) is investigated in terms of energy and water consumption using simulation software packages. The paper then examines the prospects for applying various measures to the typical Saudi residence to manage energy and water use more sustainably. This research identifies several design-related faults common to Saudi Arabian house design. These faults contribute to an inefficient use of energy and domestic water resources. Finally, the paper puts forward a set of recommendations and guidelines, design-related and otherwise, to enhance the sustainability of future Saudi residential buildings.     

Energy efficiency in the Hellenic building sector: An assessment of the restrictions and perspectives of the market

The significance of bioclimatic architecture has become widely accepted since the 1970s and the implementation of its principles in practice is a key factor in order to achieve energy efficiency in the building sector. The way, however, from scientific acceptance to commercial utilization is not a straightforward one. This paper deals with the notion of bioclimatic architecture in buildings and investigates the aspects of this concept in Hellas. A sample of university researchers, building contractors and members of public organisations was interviewed using a standardised set of guidelines. The barriers to promoting bioclimatic design, role of the local government in the adoption process, level of environmental culture as well as perspectives of this concept in Hellas were the key areas of discussion in each of the interviews. The results from the data analysis reveal insufficient economic incentives, a lack in technical information as well as a lack in specific environmental policies that would foster the propagation of bioclimatic architecture.