Measuring Energy Efficiency in EU ETS and White Certificates Paolo Bertoldi , European Commission, Directorate General JRC. Introduction.
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A possible market-based policy portfolio oriented towards end-use energy efficiency could comprise energy-savings quota for some category of operators (distributors, suppliers, consumers, etc.) coupled with a trading system for energy-efficiency measures resulting in energy savings. The savings would be verified by the regulator and certified by means of the so-called “white” certificates (tradable certificates for energy savings).
In Europe variations of this policy mix have been introduced in Italy, Great Britain, and since July 2006, also in France. The Netherlands is currently considering the implementation of a white certificate system. In Flanders (Belgium) and in Ireland there are savings obligations imposed on electricity distributors without certificate trading option; saving obligations on electricity and heat distributors in Denmark.
Italy: all end-use sectors eligible (but “50 % constraint”); an illustrative list of eligible projects; projects contribute to the achievement of targets for up to 5 years (with only some exceptions). So far: generation and distribution systems for various energy carriers (29%); households electricity consumption (28%); energy consumption for heating purposes in the households and the commercialsector(20%) and public lighting (19%). Targets achieved (mostly early action), surplus banked.
Great Britain: only domestic users anywhere in the UK, at least 50% “priority group”. Projects can be related to electricity, gas, coal, oil and LPG;non-exclusive list of measures. EEC-1: 56 % of savings from building insulation (wall and loft), 25 % CFLs, 11 % appliances, 9% heating measures.
France: all energies (incl. fuel) and all the sectors (incl. transports and excluding installations covered by ETS) are eligible; excluded - ETS installations, fuel substitution between fossil fuels, measures resulting just from measures implemented only to conform to current legislation; savings above 3 GWh over the lifetime of a project are certified, there is a possibility to pool savings from similar actions. FIRST YEAR OF OPERATION!
UK (EEC 2, 2005-2008) eligible projects
Unit of target
TWh fuel weighted energy benefits
Duration current phase
Residential consumers only
50 % from ‘priority group’ (low income consumers on social benefits).
50 % from reduction in own energy vector (electricity and gas).
Electricity and gas suppliers above 50,000 residential customers served
Electricity and gas distributors above 100,000 customers served
Electricity, gas, LPG, heat, cold and heating fuel above 0.4 TWh/y
No certificates; Obligations can be traded; Savings can be traded after own obligation met; No spot market; One-way trade in national emission trading scheme;
Spot market sessions;
only bilateral exchange
Energy regulator OFGEM
Energy regulator AEEG + electricity market operator GME
Ministry of Industry + ADEME
No specific guidance on how penalty would be calculated;
The penalty can arrive up to 10 % of the supplier’s turnover.
Fixed by the Regulator according to criteria such as: the actual possibility to meet the target, the magnitude of the non-compliance, the state of affairs of the non-compliant party.
3 valuation (measurement and verification, M&V) approaches:
Most of the projects submitted to date are of the deemed saving and engineering method variety. There is ex-post verification and certification of actual energy savings achieved (yearly)
What Would Have Happened eligible projectsMeter
Watt-hour (Wh) meters & What Would Have Happened (WWHH) meters
Common issue in programme evaluation (e.g. DSM programme) and white certificates programmes (creating a real market for “energy savings”);
Methodologies have been developed both for individual projects (IPMVP) and for programmes and polices (based on bottom up methods with correction for free riders and spill over effect, life of the measure and persistence of the measure, using deem values, engineering models with partial measurement, and full measurement). Benchmarking is also under development, this is one of the best way to capture the efficiency improvement of complex systems such as production plants, and to measure the impact of energy management practices,
Methodologies for the assessment of market penetration of efficient technologies (in particular following labelling/classification schemes)
Expected Cash-flow eligible projects
Organization Risk Tolerance
Uncertainty w/ no risk mgmt
$0 for M&V
Uncertainty w/ some risk mgmt $X for M&V
Uncertainty w/ more risk mgmt
$2X for M&V
M&V Risk Management @ a reasonable cost
Note: two-way fungibility will compromise the environmental soundness of green electricity and of energy saving targets