SUPPORTING ENERGY EFFICIENCY
IN MAJOR ECONOMIES
G7 Hamburg Initiative for Sustainable Energy Security
Analytical Report on
Instruments for Energy Efficiency
This paper has been prepared by the International Partnership for Energy Efficiency Cooperation in
response to the mandate from G7 Members following the G7 Energy Ministerial in May, 2015.
The views expressed in this report do not necessarily reflect the views or policy of the International Partnership for Energy Efficiency Cooperation (IPEEC)
Secretariat or of its individual member countries. The paper does not constitute advice on any specific issue or situation. IPEEC makes no representation or
warranty, express or implied, in respect of the paper’s content (including its completeness or accuracy) and shall not be responsible for any use of,
or reliance on, the paper. Comments are welcome, directed to ailin.huang@ipeec.org.
© OECD/IPEEC 2016
Market-based Instruments for Energy Efficiency
© OECD/IPEEC 2016
Table of Contents
1.
Introduction.......................................................................................................................................... 3
1.1. Context ......................................................................................................................................... 3
1.2. Scope of this report .................................................................................................................... 3
2.
The case for energy efficiency market-based instruments .......................................................... 4
2.1. The case for energy efficiency ......................................................................................................... 4
2.2. The case for market-based instruments ......................................................................................... 4
3.
Competitive Tendering Schemes..................................................................................................... 6
3.1. Energy Efficiency Tender .......................................................................................................... 6
3.1.1.
Financing tendering schemes................................................................................... 6
3.1.2.
United Kingdom .................................................................................................................. 7
3.1.3.
Switzerland ........................................................................................................................ 10
3.1.4.
Germany ............................................................................................................................ 12
3.2. Evaluation of Tendering Schemes......................................................................................... 13
4.
White Certificates ............................................................................................................................. 15
4.1. Experience with national White Certificate schemes in the European Union ................. 18
4.1.1.
France ........................................................................................................................ 18
4.1.2.
United Kingdom ........................................................................................................ 21
4.1.3.
Italy ............................................................................................................................. 22
4.2. Evaluation of White Certificates ............................................................................................. 24
4.3. Wider impact ............................................................................................................................. 27
5.
Recommendations ........................................................................................................................... 30
List of Figures ........................................................................................................................................... 32
List of abbreviations and acronyms ....................................................................................................... 33
Bibliography .............................................................................................................................................. 34
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1. Introduction
1.1. Context
At the G7 Energy Ministerial meeting held in May 2015 in Berlin, the G7 countries underlined
that ‘energy efficiency is key to sustainable energy security and contributes to the
competitiveness of our economies’1. The Communiqué reaffirmed the commitment of G7 Energy
Ministers to the principles for energy security as agreed to at the Energy Ministers’ meeting in
Rome in 2014, and the Energy Ministers have agreed upon the Hamburg G7 Initiative on
Sustainable Energy Security.
Within this Hamburg Initiative, Ministers have decided to take up further actions to enhance
sustainable energy security. As a crucial pillar in achieving this goal, energy efficiency thus
encompasses three initiatives, one of which is to inquire cost-efficient energy efficiency
instruments.
As a first step the G7 German Presidency hosted a workshop on energy efficiency instruments
on 11th November in Berlin, where delegates from the United Kingdom, Switzerland, Germany,
Italy and France exchanged their experience and best practices with Tendering Schemes and
White Certificates.
1.2. Scope of this report
This report provides an overview of the implementation of tendering schemes and white
certificates. Specifically:
1. Tendering schemes in Switzerland, United Kingdom and Germany.
2. White Certificates (WhC) in Italy, France and the United Kingdom.
This overview will highlight some of the best practices in each scheme and provide
recommendation for further international collaboration and analysis.
1
G7 Energy Ministerial in Hamburg, Communiqué (May 2015)
3
2. The case for energy efficiency market-based instruments
2.1. The case for energy efficiency
Energy efficiency is an effective way of decoupling economic growth from unsustainable energy
demand and it is fast taking its place in the world as “the first fuel”. According to the International
Energy Agency (IEA)2, energy efficiency will contribute 50 per cent in carbon dioxide (CO 2)
emission reductions for the world to be on track for the 2 degree Celsius (2°C) trajectory. The
global investment in energy efficiency, which in 2014 was estimated to be between USD 310
billion and USD 360 billion3 with the potential to quadruple in size, further validates its position
as the world’s first fuel. In addition to being the most cost-effective way of reducing GHG
emissions, energy also delivers a range of economic, social, environmental and strategic
benefits on both the supply and the demand side4.
2.2. The case for market-based instruments
Out of the policy and regulatory toolkit available to policy makers, WhC and tendering schemes
are both policy tools that fall under the category of market-based instruments (MBIs). MBIs in
this context are policy instruments that internalise the cost of negative externalities due to the
inefficient use of energy through incentive mechanisms.
Well-designed and implemented, MBIs have a clear advantage of allocative efficiency compared
to regulatory tools. This means that the market mechanisms such as tradable WhCs and
tendering schemes, will work to allocate the energy savings where it is the cheapest - thereby
minimizing the overall cost for society to achieve energy savings5.
Both tendering schemes and WhCs share common features:



The EES define a savings target;
The responsible party is to take over responsibility to achieve the target;
The new EES establishes a search mechanism to identify suitable objects and energy
efficiency measures;
The new instrument establishes an implicit (hidden) or an explicit (open & transparent) way to
provide the financial base for energy efficiency measures6.
Given a specific context, each instrument has its benefits and drawbacks, and can be a more
adequate policy choice.
2
IEA (2015) World Energy Outlook Special Report on Energy and Climate Change
IEA (2014) Energy Efficiency Market Report
4
IEA (2014) Capturing the Multiple Benefits of Energy Efficiency
5
European Environment Agency. (2006). Using the market for cost-effective environmental policy: Market-based instruments in Europe.
6
Seefeldt et. al. (2015). From theory to practice: the development of the ‘Competitive Efficiency Tender’ in Germany. ECEEE SUMMER STUDY –
FIRST FUEL NOW.
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The benefits of tendering schemes are that:

All motivated and professional market participants, i.e. the Energy Efficiency Agents
(EEAs), including energy companies, dependent and independent ESCOs are allowed to
participate in the tendering scheme;
Successful EEAs will receive the best results, and will be motivated to do more;
Successful EEAs will establish a successful business case on energy efficiency;
No party will be obliged to establish a business case in which they are not interested
Parties, who do not feel inclined or who are not motivated, will not participate
A well designed instrument results in cost-effective level of support and keeps the amount
of support needed to a minimum; and
EETs initiate a strong search function, i.e. by leaving room for the best agent for the most
efficient solution to be identified in the EET.






The strengths of WhCs are as follows:



They initiate competition to identify the cheapest energy saving option;
WhCs are suitable to be designed for specific technologies and long payback projects; and
Certainty in energy savings to be achieved, as WhC are based on an Energy Efficiency
Obligation (EEO) that specifies an energy saving target7.
The following section will provide an overview and tendering schemes and White Certificates. It will
summarise the success factors of each instrument against the key principles of best practice MBIs as
outlined in table 1 below.
Table 1 Key principles of best practice MBIs
Cost-effectiveness
Flexibility
Ease of
implementation
Complementarity
with other schemes
Additionality
7
The scheme should be designed in such a way that it generates greater
economic benefits to the whole economy (i.e. liable parties, consumers,
Government) than costs.
The scheme’s coverage and the design of trading should allow for a broad
range of projects to be valorized and traded (in the case of trading) to ensure
that least cost opportunities are valorized.
Compliance burden for liable parties and implementation costs for the
government should be as low as possible. Public authorities can consider
transition phases with information and education campaigns to support the
introduction of the scheme. Reporting processes should be kept as simple as
possible.
The scheme should support, not inhibit, other policy goals whether they are
environmental, social, economic, or health related.
The scheme should aim to prioritise investments in energy efficiency
opportunities that would not have taken place otherwise.
Ibid.
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3. Competitive Tendering Schemes
Competitive tendering schemes consist of two parts: firstly mechanisms of financing, which
could be channeled through an energy saving fund (EEF) or other forms of budget allocation,
such auctions through the Capacity Market in the United Kingdom. And secondly, an energy
efficiency tender mechanism, which allocates the funding to project bids with the highest
possible energy savings given a pre-determined budget.
The following section will explain the mechanisms of energy efficiency tendering schemes
(EETs) and provide an overview of EETs that have been implemented in the United Kingdom,
Switzerland and Germany.
EETs can take a diversity of forms, and the policy choice for EETs and their design is
dependent on a number of factors. Nevertheless, there are some common themes, based on
which countries can learn from each other and derive best practices. Therefore the case studies
will elaborate specifically on 1) financing, 2) purpose, 3) eligibility criteria, 4) design and
implementation.
3.1. Energy Efficiency Tender
Through an energy efficiency tender, select parties, primarily energy service companies,
contractors, technology providers, energy agencies, engineering firms and municipal utility
companies are invited to submit bids for the planning and implementation of energy efficiency
projects. Interested parties submit offers for an energy savings amount and put in a bid for a
required budget, which usually comprise a share of about 20% to 40% of the total costs, e.g.
costs for information, planning, conceptual design, transaction, investment, and measurement
and verification. The ratio between requested budget and the energy savings offered is the
‘specific price’ of the offer and the winner may be chosen based on this ratio, i.e. minimum
requested budget for highest possible energy savings8.
Energy efficiency tendering (EET) has been in place in several countries including Switzerland,
the United Kingdom and is now in the process of being introduced in Germany.
3.1.1. Financing tendering schemes
For each periodic tender, there is a fixed budget set out for the programme. There are different
mechanisms through which this budget is mobilized. In Switzerland as in Germany, the EET is
combined with an Energy Savings Fund (EEF), which collects a mandated levy or contribution
from selected parties and then uses it to fund energy efficiency programs, such as EETs.
8
Seefeldt et. al. (2015). From theory to practice: the development of the ‘Competitive Efficiency Tender’ in Germany. ECEEE Summer study
proceedings.
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In the United Kingdom, the tendering scheme is integrated into the domestic capacity market
and does not rely on an EEF for financing. This is an interesting feat, both conceptually and
practically. By integrating the EET in the capacity market, the submission of a bid for EETs
(demand side solution) is treated as an equivalent of a bid from an energy supplier.
3.1.2. United Kingdom
The Energy Act 2013 introduced a pilot scheme Electricity Demand Reduction (EDR) to test
whether electricity savings from energy efficiency could be offered a financial incentive in a way
that is similar to the payments made by the Capacity Market for electrical capacity. The EDR,
which is currently in its second Phase, seeks to specifically target the challenge of peak winter
capacity, by auctioning off energy savings in these dedicated periods. The scheme is
administered by the Department for Energy and Climate Change (DECC).
Financing – explaining the capacity market
A capacity market was introduced in place in Great Britain since 2014. Based on projected
electricity demand in the future, it allows participants to bid in the amount of capacity they are
able to offer and a price at which they are willing to provide it until enough capacity has been
acquired to meet the projected demand. The price is set based on the bid that has the most
expensive unit needed to meet the demand and is referred to as the clearing price. All of the
successful bidders receive this clearing price in the form of regular “capacity payments”,
irrespective of the bidding price. This means that the bidder with the lowest bid price gets the
maximum profit.
These bids for capacity can come in the form of generated power from power plants as well as
in the form of reduced demand through efficiency, which means that capacity markets do not
have an inherent resource preference. They acquire the lowest cost resources needed to meet
demand. In keeping with this view, the EDR program was designed to supplement the capacity
market by reducing the level of demand placed on the electricity network. It seeks to test
whether electricity demand reduction has a role to play in the capacity market and to identify
suitable delivery mechanisms for it.
In the EDR system, participants register their bids in the auction by submitting their proposed
efficiency measures and the cost incurred. The success of the bid depends on whether the
proposed projects or technologies are eligible and if the proposed costs per unit of energy
savings are below a pre-determined “ceiling price”. Those, whose bids are accepted based on
these criteria, install their respective measures which are subject monitoring and verification by
the DECC. Successful participants will then receive funding in line with their bid (GBP/kW)
through payments in the form of installments spread across the duration from installation to
verification and delivery.
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Figure 1 Energy Efficiency in the Capacity Market
Purpose: The EDR Pilot has two objectives. Firstly to examine the viability of EDR in the
Capacity Market, and secondly to learn lessons for Government and wider stakeholders on the
design of EDR schemes9.
Eligibility: The pilot is aimed at non-domestic property retrofit and industrial energy efficiency,
and at projects in industrial energy efficiency, which would not have happened without external
funding. Projects that fall under these two areas must also fulfill the following conditions:




Projects together must cut electricity use by at least 100kW between 4-8pm business days
at winter peak;
Project has to be new, and have a ‘payback’ of over two years;
The investments must be long lived, which is defined as reducing energy for at least
16,000 hours; and
Projects cannot benefit from support of other government funding programmes as specified
in the Participant handbook10.
Implementation: In Phase I of the EDR Pilot, a fund of GBP 1.28 million was made available to
bids from 18 lead organisations and 22 individual projects across Great Britain. There is no cap
on the required amount. Instead, it is up to the participants to bid for the funding they would like,
whether that is 100% of the investment cost, or just a small amount. The first auction took place
in January 2015, with the bid ceiling set at GBP 300/kW and the lowest bid wins11.
Furthermore, the EDR allows for either deemed savings or metered savings12.
9
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/480548/EDR_Participant_Handb
ook_vpublication_30_November.pdf
10
http://www.wsp-pb.com/Globaln/UK/Images/091614%20Electricity%20Demand%20Reduction.pdf
11
http://www.wsp-pb.com/Globaln/UK/Images/091614%20Electricity%20Demand%20Reduction.pdf
12
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/449307/Appendix_A__Deemed_Measure_Overviews_and_Data_Calculations_v1_0.pdf
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It resulted in the purchase of 5,589 kW of winter peak capacity with a weighted average bid
price of GBP 229/kW. Energy savings could be measured as deemed savings or monitored
savings. While the successful projects are currently in the delivery phase, they are continuously
being evaluated to derive lessons for Phase 2 of the scheme.
Already, lessons learnt the first phase of implementation led to changes being introduced in the
design of Phase 2 of the scheme. Improvements primarily aim to reduce the administrative
burden, both to bidders and the regulars, thereby incentivizing more bidders to participate:




Project size: Smaller projects and bids are allowed to participate;
Administrative burden: Bidders are expected to provide lesser upfront evidence and
allowed to choose from two delivery periods;
Flexibility: It also allows participants to bid lower than planned savings to increase
flexibility, and to account for uncertainties at the beginning of the project bid; and
Financial incentive: payments were designed to be made sooner with up to 20% on
installation, 60% on verification and 20% after delivery. Previously in Phase 1, no upfront
installation payment was made.
The auction for the second phase of EDR took place on 21 January 2016, at the end of which
funding was offered to 24 lead organisations with 37 individual projects. Around 23,307 kW of
winter peak capacity was purchased and GBP 4.74 million was allocated in the auction. The
weighted average price bid saw a decrease from the first phase at GBP 203/kW. Most of the
proposed measures were in lighting.
Key insights
Continuous evaluation is underway to optimise the scheme. If this system of leveraging the
capacity market model proves to be viable, integration with demand side response and
other markets could be considered.
Additionality is accounted for through a list of specified Government funding programmes
which potential bidders are not allowed to participate in.
Reducing administrative burden is key to broaden participation. This helps identify the
cheapest energy saving option and drives down the weighted average bid price.
Policy design of tendering schemes needs to include the right mix of carrots and sticks. For
instance upfront payment of installation cost provides strong incentive for participants, while the
rest of the payments are only guaranteed for energy savings delivered.
Uses both deemed savings and monitored savings.
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3.1.3. Switzerland
Purpose: Under the framework of the Energy Strategy 2050, the Swiss Federal Office of
Energy introduced and carries out competitive tenders for annual energy savings called the
ProKilowatt program. The program was launched in 2010 and has since then auctions have
taken place annually.
ProKilowatt issues both tenders for projects and programs. Projects are dedicated to individual
companies in the industrial and service sector which would like to implement energy saving
measures within their company. Programs are bids submitted by associations or other operating
agents that bundle multiple similar projects into one program. Both open and closed, i.e. sector
specific, tenders are available for programs13.
Financing: The projects are financed through a surcharge on transmission costs of the high
voltage network. In 2015, the levy amounted to a maximum of 5 per cent of 1.5 cts/kWh.
Operating agents included consultancies, utilities and industry associations.
Eligibility criteria: Common eligibility criteria for projects and programs include the following:
-
Must be targeted at equipment, industrial plants, or housing;
Real energy savings must be achieved through energy efficiency measures;
The proposed required budget of the bidder must at least be 20.000 CHF;
The proposed energy saving would otherwise not be implemented (proof of additionality
required); and
The energy savings have to be proven by the bidder, i.e. proof of energy savings have to
exist or can easily be created through a quantitative model.
Implementation: In 2014, the budget of the call for tender amounted to CHF 24 million (EUR 21
million), which saw an increase to CHF 42 million (EUR 38 million) in 2015. Between 2010 and
2015, the program saw energy savings of on average 285 GWh per annum. The budget was
split across 105 programmes, covering 20 different types of energy efficiency measure, with
most of the savings coming from pumps (13%), pumps (11%) and lighting (11%). A good
auctioning price was achieved of 2.2cts/kWh14.
Table 2 provides a more detailed breakdown of the number of projects and programmes under
ProKilowatt from 2010 to 2015. The table provides two main insights.
The cost-benefit ratio of both projects and programmes are on an increasing trend. This is in
part due to a tightening of criteria and low-hanging fruits being reaped earlier on. Once the
13
Bundesamt für Energie (2009) Wettbewerbliche Ausschreibungen für Effizienzmaßnahmen im
Elektrizitätsbereich – Vollzugsweisung zur Durchführung von Ausschreibungen und Umsetzungen von
Massnahmen
14
ProKilowatt: Competitive tenders for electric efficiency, presentation at the G7 Energy Efficiency Workshop,
Berlin 11th November 2015
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simpler projects were completed, the more complex projects with higher support requirements
have higher chances of being chosen.
Over time, programmes have accounted for a growing proportion of total energy savings. This is
indicative of the strategy of regulatory authorities to see the tendering scheme under
ProKilowatt evolve into a conventional Energy Saving Fund (EEF), i.e. with targeted sectoral
schemes. Such an evolutionary approach aims to tap into a larger share of the savings potential
and aggregation of smaller projects under one programme bid enables economies of scale. As
part of this transition, ProKilowatt’s budget will see a different allocation between projects and
programmes over the course of time. Programmes currently represent about 70% of the budget,
with the goal of reaching 80% in 2025 and 90% in 203515.
Table 2 Breakdown of projects and programmes under ProKilowatt from 2010 to 2015
Competitive
tendering
schemes
2010
2011
2012
2013
2014
2015
Number
Projects
GWh
18
113
32
99
67
242
34
167
61
191
50
150
25
68
Rp/kWh
Number
Ø2.3
[0.4–21.6]
Ø4.5
[1.5–14.9]
Ø3.2
[1.1–8.5]
Ø4.1
[1.7–7.1]
Ø3.7
[0.7–7.8]
Ø3.9
[1.7–6.3]
Ø4.0
[1.4–5.7]
16
Programme
GWh
Rp/kWh
8
457
13
548
9
276
23
421
21
509
30
1270
Ø1.5
[1.0–2.1]
Ø1.7
[1.1–10.4]
Ø2.4
[1.4–5.0]
Ø2.9
[1.5–5.0]
Ø3.2
[2.1–4.3]
Ø2.6
[1.4–4.2]
Total
energy
savings
570 GWh
647 GWh
518 GWh
588 GWh
700 GWh
1488 GWh
Key insights
The approach of auctions can be effective, when designed effectively and with continuous
adaptation of the tender framework.
EETs are complementary to other Federal and Cantonal obligations of the energy law, as
only proposals that would have otherwise not been implemented are support (bidders have to
submit proof of additionality).
EETs offer a flexible approach, as allow for a wider range of technical measures.
15
16
ProKilowatt: Auswahl von Effizienzmassnahmen & Wirkungspotentiale
ProKilowatt: Ergebnisse, http://www.bfe.admin.ch/prokilowatt/06034/index.html?lang=de
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Aggregating and bundling similar individual projects (across one technological category
and one region) through programmes allows tapping into larger saving potential and achieve
economies of scale.
3.1.4. Germany
Purpose: Tendering schemes have been introduced in Germany in response to Article 7 of the
EU Energy Efficiency Directive (EED), and to create the necessary incentives for energy
efficiency improvements. Tendering schemes have been seen as a better solution than EEOs
due to the heterogeneity of the German market for energy services, which comprises of more
than 3,000 energy suppliers and nearly 500 ESCOs. Such a heterogeneous market structure
would have made it difficult to identify the adequate obligated party, with a fear for market
distortion, should a regulatory policy such as the EEO be introduced into an existing and
competitive market17.
The pilot project ‘STEP up!’ (STromEffizienzPotenziale nutzen – using energy efficiency
potential) focuses on reducing the demand for electrical energy efficiency and went into
implementation in 2016. There will be both open and smaller, closed tenders, while most of the
budget will go to the former. The closed tenders are designed to address specific themes with
known large potential and constraints, or alternatively, innovation potential. Similarly to the
Swiss model of competitive tenders, there will be both standalone and group projects. ‘STEP
up!’ is a complementary scheme to other measures of the German National Action Plan on
Energy Efficiency (NAPE).
Financing: Funding for the tender scheme is drawn from the German Energy Efficiency Fund
(EEF). Planned funding amounts to EUR 50 million for 2016, EUR 100 million for 2017, and
EUR 150 million for 2018. In 2018, extensive evaluation will be conducted in order to assess the
impact of the scheme and, if successful, refine a plan to continuation of the scheme - potentially
expanding into promoting energy efficiency measures in heating.
Eligibility criteria: Most of the tendering scheme will be open to all interested companies, and
institutions – only private individuals are excluded as bidders. There is neither minimum nor
maximum in terms of overall requested budget by the bidder. The required budget, however,
cannot exceed 30 per cent of total cost of the project. Payback period should be below three
years.
Implementation: ‘STEP up!’ has just entered the implementation phase at the beginning of
2016, hence no results can be reported on implementation itself. For now, estimates of
17
Seefeldt et al. (2015) ‘From theory to practice: the development of the ‘Competitive Efficiency Tender’ in Germany’, ECEEE
Summer Study Proceedings, pp. 433-443
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expected energy savings through ‘STEP up!’ are estimated at 26 to 51.5 Petajoule (PJ)18. The
allocated funds will be dispersed upon receiving proof of for the electricity saved. When reported
savings are below savings indicated in the bid, only a proportion of the allocated budget will be
paid out. At the moment no system of penalties is planned.
Key insights
The German tendering scheme is still in its nascent stage. This pilot consists mostly of open
tenders
3.2. Evaluation of Tendering Schemes
Cost effectiveness: By design, competitive tendering schemes scope out the most costeffective efficiency improvements from the pool of contenders through the use of specific price
as the determining factor in choosing the winners of the auction. This was seen with
Switzerland’s experience. The auctioning price was around 2.2 cts/kWh on average, which is
below the prevailing cost of generation per kWh in the country.
In the case of UK’s EDR pilot, the weighted average bid price decreased from GBP 229/kW in
the first phase to GBP 203/kW in the second phase. Both of these were well below the ceiling
price of GBP 300/kW, making the scheme significantly cost-effective even in the pilot stage.
Flexibility: Flexibility can be ensured through the use of open tenders that allow the bidders to
choose their own technologies and programs for implementation. Broader eligibility criteria for
the bids allow for greater flexibility. For example, based on the lessons learnt from the first
phase, the UK’s EDR program allowed participants to bid lower than planned savings and also
allowed smaller projects to participate.
Ease of implementation: From the vantage point of the policy-makers, tendering schemes
offer the advantage of easier implementation and smaller administrative burdens. In the case of
Switzerland’s ProKilowatt program, the projects were funded through a special levy thereby
freeing the state of financing burden. In the case of UK’s EDR pilot Phase 2, the administrative
burden was reduced for the participants too, as it required bidders to provide lesser upfront
evidence.
Since tendering programs choose from a reduced pool of eligible bidders, monitoring and
verification costs can be limited thanks to fewer projects. In addition, the system passes the
burden of identifying the cheapest energy savings to the bidders themselves. Not only does this
lessen administrative but also ensures greater flexibility for the bidders.
18
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Additionality: UK’s EDR pilot program accounted for additionality risks by mandating through
the eligibility criteria that participants should provide evidence to show that their proposed
improvements could not be realized without the support of the EET against a list of funding
incentive programmes that are outline in the EDR Participant Handbook. A similar strategy was
also employed by Switzerland’s ProKilowatt program which required participants to submit proof
of additionality in order to be eligible.
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4. White Certificates
White Certificates (WhC), also known as Energy Saving Certificates or Credits, are a type of
environmental commodity that certify that a certain amount of energy savings has been
achieved, when measured against a baseline or mandatory obligation, for instance the energy
efficiency obligation. The EU Directive on Energy End Use Efficiency and Energy Services (EC
2006) defines White Certificates as “certificates issued by independent certifying bodies
confirming the energy savings claims of market actors as a consequence of energy efficiency
improvement measures”.
Under this system, energy saving targets are set for energy suppliers or energy distributors who
may be referred to as obligated parties. The obligated parties fulfill these requirements by
implementing energy efficiency measures among their clients in the stipulated time frame. On
achieving the savings targets, they are awarded the white certificates. Parties who over-fulfill
their targets can sell their excess energy savings in the form of white certificates to those parties
who fall short of their targets.
White certificates can also be traded between eligible parties which include not only energy
suppliers and distributors but also Energy Service Companies (ESCOs) that do not have
obligations. This means that a white certificate is both an accounting tool to be declared and
surrendered to the appropriate authority, as well as a tradable commodity that can be bought
and sold either bilaterally or on the WhC market. Each certificate is a unique and traceable
commodity that carries a property right over a certain amount of additional savings and
guarantees that the benefit of these savings has not been accounted for elsewhere 19. White
Certificates are environmental commodities. Therefore they can only be obtained by obligated
and eligible parties and are not traded on usual commodity exchanges.
A WhC market consists of the following participants:
 A regulatory authority;
 Suppliers and/or distributors of gas and electricity, Energy Service Companies;
 End users (households, commercial and tertiary sectors); and
 Brokers (financial intermediaries).
Energy Efficiency Obligations
19
Energy Charter. (2010). Market Trading Mechanisms for Delivering Energy Efficiency (978-905948-087-2)
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An energy efficiency obligation (EEO) is a regulatory mechanism that requires obligated parties
to meet quantitative energy savings targets through implementing cost-effective end-use energy
efficiency20. An EEO usually sets annual energy savings targets for a long-term period, requiring
obligated parties to achieve specified percentage reductions in energy use over a longer period
of time. The key components in the design of an EEO are:




Sectors covered by the obligation, including the fuel types of energy covered and the enduse sectors in which energy savings measures may be implemented;
Level of the energy savings target to be achieved;
Obligated parties and how the overall energy savings target will be assigned to individual
obligated parties; and
Type and level of incentives or penalties applicable.
Savings from energy efficiency measures may be measured as deemed savings, calculated
savings or through funded programs. Energy efficiency obligations were introduced as early as
1994 in the United Kingdom. About 54 countries around the world including the United States,
Australia, Canada, India, China, Brazil, South Africa, Chile and several European states have
seen EEOs in the past twenty years. In the EU, the EU’s Energy Efficiency Directive
encourages member states to include within the framework of their national action plans an
energy efficiency obligation scheme. The Directive sets out for companies to achieve yearly
savings of 1.5 per cent of annual sales through such a scheme or to achieve equivalent energy
savings through other national mechanisms21.
Almost 90 per cent of the obligated parties are retailers while distributors constitute about 10-15
per cent22. 100 per cent of electricity, 52 per cent of natural gas, 9 per cent of transport fuels
and 20 per cent of heating oil are covered by the EEOs. Electricity is the only energy type that is
fully obligated under the regime in the EU, North America as well as in emerging countries.
Eligible sectors covered by EEOs include residential and commercial buildings, industry and
transport.
20
The Regulatory Assistance Project
European Parliament. (2012). Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency,
amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC Text with EEA relevance.
21
22
Duchemin, & Trovero. (2015, December). Worldwide Review of Energy Efficiency Obligation Schemes. Paper
presented at Association Technique Energie Environnement, Espaces Générations climat, COP21, Paris.
http://atee.fr/region/actualites/les-conferences-atee-sur-la-cop-21
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Figure 2 White Certificate energy market
Figure 3 EEOs in the EU
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4.1. Experience with national White Certificate schemes in the European Union
Tradable certificate schemes have been active in Italy since 2005 and in France since 2006.
The UK had a variation of the scheme since 2002 with limited trading. The following section will
focus on describing and analysing WhC in these three countries as they are the most advanced
programs of tradable WhC schemes to date.
4.1.1. France
Background: The French White Certificate scheme arose out of the French energy policy law
passed in July 2005 and is administered by the French Government and the Agence de
l'Environnement et de la Maîtrise de l'Energie (ADEME). White Certificates are a key part of the
French policy to reduce energy intensity by two percent per year until 2015 and then by 2.5
percent per year until 203023. It is also in line with national Kyoto Protocol targets and energy
security goals.
In preparation for the implementation of the EU Directive and savings targets, the gas and
electricity markets underwent a phase of liberalisation from 2000 onwards. Regulation of prices
for consumers remained, but the domestic market was opened up for competition in 2007.
Objective: The main objective of the scheme was to achieve energy savings in sectors of
dispersed activity such as buildings, industry, agriculture and transport.
Obligated Parties: An obligation of energy savings was set on energy suppliers for a three year
period, as a proportion of their sales. The designated eligible parties included local authorities,
National Housing Agency, social landlords and public ESCOs.
Eligible Projects: Obligated parties had the following options in order to comply with their
obligations: implement energy saving measures either in their own buildings and processes or
at their consumer’s premises, purchase certificates on the ESC market or delegate their
obligation. In addition, they could also choose to participate in pre-defined programs focussed
on training, information, innovation, fuel poverty etc. The obligated parties had the freedom to
choose their compliance path. Standardised and justification documentation (declaration of
honour) were made available only for the sake of control.
Calculation Method: The obligations and savings were measured in KWh cumac where cumac
refers to actualised energy savings, cumulated over real lifetime and discounted at the rate of 4
per cent. In case of obligated parties that choose projects from the catalogue of standard
measures (Opérations standardises), energy savings are calculated as deemed savings. This
method involves multiplying the number of installed measures by an estimated savings per
measure, which is derived from historical evaluations. In case of obligated parties that chose
23
Eoin Lees. (2014). French White Certificates and Energy Savings in the Transport Sector. The Regulatory Assistance Project.
18
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their own measures (opérations spécifiques), savings are calculated based on a detailed
application that the parties provide to ADEME for review.
Trading: The French program allowed for WhCs to be traded among obligated as well as
eligible parties.
Enforcement: Non-compliance incurred a penalty of 20€/MWh cumac.
The first phase of French WhCs span over three years from 2006 to 2009 with a target of 54
TWh of cumulative energy savings, discounted at 4 per cent over lifetime. The obligation was
placed on all energy retailers outside of the transport sector that supplied to end users not
covered by the EU Emissions Trading Scheme. At 80 per cent, the majority of the obligation
was placed on Électricité de France and Gaz de France. The other 20 per cent of the obligation
was imposed on small electricity, gas, and liquefied petroleum gas (LPG) retailers and all
domestic oil providers.
At the end of the three-year period, nearly 84 per cent of the target for energy savings was
achieved in residential buildings and 27 per cent through energy savings measures in electricity.
Thus energy retailers collectively achieved cumulative energy savings that were over 20 per
cent greater than the target of 54 TWh, clocking savings of more than 65TWh. Most of the
savings (58.5 TWh cumac or 91.4 per cent) were realized through standardized measures. Only
1.5 TWh cumac resulted from non-standardized measures.
Moreover, this was done at a cost equal to one-fifth of the penalty set by the French
Government. The estimated costs for the obligated companies in achieving their targets was 0.4
eurocents/kWh cumac. This constituted 20 per cent of the penalty that the companies would
have had to pay had they missed their energy saving targets for each kWh cumac of shortfall.
The obligated energy retailers could also meet their individual targets by generating energy
savings for their customers, by buying certificates on the WhC market, or by paying a penalty of
two eurocents/kWh cumac. Less than three per cent of the total certificates were traded in the
first period, and the price was usually between 0.3 and 0.35 eurocents/kWh cumac.
The second phase of the WhC scheme spanned from January 2011 to December 2013 and set
a much higher target of 345 TWh cumac accounting for almost a six-fold increase over the first
period. It was also expanded to include the transport sector in the form of road fuel importers
who faced an obligation of 10, 30, and 50 TWh cumac in the period from 2011 to 2013. The
electricity, gas, and LPG retailers had a target increased by a factor of 4.5.
Achieving sufficient competition was one of the challenges faced by this scheme in France. The
program was well known in the industrial sector but less in the tertiary sector. Based the French
experience with the first two periods of implementation, it was observed that simplicity of the
scheme is crucial. It needs to be easy to implement, cost-efficient and flexible for evolution.
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Key insights
Competition was a challenge in order to create liquidity in the market.
The French scheme was successful because EEOs addressed the high energy saving potential
sector of buildings.
Cost of monitoring and verification/administration cost were high, because of high degree of
flexibility of the scheme that allowed obligated parties freedom to choose their compliance path.
Largest obligation was placed on EDF (80%).
Figure 4 WhCs in France - targets and results (Source: Elodie TRAUCHESSEC, ADEME)
20
Market-based Instruments for Energy Efficiency
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4.1.2. United Kingdom
Background: The Energy Efficiency Standard of Performance (EESoP) system of 1994 can be
considered a precursor for the WhC scheme in the UK. The Carbon Emission Reduction Target
(CERT) in the United Kingdom was initially called the Energy Efficiency Commitment (EEC) and
it was introduced through Section 33BC of the Gas Act 1986 and Section 41A of the Electricity
Act 1989 and later modified by the Climate Change and Sustainable Energy Act 2006. The
program was originally connected to a debate on the state’s role in providing energy and related
services. However, it currently operates in an electricity and gas markets that are privatised.
Objective: The program was designed to get the market to deliver energy efficiency
improvement without considerable public resources. It was implemented in three phases, i.e.
2002-2005, 2005-2008 and 2008-2011.
Obligated parties: The savings targets were applicable to all gas and electricity suppliers,
which serviced more than 15,000 customers. This meant that the obligations applied mainly to
11 suppliers who cover 99% of the energy market.
Eligible projects: In order to keep the administrative costs low, obligated parties were expected
to choose from a limited number of measures mostly focused on insulation, given the emphasis
on the residential buildings sector. For this purpose, households were divided into two groups;
a) a priority group of pensioners, recipients of benefits, children aged under 16, b) and a second
group covering the rest of the consumers. The priority group action was focussed against
energy poverty. Obligated parties had to implement at least 50 per cent of their energy savings
to the Priority Group through structural or non-structural measures.
Calculation method: Since the program was centred on standard measures, it used the
deemed savings method.
Trading: This scheme allowed trading among suppliers, between suppliers and project
developers, as well as inter-temporal trades between the compliance periods.
Enforcement: In case of non-compliance, companies can incur a penalty of up to 10 per cent of
their turnover. In the first phase, the total energy reduction target was 62 TWh, which
accounted for almost one per cent of the UK’s total energy consumption. For the second period
between 2005 and 2008 (EEC2), the targets were doubled and eight suppliers were obligated to
meet an energy saving target of 130 TWh in domestic properties. The follow up program called
the Carbon Emissions Reduction Target (CERT), which covered the period from 2008 to 2011,
comprised of an undiscounted reduction target of 185 million tons of carbon dioxide (lifetime) by
2012.
For the second period, the savings target was surpassed by 44 per cent and was carried over to
CERT, amounting to almost 187 TWh energy saved and up to 2.1 MtCO 2 over project lifetime.
Costs were reported to be 23 per cent lower than originally expected on account of economies
21
Market-based Instruments for Energy Efficiency
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of scale and market transformation effects. The EEC2 was deemed highly cost effective, with a
consumer benefit of GBP 9 (lifetime) per GBP 1 spent and a Net Present Value/tCO2 of GBP 57.
Key insights
The number of market players, i.e. market structure, matters in informing policy choice. In the
UK EEOs were only placed on few actors with large market share.
Contextualised impact design: EEOs can be designed specifically to reflect and realise,
domestic priorities of energy poverty.
Doubling the energy saving target from Phase 1 to Phase 2 increased the liquidity of the
market for WhCs.
4.1.3. Italy
Background: The white certificates or “Energy Efficiency Certificates” (EEC) scheme was
introduced to Italian legislation by the Ministerial Decrees of 20 July 2004. The WhCs have
subsequently been amended and supplemented over the years, as the scheme evolved based
on market and policy demands.
Objective: The scheme was designed to combine the ‘guaranteed results’ of regulation (i.e.,
mandatory energy savings targets) with the economic efficiency of market-based trading
mechanisms. Another driver was the need to stimulate the ESCO market.
Obligated parties: Unlike France and the UK which imposed the EEO on energy suppliers, the
obligations in Italy apply to the energy distributors. They cover all end use sectors i.e.
residential, tertiary, industry and transport.
Eligible projects: The obligations began with deemed savings in the civil sector and expanded
to include metered savings for industrial projects.
Calculation method: Unlike the cumulative measurement in France and the UK, Italy
measures annual energy savings. The savings are determined as deemed savings from
standard projects or as scaled or metered savings from engineering estimates on non-standard
projects.
Trading: The Italian system allows for trading of WhCs among obligated as well as eligible
parties.
Enforcement: Non-compliance attracts cost recovery in the range of 88.92 -100 EUR per toe of
savings shortfall. The system entered into force in January 2005 for a five-year period. On the
basis of the positive results achieved, the scheme was extended until the year 2012 after some
22
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improvements to its components. Overall, the obligations mandated savings of around 1.1
million toe.
The scheme resulted in energy savings which were almost double that of the target at around 2
million toe. Out of these 78 per cent came from electricity, 18 per cent from natural gas and 4
per cent from other fuels. In addition, the scheme was also instrumental in stimulating the
market for ESCOs with 75 per cent of the savings originating from them. Around two thirds of
total savings were accounted for by the potentials in ‘low-hanging fruit’ in the commercial and
household sectors.
In addition, around 2.500 transactions of certificates traded in the first two years with an average
weighted price of 61 EUR/toe. For end users, these translated into 5 to 6 eurocents/kWh of
electricity and natural gas saved.
Key insights
The main driver for the WhC scheme was the desire to stimulate the market for ESCOs. The
scheme succeeded in doing so, as 75% of the total energy savings achieved originated from
ESCOs.
The WhC scheme here was targeted at distributors, rather than suppliers, implying that for
different kinds of market structures the obligated party should be targeted differently.
Figure 5 WhC in Italy - Issued certs & energy savings (000s) (Source: Dario Di Santo, FIRE, Italy)
23
4.2. Evaluation of White Certificates
It is difficult to isolate and quantify the direct impact of White Certificates on energy savings,
market transformation, and energy prices within the broader energy efficiency policy mix that
includes taxes and subsidies. While there has not been any econometric analysis to produce an
empirical evaluation of White Certificates, several studies have evaluated the European
experience with these schemes based on ex-post assessments. Table 2 below provides an
overview of all the WhC schemes discussed in the prior section. On the basis of the available
data and the ex-post assessments, the following section will analyse WhC based on the key
principles of MBIs outlined in section 2.324 of this report as well as the wider impact of WhC.
Table 3 White Certificates at a glance
COUNTRY
PERIOD
FRANCE
2006-2009
2011-2013
UNITED KINGDOM
2015-2018
2002-2005
ITALY
2005-2008
2005-2012
Savings Target
54TWh
Obligated
Parties
More than 2400 energy suppliers
(electricity, gas, heating and cooling with
annual sales greater than 400GWh; LPG
sellers with annual sales >100GWh) and
transport fuel suppliers.
6 electricity and gas
suppliers with greater than
50,000 customers;
75 electricity and
gas distributors
with more than
50,000
customers.
Target Sectors
All except
transport
All
Residential buildings
All
Resultant
Savings
65TWh
460TWh
Penalty/CostRecovery
Buy-out of 0.02 €/kWh
24
345 TWh
700TWh
-
62 TWh
-
130TWh
187 TWh
Penalty up to 10% of
companies’ turnover
1.1 million Toe
2 million Toe
Cost recovery
88.92 -100 € per
toe
Six key principles: Cost-effectiveness, flexibility, ease of implementation, equity, complementary with other
schemes, additionality
Market-based Instruments for Energy Efficiency
© OECD/IPEEC 2016
Cost-effectiveness
Following the completion of the first obligation period (2008-12), research by Giraudet and Finon
using cost estimates provided by obligated parties, concluded that in all countries, energy
efficiency measures were delivered cost-effectively with the benefits outweighing the costs – as
shown in table 3 below25.
This table also highlights differences between countries: British energy suppliers bear 73 per
cent of total costs (at 0.67 c€ per kWh saved), while French suppliers only 10 per cent (at 0.39
c€ per kWh saved). This gap can be partly explained by the absence of capped energy prices in
Britain. In the case of Italy, the way costs were split between the end-customer and the
obligated party was not transparent.
The ability to pass on costs or not bears important policy implications, as explained further on, in
the Recommendations section.
Table 4: Overview and breakdown of program cost for White Certificates
United Kingdom
2005-08
France
2006-09
Obligated Party Cost
1280
210
Customer cost
325
504
Other party cost
153
1305
857
Total Costs
1,758
2,019
3,981
End-use energy savings (TWh)
192
54
97
Monetary value of energy savings (M€)
13,020
4,320
12,378
CO2 savings (MtCO2)
72.6
20
NA
Total Benefits (M€)
20,702
5,241
-
Cost-effectiveness (c€ spent per kWh
saved)
0.91
3.7
4.1
Program Costs (M€)
Italy
2005-10
3124
Program Benefits
25
Louis-Gaetan Giraudet, D. Finon. European experiences with white certificate obligations: A critical review of existing
evaluations. 2014. <hal-01016110>
25
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Flexibility implies that a scheme allows for a range of different projects to be eligible and
credited for. Energy companies are able to identify and address the context-specific market
failures in energy efficiency in order to meet their energy savings targets.
In the three countries studied, most of the measures were expected to come from insulation
measures as they are believed to be the cheapest potentials to address. However, it was found
that major savings came from insulation in Great Britain (75 per cent), compact fluorescent light
bulbs (CFLs) in Italy (54 per cent), and heating appliance replacements in France (68 per cent).
This may be explained by the differences in infrastructure and construction styles prevalent in
the different countries. For example, in the case of buildings, the British style of cavity wall
insulation delivers energy savings at a cost that is ten times lower than solid wall insulation that
is prevalent in France. This is also one of the primary factors responsible for the greater cost
effectiveness of the British program. The Italian, UK and French scheme proved to be
sufficiently flexible to ensure the most cost-effective projects were valued.
Ease of implementation
As study has shown that WhCs deliver energy savings less cost-effectively than the first-best
energy tax, but more cost-effectively than a pure subsidy on energy efficiency yielding the same
level of energy savings26. In addition, they were also found to induce a smaller rebound effect
than subsidies as well as a lower increase in energy price than a tax regime. While this
enhances the acceptance level as an instrument, it may not reflect the externality accurately.
In addition to this, it is important to consider the choice of unit. For example, in France and Italy,
efficiency improvement targets are formulated in terms of kilowatt-hours of energy saved, while
in the UK the targets are labelled in carbon dioxide emission savings. Anecdotal evidence
suggests that the EEOs in the UK better reflects the price of the externality.
Complementarity with other instruments
EEOs coexist with the E.U. CO2 Emissions Trading System. Research27 has shown that
combining the two instruments minimises the overall cost to the economy. In fact, combining a
tighter cap on CO2 emissions with EEOs has shown to have a more equalising effect by
cancelling out (partially) the opposing wealth flows between utilities and consumers (see figure
5 below)28. This shows that EEOs and WhCs are highly compatible with other policy instruments
and can improve the cost-effectiveness of the policy framework.
26
Louis-Gaetan Giraudet, D. Finon. European experiences with white certificate obligations: A critical
review of existing evaluations. 2014. <hal-01016110>
27
See study by The Regulatory Assistance Project – add reference 16 and 17 are the same report. 16 is
not required.
28
Cowart, R., Bayer, E., Keay-Bright, S., and Lees, E. (2015). Carbon Caps and Efficiency Resources:
Launching a “Virtuous Circle” for Europe. Brussels, Belgium: The Regulatory Assistance Project.
Retrieved from http://www.raponline.org/document/download/id/7515
26
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Figure 6 Interaction of EEOs with the EU ETS
4.3. Wider impact
Liquidity of the market for WhCs
The liquidity of the market for WhCs, which can be indicated by the volume of certificates
traded, is an important factor in driving the overall cost-effectiveness of a WhC scheme given a
specific target. Higher liquidity in the market for WhCs facilitates the allocation of energy savings
to the measures, which are least costly.
In the early stages of the EEO and WhC, the volume of trade tends to be low as the energy
saving targets are low. As soon as these targets are raised, the volume of trade immediately
goes up, which demonstrate that the actors in the market are keen towards using market
mechanisms to ensure to achieve energy savings at the lowest possible cost.
In addition to the level of energy saving targets, there are two other factors, which influence the
trade volume: firstly the obligation party, and secondly the cost heterogeneity, i.e. amongst how
many obligated parties the cost of the instrument is split.
27
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2.
© OECD/IPEEC 2016
In France and Great Britain obligations are placed on energy suppliers, who
are closer to the end-users than in Italy, where they are imposed on energy
distributors29.
The cost heterogeneity among the obligated parties is a factor that influences
horizontal trade of white certificates, was found to be low in France and Great
Britain.
Table 5 WhC - Trade volumes summary (Period 1)
Great Britain
France
Italy
Transactions between
obligated parties i.e.
horizontal trade
None
4%
75%, mainly
through spot and
over-the-counter
markets.
Transactions between
obligated parties and energy
end-users
Financial incentives
for purchase of
energy efficient
equipment.
Information and
advice,
advertising for tax
credits, financial
incentives.
Reduction
coupons,
Information
campaign.
Market transformation
Research indicates that WhC schemes have impacted the market for energy efficiency products
– as evidenced by qualitative surveys conducted on the British (2008-2011) and French (20112013) obligations schemes (there are no such surveys are available for Italy). On the basis of
ex-post assessments for these periods, significant market transformation has been observed in
Great Britain. A sizeable stock of buildings received insulation improvements and CFLs and
efficient appliances were adopted widely. The markets for integrated digital televisions and
stand-by savers were also observed to have undergone transformation in a very short period of
time. In Italy, water economizers and CFLs underwent increased diffusion. However, no
substantial shift in technology adoption that could be attributed to EEOs was recorded in
France30.
Notwithstanding these changes, no overall causal relationship between WhC and market
transformation, in particular technology adoption, has yet been formally tested or evidenced in
any country. This is due to the difficulty to isolate the specific effect of WhC on market
transformation from broader socio-economic drivers.
29
Louis-Gaetan Giraudet, D. Finon. European experiences with white certificate obligations: A critical review of existing evaluations. 2014.
<hal-01016110>
30
Further analysis is required to understand the reasons behind this.
28
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Behavioural change
Experience with WhC schemes indicates that consumers are responsive to price increases or
financial gains induced by the scheme. In France, more than 75 per cent of survey respondents
considered that financial incentives were decisive. Saving money was the main motivation for
more than 60 per cent of householders.
Contrary, when the cost of meeting the obligation (or a part of it) is passed to the endconsumers through higher energy price, it provides them with an incentive to adopt behaviours
that include a more judicious use of energy. This in turn forces retailers to develop broader
energy service business models to deal with their lower revenue levels. However, no data is
available on this from the three schemes.
29
5. Recommendations
Our evaluation of competitive tendering schemes and White Certificates show that both can be
effective policy instruments in advancing energy efficiency improvements. Their effectiveness
depends on a multitude of factors in their design and context. There is no off-the-shelf solution
for one policy, but they have to be tailored to a given context and time.
Thus factors that define the success of a scheme can be categorized by factors shaping policy
choice and those shaping the policy design:
1. Policy choice: The choice for one instrument or the other need in a country or context
need not be exclusive of the other, but can be part of a long-term evolving policy
framework (i.e. when to choose which instrument for which purpose). Thus in order to
improve policy choice, countries can learn from each other by sharing their experience
on the suitability of each policy given the following factors:
i.
ii.
iii.
Target priorities: least costly energy saving solution, reducing peak demand
for energy, stimulating innovation, stimulating ESCO market;
Target sector: electricity sector, building, transport, agriculture, services,
industry, or all sectors; and
Market structure: heterogeneity of energy sector, maturity of ESCO market.
2. Policy design: how a policy is designed from the outset has immediate implications with
regards to the cost of the scheme and overall effectiveness in achieving the defined
policy objective. Moreover the policy design must be tailored in order to each specific
context. In our evaluation of schemes implemented, we were able to highlight some
factors that played an important role in influencing the cost and effectiveness of the
schemes, namely31:
i.
Scheme framework: obligated parties chosen, optimal mix of closed versus
open tenders (see tendering schemes in Switzerland, as well as WhCs in
France and Italy), energy saving target (see WhC in France), eligibility
criteria;
ii.
Application process: best practices in accounting for additionality,
application documents (see tendering schemes in the UK, Switzerland); and
iii.
Monitoring and verification: choice of optimal mix of deemed savings and
metered savings (see WhC in all three countries, and UK for tendering
schemes).
31
Note: a complete framework for the policy design features of WhCs can be found in the study by The Regulatory
Assistance Project (2012) ‘Best Practices in Designing and Implementing Energy Efficiency Obligation Schemes’. It
covers design considerations for policy objectives, legal authority, fuel coverage, sector and facility coverage,
energy saving target, obligated parties, compliance regime, performance incentives, eligible energy savings,
eligible energy efficiency measures, measurement, verification and reporting, trading of energy savings, and
funding.
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Our evaluation in the above has reflected on a number of these factors, but given the fairly
novel nature of both instruments, especially tendering, there still remain significant gaps of
information and the need for more detailed understanding of both instruments.
As next steps we therefore recommend to conduct further research and analysis on the success
factors of White Certificates and tendering schemes, using the success factors and hypotheses
outlined below as a starting point. Secondly to engage in a dialogue with governments for a
more context specific analysis of these two instruments to assess the suitability and
effectiveness of each instrument.
IPEEC suggests that the G7 further considers the need for and effectiveness of these various
market-based instruments, drawing from the above analysis and further research and
consultation. IPEEC is available to support the G7 in 2016 in evaluating the various
considerations for such schemes.
31
List of Figures
FIGURE 1 ENERGY EFFICIENCY IN THE CAPACITY MARKET ................................................................................. 8
FIGURE 2 WHITE CERTIFICATE ENERGY MARKET ................................................................................................ 17
FIGURE 3 EEOS IN THE EU ....................................................................................................................................... 17
FIGURE 4 WHCS IN FRANCE - TARGETS AND RESULTS (SOURCE: ELODIE TRAUCHESSEC, ADEME) .......... 20
FIGURE 5 WHC IN ITALY - ISSUED CERTS & ENERGY SAVINGS (000S) (SOURCE: DARIO DI SANTO, FIRE,
ITALY) ................................................................................................................................................................. 23
FIGURE 6 INTERACTION OF EEOS WITH THE EU ETS .......................................................................................... 27
TABLE 1 KEY PRINCIPLES OF BEST PRACTICE MBIS ............................................................................................. 5
TABLE 2 BREAKDOWN OF PROJECTS AND PROGRAMMES UNDER PROKILOWATT FROM 2010 TO 2015..... 11
TABLE 3 WHITE CERTIFICATES AT A GLANCE ....................................................................................................... 24
TABLE 4: OVERVIEW AND BREAKDOWN OF PROGRAM COST FOR WHITE CERTIFICATES ............................ 25
TABLE 5 WHC - TRADE VOLUMES SUMMARY (PERIOD 1) .................................................................................... 28
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List of abbreviations and acronyms
ADEME - Agence de l'Environnement et de la Maîtrise de l'Energie
AFD - Agence française de développement
ATEE - Association Technique Energie Environnement
CERT - Carbon Emission Reduction Target
CFL - Compact Fluorescent Light Bulb
CHF - Confoederatio Helvetica Franc (Swiss franc)
COP - Conference of Parties
CUMAC - “cumulé et actualises” or “Cumulated over product lifetime and Discounted at the
market”. Ideally, it is calculated by multiplying by 8 to determine savings over 10 years.
DECC - Department for Energy and Climate Change
DSM - Demand Side Management
EDR – Energy Demand Reduction
EU ETS - European Union Emissions Trading Scheme
EBRD - European Bank for Reconstruction and Development
EEC - Energy Efficiency Certificate
EEF - Energy Efficiency Fund
EEO - Energy Efficiency Obligation
ESCO - Energy Service Company
EU ETS - European Union Emissions Trading Scheme
GBP – British Pound
GDP - Gross Domestic Product
GHG - Greenhouse Gas
GIZ - Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH
Gtoe - Giga Tonne of Oil Equivalent
GW - Giga Watt
IEA - International Energy Agency
INDC - Intended Nationally Determined Contribution
IRENA - International Renewable Energy Agency
IPEEC - International Partnership for Energy Efficiency Co-operation
LPG - Liquefied Petroleum Gas
MBI - Market-based instruments
Mtoe - Mega Tonne of Oil Equivalent
NAPEE - National Action Plan for Energy Efficiency
RAP – The Regulatory Assistance Project
Toe - Tonne of Oil Equivalent
TWh - Tera Watt-Hour
UNFCCC - United Nations Framework Convention on Climate Change
UN FI - United Nations Environment Program Finance Initiative
UN PRI - United Nations Principles of Responsible Investment
WhC - White Certificate
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http://www.iea.org/
http://www.theenergycollective.com/
http://www.bfe.admin.ch/prokilowatt/
https://www.emmy.fr/
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