Case Study Details - Playbook of Solutions

Challenges to Investment

Investing in energy efficiency presents several challenges, particularly because the business models of energy suppliers and retailers are economically at odds with the goals of energy-saving initiatives. Energy retailers, whose profitability often relies on increasing energy consumption, face conflicting incentives when asked to promote energy efficiency. Additionally, traditional public interventions like standards, taxes, or contributions to the national funds often apply uniformly, regardless of the varying costs or capacities of different actors to achieve energy efficiency. This "one-size-fits-all" approach can further hinder investment by not considering the differing economic contexts of energy suppliers, making energy efficiency investments less attractive compared to their core business activities.

Approach

The French White Certificates scheme, known as Certificats d'Économies d'Énergie (CEE), was created in 2005, as a core instrument to manage energy demand and promote energy efficiency. The program required energy suppliers to achieve specific energy-saving targets, measured in kWh cumac. The scheme was designed to operate on a triennial basis, with energy suppliers incentivized to encourage energy-saving measures among their customers in various sectors, including residential, commercial, and industrial.

The first phase of the scheme took place from mid-2006 to mid-2009, with the overall national energy-saving target set at 54 TWh cumac. Energy suppliers could choose to either directly implement energy-saving measures or purchase White Certificates from other eligible entities that had successfully carried out energy-saving operations. To ensure transparency and accountability, a national registry was established to record the transactions and ownership of White Certificates.

Following the success of the first phase, with savings of over 65.3 TWh cumac by July 2009, a second phase was introduced in 2011 under the National Commitment for the Environment Law (Law no. 2010-788). This phase, which ran from 2011 to 2014 raised the ambition of the program, setting a new national target of 447 TWh cumac. Moreover, the program's scope was expanded to include automotive fuel suppliers. This period also introduced new rules to ensure that larger energy providers bore a more proportionate share of the energy-saving burden.

Key Enabling Conditions

A key enabling condition of White Certificates is the liberalization of the national energy retail market, as the mechanism relies on private sector financing to drive energy savings. The penalty asked to energy suppliers in case specific energy targets are not met is also key to this device. The flexibility provided by the system, allowing suppliers to either implement their own energy-saving actions or purchase white certificates from other eligible actors was key to its adoption. Lastly, the creation of standardized operation sheets further streamlined the process, simplifying the calculation of energy savings and ensuring that common efficiency improvements, such as insulation or heating upgrades, could be easily quantified.

Impact / Outcomes

Since its launch, the White Certificate scheme consistently exceeded its energy savings targets. In the first phase (2006-2009), over 65.3 TWh cumac of energy savings were achieved, surpassing the 54 TWh cumac target. The second phase (2011-2014) set a higher goal of 447 TWh cumac and delivered 603.2 TWh cumac, 20% above the target. These results were driven primarily by residential projects but also included improvements in industrial processes, public lighting, and transport. The scheme continued through a third phase (2015-2017) and into a fifth phase (2021-2025), with targets rising to 2,400 TWh cumac. Each phase introduced refinements to expand sectoral reach and flexibility, enabling obligated parties to participate in government-approved programs.

While White Certificates have shown great success in France and other EU countries, they present interesting learnings for potential replication and scaling in an EMDE context, in a way that accelerates energy savings and affordably supports climate goals.

Additional Sources