Opportunity Cost of Carbon Pricing and White Certificate Programs: A Business Case

Carbon pricing aims to capture the external costs of emissions and link them their sources through a price signal, while market-based policy tools support investments in energy efficiency, rewarding investors following certified savings. The interplay between emission trading system white certificate scheme is complex, especially regarding opportunity efficiency two mechanisms combined achieving environmental goals. Using monthly data covering six years, we analyze how carbon programs intertwine. We consider cost as savings from an intervention under program firm covered by system. calculate €/MWh corresponding one MWh reduction consumption assess contribution certificates determinants induced intervention. then simulate economic saving vary dynamics gas permit markets change. relative weight components on differs significantly according related commodity markets. Provided that mandatory for certain industries participation voluntary, argue overlap can be effective. This important policymaking, periodic fine-tuning interventions mechanisms, increasing flexibility. paper also has business implications, given managers may use this framework building management strategies.