White certificates and white certificate trading schemes as greenhouse gas mitigation policy options for South Africa

 

 

Emily Tyler^I; Michelle du Toit^II; Zelda Burchell^III

^IClimate change economist
^IIClimate Change Practice Genesis Analytics, SouthSouthNorth Projects Africa
^IIIWSP Environment & Energy

 

 

---

ABSTRACT

Energy efficiency activities driven by White Certificate Trading schemes (WCT) achieve the objective of conserving energy, and in most circumstances, also that of reducing greenhouse gas (GHG) emissions. The potential therefore exists that both objectives could be targeted by a single policy mechanism. Energy efficiency activities are important from a GHG mitigation perspective as they represent some of the least costly GHG mitigation activities available to economies.
However, there are some significant differences between the use of a direct policy instrument to target GHG emissions mitigation, and the use of an indirect instrument such as WCT, whose direct policy objective is to achieve energy efficiency. Most importantly, WCT utilises intensity targets, whereas GHG mitigation is required by science to comprise absolute reductions. International experience does however suggest that white certificates can be fully fungible with a GHG mitigation policy instrument such as an emissions trading scheme, as long as double counting rules are firmly in place, and the design of the schemes are compatible.
Given that 80 percent of the South African GHG emissions are energy related, with energy efficiency measures in industry, commerce and the residential sector representing the bulk of negative cost mitigation options available in the economy, energy efficiency has an important role to play in the country's mitigation strategy.
This paper presents results on research into WCT as a policy option for South Africa conducted in 2008 and presented at the Climate Change Summit 2009. It investigates in particular the Electricity Conservation Scheme (ECS) as an option for incorporating a WCT mechanism.
There is limited experience and therefore analysis on WCS available to date, and even less on the potential interaction and linkages of WCS and emissions trading schemes. This paper therefore identifies significant scope for future research on this topic.

Keywords: energy efficiency, greenhouse gas, White Certificates, White Certificate Trading schemes

---

 

 

Full text available only in pdf format.

 

 

Acknowledgements

This paper, derived from a report, is the result of collaboration between the Energy Research Centre (ERC), Environmental Policy Research Unit (EPRU) and Genesis Analytics. The ERC and EPRU are both research units at the University of Cape Town. The research by Genesis Analytics was commissioned by the ERC, drawing on National Research Foundation (NRF) funding which is gratefully acknowledged.

 

References and bibliography

Better Regulation Commission (undated). Regulating to Mitigate Climate Change, a Response to the Stern Review.         [ Links ]

Capozza, A. (2006). Market Mechanisms for White Certificates Trading. International Energy Agency Implementing Agreement on Demand-Side Management Technologies and Programmes. IEA DSM Task X1V Final Report.         [ Links ]

Dunn, Z., du Toit, M., and Tyler, E. (2008). Emissions trading as a policy option for greenhouse gas mitigation in South Africa. Unpublished.         [ Links ]

Department of Minerals and Energy (2005). Energy Efficiency Strategy of the Republic of South Africa. South Africa.         [ Links ]

Eskom. (2008b). Fact Sheet: Power Conservation Programme - managing demand and making space for growth South Africa's Current Energy Crisis.         [ Links ]

Eskom (2008c). Developing a Power Conservation Programme for South Africa. Presentation to NERT, September 2008.         [ Links ]

EuroWhiteCert Project., (2006). White Certificates and interactions with other policy instruments Work Package 3.3., European Commission Intelligent Energy Programme.         [ Links ]

EuroWhiteCert Project., (2006). White Certificates: concept and market experiences. March 2006; Accessed October 2008, www.eurowhitecert.org.         [ Links ]

EuroWhiteCert Project., (2006). White Certificate Schemes and European Emissions Trading System (2006), Work Package 3.1. European Commission Intelligent Energy Programme, March 2006.         [ Links ]

Lees, E., (2007). European Experience of White Certificates. World Energy Council.         [ Links ]

OFGEM. Carbon Emission Reduction Target (CERT) (accessed November 2008) www.ofgem.gov.uk/Sustainability/Environment/EnergyEff/Pages/EnergyEff.aspx.         [ Links ]

National Business Initiative (2008). Carbon regulatory options in South Africa. Briefing paper for members.         [ Links ]

Oikonomu V., Rietenberg M., and Patel M., (2006). An ex-ante evaluation of a White Certificate scheme in The Netherlands. Journal on Energy Policy. Volume 35. Pp. 1147 - 1163.         [ Links ]

Oikonomou, V., (2004). The 'White and Green' Consortium. A qualitative analysis of White, Green Certificates and EU CO₂ allowances. Phase II of the White and Green project, The 'White and Green' Consortium, August 2004, Utrecht University, Copernicus Institute.         [ Links ]

Oikonomou, V., Patel, M., (2004). An inventory of innovative policies and measures for energy efficiency. Phase I of White and Green Project. The 'White and Green' Consortium, Utrecht University, Copernicus Institute.         [ Links ]

Van der Merwe, M.R and Scholes, R.J., (1998). South African Greenhouse Gas Emission Inventory for the years 1990 and 1994. Pretoria, National Committee on Climate Change.         [ Links ]

 

 

Received 16 March 2009
Revised 20 October 2009