White Certificates

Policy Description

A white certificate scheme is one where tradable certificates are generated from the implementation of energy-saving measures. Energy retailers are required to purchase a certain number of certificates each year and surrender these to the regulator.

White certificate schemes typically enable the implementation of energy efficiency activities in households and small and medium sized businesses by facilitating an up-front discount.

The diagram below shows how a white certificate scheme works

Certificates are generated when energy-savings measures are implemented in accordance with the rules of the scheme. White certificates can only be created by regulator-accredited parties, with any business eligible for applying to be accredited, including energy retailers. Record-keeping requirements and audits of accredited parties are used to ensure scheme compliance by participants.

These certificates facilitate the implementation of energy efficiency measures for small energy users including households and small and medium sized businesses

Where it has been used

White certificate schemes have been widely used, as follows:

Australia (state based schemes in N.S.W, Victoria, S.A. and A.C.T)
U.K.
U.S.A (state based schemes).
Italy
France
Denmark

Plus

Typically white certificate schemes “deem” forward the life-time carbon savings for the energy saving activity being implemented to provide an up-front discount. This encourages the up take of energy saving measures.

There is a considerable body of evidence that white certificate schemes are much more effective than other policies in driving the “retrofit” uptake of energy efficiency measures. For example, in the state of Victoria Australia, the (deemed) carbon savings from this state’s white certificate schemes far exceed the savings achieved by other energy efficiency policies, such as the state government greener government buildings program (where state government departments and agencies are required to implement an energy performance contract).

Minus

White certificate schemes may be economically inefficient where the savings are over inflated through exaggerated deeming of lifetime savings. This could be the case where deeming of new technologies is not based on robust measurement and verification of an appropriate sample size and for a sufficiently long period.

As the retailers who are liable under white certificate schemes will typically pass onto consumers their cost of scheme compliance, when deeming has been exaggerated the cost of the policy could exceed the value of the savings achieved.

White certificate schemes benefit those who chose to implement energy efficiency measures supported by the scheme, but all energy consumers pay. White certificate schemes can therefore be viewed as a form of unfair taxation.

Interesting

White certificate schemes have gone well beyond deeming with the New South Wales government in Australia introducing a range of other non-deeming methods for generating certificates. This has fostered greater non-residential uptake of certificates.