White Certificates Trading & Markets

White Certificate : Trading | Market

White Certificates, also known as Energy Saving Certificates or Energy Efficiency Credits, are a type of environmental commodity. White Certificates were introduced as a way to complement existing policies regarding the energy efficiency of large companies and corporations. The overall objective of the scheme is to lower the level of greenhouse gas emissions produced by the industrial and commercial sectors, with the long-term goal of improving the quality of the air we breathe. They are also designed to eventually facilitate the introduction of new and more streamlined energy efficiency technologies.

Tradable White Certificates

The premise behind White Certificates is that companies that supply or distribute energy are required to meet certain targets for the amount of energy saved. Certificates must be presented that comply with these targets, and the certificates themselves can be created by Energy Service Companies or by engaging in energy-saving projects beyond the standard remit of the company. A corporation in possession of these certificates can either put them towards their own targets, or they can trade them with other companies who are struggling to reach their desired numbers. This tradable aspect is what makes White Certificates a commodity, although not in the standard sense of the word, as they are only obtainable by companies to whom they are relevant. For this reason they are not traded at open outcry on any commodity exchange that would normally be expected to trade in such commodities.

The main feature of having White Certificates as a trade-able commodity is that it allows companies who are not meeting their emissions targets to avoid penalties imposed on them by the government for not doing so. The targets for emissions that the government sets are mandatory, and the penalties that may be imposed are greater in theory than the cost of purchasing a white certificate from another company. White Certificates also carry with them a degree of prestige, as they supposedly certify the green credentials of a company, so spending capital on these may seem like a more appealing prospect than paying a penalty fine, which may reflect badly on the image of the company.

White Certificates Market

White Certificates are currently issued primarily in the UK, France and Italy. Other European countries, such as Denmark and the Netherlands, are considering implementing similar schemes.

In the US, energy efficiency certificates are available in Connecticut, Pennsylvania and Nevada, but so far the scheme has not been implemented across the country. The scheme works in much the same way as the European version, but the US also has a voluntary market in white certificates away from government targets and sanctions. Corporations may choose to purchase energy-saving certificates as a way to make good on any corporate promises that they have made in regard to reducing harmful emissions.

It is expected that the market for white certificates and other similar schemes will continue to expand as governments make larger commitments to reducing greenhouse gases. Until a new scheme is implemented that does away with the need for these certificates, it seems likely that they will remain a valuable investment for the industrial and commercial sectors, with the result that increasing amounts of commodity brokers will offer services to allow clients to trade in them.

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