Members of the European Parliament’s Industry (ITRE) and Environment (ENVI) Committees are trying to improve the Commission’s proposals for revising the Emissions Trading System in regard to Combined Heat and Power (CHP), including its use in district heating schemes.

MEPs have acknowledged the contribution CHP plants make to help meet the EU’s international climate commitments. They have also recognised that while there is a need to distinguish between the electricity and heat markets as these obey to fundamentally different principles, combined heat and power installations primarily service a heat load and as such cannot be included with pure electricity generators.

The amendments being tabled in both the ITRE and ENVI Committees propose that free allowances for CHP installations both for both the heat produced and the electricity generated, provided this electricity is does not represent a net sale. The Commission proposals call for most allowances to be auctioned, i.e. energy companies would have to buy all the allowances they need, pushing up the price to the consumer. At the same time, recognition of the benefits inherent to quality district heating and the need to safeguard the competitiveness of these schemes is also being taken into account.