Editorial: Tradable White Certificates—a promising but tricky policy instrument

Abstract

In the wake of a steadily expanding climate policy portfolio tradable white certificates (TWCs) are an energy-efficiency policy instrument, which is receiving increasing attention from policy makers worldwide. Many policy makers regard them as an effective instrument to improve security of supply, to minimize negative environmental impacts of energy conversion and to maximize economic efficiency of climate policies. Tradable white certificates have their roots in several preceding instrumental designs. Firstly, there is a heritage of integrated resource planning (IRP), demand side management (DSM), energy-saving obligation schemes for energy utilities. IRP started already in the 1970s and was enlarged to DSM and utility obligation programs in the 1980s (e.g. Hirst 1992; Schweitzer et al. 1991; Waide and Buchner, in this volume). The second line of heritage for TWCs comes from the development of the tradable property rights. Even though the idea has been around already for more than 40 years (Coase 1960), the implementation started only to pick up in the late seventies (‘bubble-concept’, Atkinson and Tietenberg 1991) and, more seriously, with the introduction of a capand-trade system for SO2 in the USA in the eighties. Since then, a strong trend favouring market-based instruments was prominent in many OECD countries. More specifically, the existing TWC systems have many features in common with greenhouse gas emission trade systems (notably EU ETS) and with green certificate systems, such as RECs (Gillenwater 2008a, b).