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Simultaneous use of black, green, and white certificate systems

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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.

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Energy Specializations: Energy and the Environment – Other ; Electricity – Markets and Prices ; Electricity – Policy and Regulation

JEL Codes: Q48: Energy: Government Policy, Q41: Energy: Demand and Supply; Prices, Q58: Environmental Economics: Government Policy, Q54: Climate; Natural Disasters and Their Management; Global Warming

Keywords: renewable energy, electricity, Green Certificates, White Certificates

DOI: 10.5547/01956574.39.4.eamu

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Published in Volume 39, Number 4 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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