Lessons learned from the French EEO Schemeenspol.eu/sites/default/files/4__French_scheme_lessons... · 2016-04-05 · ENSPOL- The Hague –Lessons learned from the French EEO Scheme

Lessons learned from

the French EEO Scheme

Christian DECONNINCKATEE Chairman

ENSPOL – The Hague - 16th of March 2016

ENSPOL- The Hague – Lessons learned from the French EEO Scheme- 16th of March 2016

1

2ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016

• ATEE role in French scheme?

• Transport Obligation

• Trading Scheme

• Annex


ATEE role in French Scheme 1/2

The “C2E” Club

Dissemination of information

(website, local & national meetings, Q&A) and sharing

best practices

Intermediary between WC

players and public authorities

Proposals to improve the

scheme

Gathering all the actors of the “energy efficiency supply chain”

(450+ members)

Organisation of European “White Certificates Club” meetings every 2

years

Working for the common good

SETTING THE WC STANDARDIZED

OPERATIONSATEE

http://atee.fr/sites/default/files/ATEE/Fichiers/2015-08-plaquette_atee_2015_gb_web.pdf

http://atee.fr/sites/default/files/ATEE/Fichiers/2015-08-plaquette_atee_2015_gb_web.pdf

Data centers


ATEE role in French scheme 2/2

Setting the standardized operations

Local/regional authorities

Industry

Agriculture

• Production of 304 [31 in transport] standardized operations (deemed savings) for the 2nd Period, revised in 230 [29 + (5+)] for 3rd Period, through Working Groups gathering more than 300 [100] professionals & experts.

• Technically approved by ADEME.

• Becoming part of WC regulation after control and formal regulatory approval by the Ministry of Energy.

Building

Heavy duty vehicles

Products/services /equipment / for

Transport

WC Register

Fishing


Transport obligations 1/5

Up to 50% of global Obligations

Fuel +270% Gas + 61% Elec +33% All +109%

48,1%

27,7%

15,1%

6,1%2,0% 1,1%

Estimated obligations by energy2015/2017*

27,1%

43,3%

19,6%

6,8%1,6%1,7%

Actual Obligations by energy 2011/2014*

Transport fuel

Electricity

Natural Gas

Heating Oil

District H&C

LPG

*233,3 TWhc/y*111,7 TWhc/y


Transport Obligation 2/5

Distribution of WC production by sector (*)

*

51,1%

21,6%

16,8%

4,7%3,6% 2,3%

Last 240 TWhc delivered (april 15-jan16)

residentialbuildingsservicebuildingsIndustry

Transport

AgricultureNetworks

65,0%

15,9%

10,8%

3,8%2,5% 2,0%

915 TWhc delivered July2006/jan2016

residentialbuildings

servicebuildings

Industry

Transport

Agriculture

Networks

• Less than 10% Transport Obligation is transformed into Transport White Certificates• Industrial & Commercial are gaining vs Residential

(*) Excluding WC produced through “programmes”


66%

0%

3%

2%

29%

0%

for Light Duty Vehicles (≈1,5 TWhc)

LUB

vehiclereplacementtraining

fleet management

tyres & inflating

intermodaltransportmisc


Distribution of Transport Standardized Operations in 2015

2%

45%

8%

14%

3%

27%

1%

for Heavy Duty Vehicles (≈2,3 TWhc)

LUB

vehiclereplacement

training

fleetmanagement

tyres & inflating

intermodaltransport

miscHalf of Tyres/inflating should be transferred to Lub on an avg year

In 2015 4,3 % of the 279 TWhc total WC delivered were Transport WC :• 3,8 TWh, or 1,4% of total delivered were standardized operations• 8,3 TWhc, or 3% were specific non recurrent operations

Operations in detail

• Almost no renovation in transport ≠ Building

• Equipment is regularly and naturally replaced by more efficient/higher standard elements

• Small, diffuse and mobile operations earning little and costing high to gather proofs, + standard reference rules made for stationary operations having often to be adapted + references are to be built (less data)

• Infrastructure investment is rightly not in the scope of Transport WC (WC timeframe ≠ infrastructure)

• Transport operations depend a lot upon business models and obligation scheme design :

– if long haul car sharing WC has found its way in France (xTWhc) at the moment, but not in Italy..

– short haul car sharing (still below 1 GWhc/y) and car-pooling (some MWhc) are still in the starting blocks, and not sure they will ever develop.

• Reminder : The EU Commission did not include Transport Obligation in its initial EED version



Why such a low success for WC Transport ?



How to consider glass is 10% full.. (being optimistic)

• Some success stories when : – A smart rule is found out to gather proofs at low cost (lub, long haul car

sharing)– Operations are more sizable: trucks replacement, Intermodal transport– References are established (trucks replacement, car sharing.. )

• Introduction of Transport Obligation has strongly contributed to open the WC market, just like obligation upon gaz/elec distributor does (with obligated parties not being able to do the obligation by themselves).

– But it has also introduced disadvantage to transport fuels sellers which cannot give a premium through a rebate on goods to buy in their supermarkets (margin, VAT). [Premium unchanged vs time when WC has more than a double value]

• Programmes (funds) can help

• Future can be better one day, with new operations, or new ways to operate present operations


Trading sheme 1/5

A growing liquidity with a growing obligation..

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TWh

cum

ac/Q

uar

ter

Delivered certificates Obligation Traded certificates

18 TWhc/y

233 TWhc/y

115 TWhc/y

Obligation on transport fuel at half rate

Obligation on transport fuel at full rate

..and a growing transport fuel obligation


Trading Scheme 2/5

Demand/offer of Certificates is shaping their price

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€/M

Wh

cum

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TWh

cum

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Excess of Certificate vs Obligation Obligation Certificates price (€/MWhc)

Spot = 1,5 €/MWh ?!


Trading Scheme 3/5

EMMY the Register and the WC French trading

Emmy is a secure registration process, but :

• Representativeness of Emmy’s reported price is questionable

• Emmy plays a very little role to insure the liquidity of the market

• What about the safety of such an OTC trade?

EMMY is a Register, held by a 3rd party after a tender process carried out by the Ministry of Energy

Data reception on energy savings operations

Transmission to the Ministry

Transformationinto WC

= deliveries

Monthly report :Quantities (transfers& deliveries)PriceLots size (transfers)

CEE

Possible transfersof WC between parties via OTC trade

www.emmy.fr


Trading Scheme 4/5

the Powernext Story - The facts

2010-2012 : Powernext worked to set up a trading platform on a spot basis in France, with an extensive dialogue with various

WC stakeholders

Total volume exchanged and weighted average price were published

Transactions were perfectly secured and

anonymous

Cash & WC were transferred between parties via Powernext

bank account and Emmy account

From 10th Jan to 16th Oct 2012 :• Declared price was in agreement with spot market price• But only 26 GWhc traded vs 25,5 TWhc exchanged on Emmy

Result was disappointing due to lack of participation and the platform launched in January 2012 was closed by the end of that year


Trading Scheme 5/5

the Powernext Story - why did it fail ?!

Complexity : Contractual process was not made for occasional players

Small Market: Not enough “professional” players in the market

Big players did not participate, for various reasons :

Willing to produce themselves WC

WC deals/partnerships considered as more

secure than the uncertainty of a

market

Willing to control the identity of their counterpart, since WC intermediaries

are also competitors

Not willing to favour smaller players with

increased transparency/market

access.

Presently some players are looking again at this model, not to insure liquidity, but to create a true spot price index, due to spread price between spot deals and past long term deals

Last but not least, able to acquire WC conveniently by other means


Do you have any questions ?

[email protected]

Appendix• What is ATEE ?

• French WC Scheme in a snapshot

• Emmy the Register in detail



What is ATEE ?

History, organisation & actions

Association founded in 1978 by big French Companies to promote Energy Efficiency

Has become a central body for Energy Management / Energy & Environment in France>2200 members (including 540 corporate members)15 regional delegations

Biogas Club: 240 corporate members, the French reference for 17 years

Cogeneration Club : 100 corporate members, the French reference for 25 years

Energy Efficiency Support for Public & Private sector, ATEE’s main concern

Energy Storage Club : exploring the future of this key concern towards Energy Balance and Renewables

C2E Club : coordinating French WC Scheme and building the references in cooperation with ADEME and under control of the ministry of Energy

Launch of an initiative to Evaluate the Efficiency of Public Policies on Energy Efficiency


French WC in a snapshot 1/2

Obligation in Final Energy Savings Energy savings calculated on the expected lifetime of operations,

discounted at 4 % “KWh cumac” Obligation proportional to sales/distribution of energy on the basis of 75%

price / 25% energy content. Obligation fixed for 3 years period in avg Recent switch to declarative process with ex post random controls 90% of EED target with WC Scheme An OTC trading system

To date 93% made with standardized operations, 4% with specific validation and 3% with funding programmes, which could raise to 20% for 2015/2017

Amount of Obligation : from 54 TWh for 2006/2009 to 700 TWhc for 2015/2017, + 150 TWhc for 2016/2017 of fuel poverty obligation just added..

French WC in a snapshot 2/2

To fulfil their obligation the Obligated Parties can :

Eligibles parties (which can produce their own WC) are :

19

promote energysaving operations

• On theirassets/activity

• For their customers of any end user

Financiallycontribute to WC programs

Buy WC on the market

Delegate theirobligation to 3rd parties

Pay a penalty

20M€/TWh cumac

Obligated parties :Transport fuel distributors (40)Energy sellers to residential/commercial sectors(≈20 Elec, 12 Gas, 1900 heating oil, 11 district H &C.. )

Local authorities

Social housing+ ANAH

ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016

In all sectors & energies, but ETS and subsidized biomass , provided minimum energy performance criteria

(& qualified professionals for residential)

Parties havingreceived a delegation


Transport Obligation

Detailed Standardized Operations by nature

Lubricants :• LDV : garages• HDV : fleets• Fishing (ε)

Vehicle replacement :• LDV : fleets (ε, but high potential )• LDV : individuals & local authorities

(ε, how to gather ?)• HDV : fleets (ok when referential ok)

Driver training :• LDV : professionals,

training centres• HDV : fleets,

training centres

Fleet Management :• LDV : fuel cards (high pot. but proof issue)• LDV : short haul car sharing ( ε, proof & business model issue) • LDV : car pooling ( ε, proof & business model issue)• HDV main: board telematics

Tyres & Inflating :• LDV : inflating stations• LDV : performing tyres (ε)• HDV : fleet management• HDV : reprofiling

Intermodal transport HDV :• Rail/road : Intermodal

Transport Units & “rail motorways”

• River/road

Miscelleanous :• LDV : fuel additives

(potential to come)• HDV : efficient

cooling equipment

various 2015 volumes :• ≈ 1 TWh• High (>100 GWh)

• Medium (100>x>10)

• Low : (10>x>1)

• Very low : ε (<1 GWh)


EMMY the Register

The safety of the deals

The Cons

• Seller remains at risk, even if for normal “physical” deals, risk responsibility is hold by Seller

• Whenever WC trading would become a “paper” marketadditional guarantees and securities would be needed

How does it work? (after the deal on the OTC market)• Buyer is making a proposal to Seller in writing through Emmy (price & quantity)• Seller is identifying WC lots for the transaction (from WC validation or previous deal) • A Transfer Order is issued, to be signed by both parties and sent to Emmy for deal

validation

The Pros

• Since responsibility for “dirty WC” is not with WC holder but with the initial WC producer, WC Buyer is safe when he pays after receiving WC on his account.

• Possibility to remove the WC from the Buyer’s account in case of payment failure


The Pros

• The bias between the market price and the Emmy reported price is limited

• In a changing market such a register reported price cannot represent the spot deals, but will nevertheless represent the average price over a long period.

• To represent the spot deals some Platts/Argus like process could be discussed

• Alternatively a spot market place could be envisaged (cf Powernextstory)

EMMY the Register

The price issue

The Cons

• No control is done on the “declarative price”

• Transfer of WC may differ from the market price (within a Group.. )

• Announced price might not represent the full price of WC

• It does not reflect the spot price, because of long term deals


EMMY the Register

The liquidity issue

The Cons

• Emmy is just an indicative process to make buyers and sellers meet

• No market maker system is in force to produce a price equilibrium between WC demand and offer

The Pros

• A growing exchanged WC volume has made in practice the market liquid, especially through brokers/intermediaries.

• Tendering process is used successfully by some parties.

Other issues :• Pricing should normally also address the value of time, which would lead to the

complexity of WC “futures”.

• Even if a market is set, ad hoc sellers would prefer to contract with obligated parties or intermediaries directly

Documents

Lessons learned from the French EEO Schemeenspol.eu/sites/default/files/4__French_scheme_lessons... · 2016-04-05 · ENSPOL- The Hague –Lessons learned from the French EEO Scheme