Torch of Change is not meant to replace an existing torch. It is meant to decorate/be hung on an empty wall.
Once placed on a wall, you can change the colour of the flame amongst the following colours: red
, green
, and lightblue
. It will then emit light in the selected colour. You can also turn it off. That means that the item can be on four different states when it is on a wall.
If you try to put the Torch of Change on a place where a torch already exists, you will get a message stating "There is not enough room.". I have tested this and taken a screenshot to show that:

This item can be purchased in the store for 120
Tibia Coins.