Energy efficiency standard and labeling program and consumer welfare : a case of the air conditioner market in China

Improving energy efficiency is an unarguable emergent issue in developing economies and an energy efficiency standard and labeling program is an ideal mechanism to achieve this target. However, there is concern regarding whether the consumers will choose the highly energy efficient appliances because of its high price in consequence of the high cost. This paper estimates how the consumer responds to introduction of the energy efficiency standard and labeling program in China. To quantify evaluation by consumers, we estimated their consumer surplus and the benefits of products based on the estimated parameters of demand function. We found the following points. First, evaluation of energy efficiency labeling by the consumer is not monotonically correlated with the number of grades. The highest efficiency label (Label 1) is not evaluated to be no less higher than labels 2 and 3, and is sometimes lower than the least energy efficient label (Label UI). This goes against the design of policy intervention. Second, several governmental policies affects in mixed directions: the subsidies for energy saving policies to the highest degree of the labels contribute to expanding consumer welfare as the program was designed. However, the replacement for new appliances policies decreased the welfare.

Evaluation of the trading development in the Iberian Energy Derivatives Market

The efficiency of the Iberian Energy Derivatives Market in its first five and a half years is assessed in terms of volume, open interest and price. The continuous market shows steady liquidity growth. Its volume is strongly correlated to that of the Over The Counter (OTC) market, the amount of market makers, the enrolment of financial agents and generation companies belonging to the integrated group of last resort suppliers, and the OTC cleared volume in its clearing house. The hedging efficiency, measured through the ratio between the final open interest and the cleared volume, shows the lowest values for the Spanish base load futures as they are the most liquid contracts. The ex-post forward risk premium has diminished due to the learning curve and the effect of the fixed price retributing the indigenous coal fired generation. This market is quite less developed than the European leaders headquartered in Norway and Germany. Enrolment of more traders, mainly international energy companies, financial agents, energy intensive industries and renewable generation companies is desired. Market monitoring reports by the market operator providing post-trade transparency, OTC data access by the energy regulator, and assessment of the regulatory risk can contribute to efficiency gains.