White certificate schemes – can commodification and financialisation of energy efficiency solve energy market failure, or risk just adding to it? (2-148-13)
Iain MacGill, UNSW (University of NSW), AustraliaStephen Healy, University of NSW, Australia
Robert Passey, University of NSW, Australia
This is a peer-reviewed paper.
Keywords
white certificates, market failures, energy savings certificates, baseline, financialisation, commodificationAbstract
In this paper we consider the underlying theory, rationale and mixed performance to date of policy measures that establish a trading market in ‘energy savings.’ Such approaches, described by terms including White Certificates, Energy Efficiency Portfolio Standards, Energy Savings, and Energy Efficiency Certificate Trading, are receiving growing policy attention and have been implemented in jurisdictions including Europe, the United States and Australia. They are often portrayed as a market-based energy efficiency solution to energy ‘market failure.’ This paperhighlights the many challenges – technical, economic and social – of such ‘designer’ markets that attempt to commodify a potential wide range of heterogeneous energy savings despite the many challenges in measurement and verification of additionality. However, there are broader challenges in the complex interaction between technologies and behaviours inherent in energy use and in the financialisation of such complex, interacting, uncertain and highly abstracted outcomes. In particular, the role of commodification and financialisation in the Global Financial Crisis suggests caution in suchapproaches. Energy savings is a particularly abstract concept and hence potentially highly problematic in this regard. It is concluded that considerable care is required with such approaches to energy efficiency policy lest governments’ merely add yet another market failure to those already existing for energy efficiency. More importantly, policy makers will need to move beyond framing energy efficiency within conventional economic terms of failure within 'energy commodity' markets, and address the broader challenge of engaging energy users on their unsustainable behaviours including, notably, the constant fuelling of the desire for further energy services against which energy efficiency can have only limited impact.
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Panels of the eceee 2013 Summer Study:
Panel 1. Foundations of future energy policy
Panel 2. Energy efficiency policies: What delivers?
Panel 3. Local action and national examples
Panel 4. Transport and mobility: How to deliver energy efficiency
Panel 5B. Cutting the energy use of buildings: Policy and programmes
Panel 6. Appliances, product policy and ICT
Panel 7. Monitoring and evaluation
Panel 8. Dynamics of consumption
Panel 5A. Cutting the energy use of buildings: Projects and technologies
