Where to place the saving obligation: Energy end-users or suppliers?

Supplier obligations have been introduced in North America, Europe and Australia. Under supplier obligations energy suppliers have to comply with mandatory energy saving targets and thus they implement (directly or via third parties) energy efficiency projects on their clients' premises, or they decide to trade certified project savings if this option is envisaged by their obligation scheme. In other emerging schemes such as the UK CRC Energy Efficiency Scheme, the Tokyo Emission Trading Scheme or the PAT scheme in India, the obligation to reduce energy consumption is placed on large end-users directly and end-users are allowed to trade emissions allowances or energy saving certificates. The paper starts with presenting all these conceptually different ways for introducing energy saving obligations. Then it analyses advantages and disadvantages of end-users obligations compared to suppliers obligations. Finally it offers an initial discussion on the potential effectiveness in reaching ambitious energy saving targets, the enforcement, monitoring and expected total transaction costs of supplier obligations versus end-user obligations. The preliminary conclusion of the paper is that supplier obligations seem to be well-suited for the residential sector, but end-user saving obligations may offer advantages when it comes to the industrial and commercial sectors.JRC.F.7-Renewable Energ