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Combined Heat and Power Brussels/Berlin: Emissions Trading & National Allocation Plans
Posted by on 2004-01-30 10:11:06
contributed by 2

40 delegates participated today in an international workshop in the German Environment Ministry in Berlin to discuss the treatment of cogeneration installations in National Allocation Plans, and to take stock of the progress, which European governments have made in developing appropriate allocation rules for cogeneration.

The day highlighted once more that specific allocation rules for cogeneration installations are necessary, and it showed that a number of European Governments are undertaking steps to ensure the fair treatment of cogeneration in their National Allocation Plans.

The workshop was organised jointly by the European Association for the Promotion of Cogeneration (COGEN Europe), the European Business Council for a Sustainable Energy Future (e5), and the German Federal Ministry for the Environment.

For each country, the National Allocation Plans will set crucial conditions for the participation of large industry and energy installations in the European-wide Emissions Trading Scheme, which will start in 2005 . The plans will establish methods to determine how many allowances to emit greenhouse gases each installation should obtain, whereby one allowance translates into the right to emit 1 tonne of CO2 equivalent.

Many cogeneration plants, together with other large energy-intensive installations, will be participants in the European Emissions Trading Scheme from 2005. The increased use of cogeneration is one of the biggest potential options available in Europe to reduce significantly CO2 emissions and meet the EU's Kyoto commitments . Intuitively, good quality cogeneration should therefore be incentivised under the Emissions Trading Scheme. However, this outcome is uncertain because it depends entirely on the rules laid down in National Allocation Plans. Depending on their design, these plans may actually create competitive disadvantages for cogeneration in the emerging carbon emissions market, thereby discouraging investment in this highly efficient energy conversion technology. This problem has been described in a number of assessments .

COGEN Europe is pleased to see at today's event that industry, environmental and other groups were successful in their efforts to make European Governments aware of these problems. As a result, a number of potential solutions to address them are currently being discussed across Europe, or have already been made part of the officially proposed allocation methods, such as the recently issued draft National Allocation Plan of the UK. Likewise, the Dutch, German, Belgian and Danish Governments are consulting with industry and other groups on how allocation methods should reflect properly the CO2 savings achieved by cogeneration installations. Promising allocation methods developed so far include the use of benchmarking and the creation of a reserve of allowances to encourage the construction of new good quality cogeneration schemes.

COGEN Europe encourages other Governments to follow these examples and to grasp the opportunity to ensure that allocation rules do not prevent cogeneration, but promote its wider use. CHP, Combined Heat and Power, or cogeneration is the simultaneous production of heat and electricity. This proven technology produces around 11% of Europe’s electricity and heat requirements and has a significant growth potential, which will lead to an improved environment and greater economic competitiveness. It is a highly efficient energy solution that delivers substantial reductions in greenhouse gases and other pollutants and is the single largest solution to meeting the Kyoto Protocol on climate change for Europe. COGEN Europe is Europe’s umbrella organisation representing the interests of the cogeneration industry, users of the technology and promoting its benefits in the EU and the wider Europe. The association is backed by the key players in the industry including gas and electricity companies, ESCOs, equipment suppliers, consultancies, national promotion organisations, financial and other service companies.

Cogeneration, which is also called combined heat and power (CHP), is the simultaneous production of electricity and heat, both of which are used.

Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community.

It has been estimated that doubling the share of cogeneration in EU electricity generation from 9% in 1997 to 18% in 2010 would achieve CO2 savings of between 65 and 127 million tonnes of CO2 per year compared to the production of electricity and heat in separate installations.

For instance, "The National Allocation Plan - Getting the Rules right for Cogeneration. Joint Paper of Cembureau, CEPI, Cérame-Unie, CIAA, COGEN Europe, Energie-Cités, EuMIGT and WADE" (December 2003, ', ', 0, 0); EU Emissions Trading and Combined Heat and Power. Complementary mechanisms are necessary to prevent negative consequences for cogeneration (November 2002). Both papers are available on



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