The implementation of the European Union Emissions Trading Scheme (EU ETS) on 1 January 2005 has raised interest in market-based approaches to achieving environmental and related public policy goals in the EU, particularly those concerned with the promotion of renewable energy and energy efficiency. Indeed, national and regional markets in tradable green certificates and tradable white certificates already exist and are receiving increased attention. With the implementation of the EU ETS, the development of green and white certificate programs raises complex issues of policy interaction.

In this report, sponsored by the Directorate-General Environment of the European Commission, the authors describe and analyze the interactions among EU ETS and green/white certificate markets and assess the implications of these interactions for the policy objectives of the EU ETS. The study aims to provide information on the EU ETS and its effects on electricity markets, describe green and white certificate programs and how they affect electricity markets, evaluate how green and white certificate programs can interact with the EU ETS, and provide conclusions regarding elements of green and white certificate schemes that might compromise the objectives of the EU ETS (and vise versa).