lessons learned from the french eeo...
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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
3ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
Data centers
4ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
5ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
6ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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”
7ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
66%
0%
3%
2%
29%
0%
for Light Duty Vehicles (≈1,5 TWhc)
LUB
vehiclereplacementtraining
fleet management
tyres & inflating
intermodaltransportmisc
Transport Obligation 3/5
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
8ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
Transport Obligation 4/5
Why such a low success for WC Transport ?
9ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
Transport Obligation 5/5
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
10ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
11ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
Trading Scheme 2/5
Demand/offer of Certificates is shaping their price
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€/M
Wh
cum
ac
TWh
cum
ac
Excess of Certificate vs Obligation Obligation Certificates price (€/MWhc)
Spot = 1,5 €/MWh ?!
12ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
13ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
14ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
15ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
Do you have any questions ?
c.deconninck@atee.fr
Appendix• What is ATEE ?
• French WC Scheme in a snapshot
• Emmy the Register in detail
16ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
17ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
18ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
20ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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)
21ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
22ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
23ENSPOL- The Hague – Lessons learned from the French EEO Scheme - 16th of March 2016
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
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