Modelling the Economics of French White Certificates

Kenneth H. Tiedemann


Cost benefit analysis, dynamic modelling, electricity demand modelling, policy issues


Tradable white certificates are a relatively new, market based instrument for energy conservation. In a white certificate program, authorities set a global target for energy savings which are then apportioned among energy suppliers and energy distributors. Energy suppliers and distributors can meet their targets by supporting specific energy conservation measures among their customers, with provision for sales of obligations or white certificates for those energy suppliers and distributors who more than meet their targets. The purpose of this study is to provide an assessment of the French white certificate program for the period 2007 through 2011. The study has several key findings. First, demand for white certificates responded well to changes in prices, and this suggests that the market for white certificates worked efficiently for the period examined. Second, the estimated price elasticities ranged from -2.05 to -2.38 for the ordinary least squares models, and they ranged from -1.73 to -2.04 for the maximum likelihood models, with the implication that energy and white certificates are viewed as good substitutes by energy suppliers and distributors. Third, there is some evidence of a declining trend in the demand for white certificates so that there may be some merit in additional actions to make the market for white certificates in France more robust.

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