Simultaneous Use of Black, Green, and White Certificate Systems

Abstract

We formulate a long run model with black, green and white certificate markets that function in conjunction with an electricity market. The markets function well together in the sense that a common equilibrium solution exists, where all targets are satisfied (e.g., the share of green electricity and share of energy saving/ efficiency increase). The equilibrium solution adapts to changing targets but it is, in general, impossible to tell whether this will lead to more, less, or unchanged consumption of "black," "green" or "white" electricity. Hence, if the long run target is to expand the capacity of green electricity generation and energy savings to certain given levels, then these markets may not be the best to use. To obtain clear results, specific parameter values and functional forms are needed. An example based on Norwegian data is provided. In addition, gains and losses in terms of consumers' and producers' surpluses are calculated.

Are Hugs, Carrots and Sticks Essential for Energy Policy: A Study of Latvia’s National Energy and Climate Plan

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“…Previous research on the functioning of TGC schemes have mainly focused on the interplay of an existing electricity market and a market for green certificates (Bye, 2003, Amundsen et al, 2006, Fischer, 2010. Others have expanded the analysis and included additional markets to assess the behavior of a TGC scheme , 2002, Morthorst, 2001, Unger and Ahlgren, 2005, Böhringer and Rosendahl, 2010, Fischer and Preonas, 2010, Meran and Wittmann, 2012, Amundsen and Bye, 2018. Earlier contributions to the literature, have applied a static model in their analyses.…”

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