White Certificates and White Certificate Trading Schemes as greenhouse gas mitigation policy options for South Africa

Abstract

Abstract
Energy efficiency activities driven by White Certificate Trading schemes (WCT) achieve the objective of conserving energy, and in most circumstances, also that of reducing greenhouse gas (GHG) emissions. The potential therefore exists that both objectives could be targeted by a single policy mechanism. Energy efficiency activities are important from a GHG mitigation perspective as they represent some of the least costly GHG mitigation activities available to economies.
However, there are some significant differences between the use of a direct policy instrument to target GHG emissions mitigation, and the use of an indirect instrument such as WCT, whose direct policy objective is to achieve energy efficiency. Most importantly, WCT utilises intensity targets, whereas GHG mitigation is required by science to comprise absolute reductions. International experience does however suggest that white certificates can be fully fungible with a GHG mitigation policy instrument such as an emissions trading scheme, as long as double counting rules are firmly in place, and the design of the schemes are compatible.
Given that 80 percent of the South African GHG emissions are energy related, with energy efficiency measures in industry, commerce and the residential sector representing the bulk of negative cost mitigation options available in the economy, energy efficiency has an important role to play in the country’s mitigation strategy.
This paper presents results on research into WCT as a policy option for South Africa conducted in 2008 and presented at the Climate Change Summit 2009.  It investigates in particular the Electricity Conservation Scheme (ECS) as an option for incorporating a WCT mechanism.
There is limited experience and therefore analysis on WCS available to date, and even less on the potential interaction and linkages of WCS and emissions trading schemes. This paper therefore identifies significa