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A game theoretic approach for tradable white certificates regarding energy rebound and government intervention

Author

Listed:
  • Soroush Safarzadeh

    (Isfahan University of Technology
    Quchan University of Technology)

  • Morteza Rasti-Barzoki

    (Isfahan University of Technology
    Seoul National University
    Seoul National University)

  • Jörn Altmann

    (Seoul National University
    Seoul National University
    Integrated Major in Smart City Global Convergence, Seoul National University)

  • Ilkyeong Moon

    (Seoul National University
    Seoul National University)

Abstract

In recent decades, many government administrations have tracked energy efficiency programs (EEPs) against environmental concerns. This was done so that it could potentially be useful as a supportive mechanism for smart technologies applied under the smart city concept. To facilitate this, tradable white certificates (TWCs) have been implemented as popular financial instruments used by energy-intensive sectors to boost cleaner production. In this study, we address an industrial EEP development with a TWC instrument as a multi-agent problem. We study this problem for the first time in the context of a supply chain that includes a manufacturer, an energy producer, and household energy consumers. Furthermore, we explore a new monopolistic pricing model for energy services and energy-efficient products, regarding the rebound effect, energy consumption, and social welfare. Additionally, we discuss two revenue-cost-sharing contracts and compare them as contracts using a comprehensive parametric and experimental analysis. The results show that the second proposed contract has some advantages over the first one. However, the second contract leads to less production than the first one does, while at the same time leading to less social welfare. Also, the findings suggest that the second investigated contract is a more appropriate instrument for the obligated parties than the first one when the aim is to improve the performance of TWC schemes. These findings can provide better circumstances for governance to optimize the critical parameters’ level on TWC schemes with the lowest analytical cost. Graphical abstract

Suggested Citation

  • Soroush Safarzadeh & Morteza Rasti-Barzoki & Jörn Altmann & Ilkyeong Moon, 2024. "A game theoretic approach for tradable white certificates regarding energy rebound and government intervention," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(11), pages 29643-29676, November.
    • Handle: RePEc:spr:endesu:v:26:y:2024:i:11:d:10.1007_s10668-024-05019-0
    DOI: 10.1007/s10668-024-05019-0
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