The European CHP association (Cogen-Europe) is concerned that proposals for amending the rules for emissions trading may actively discourage investment in the technology. The intention expressed by some member states to auction more of their emissions allowances in the next phase of the Emissions Trading Scheme (ETS) could heavily impact CHP, it says. If CHP were to be subject to full auctioning without any specific protective measures “then no heat producer or utility would want to build a cogeneration facility”, it concludes.

The problem is that the ETS only considers direct emissions, so organisations do not have to buy allowances to cover bought-in electricity. So while CHP has significantly lower emissions than those associated with the production of both power and heat, they are higher than those caused purely by burning fuel for heating on site. This is a disincentive for site operators.

“The design of the EU ETS Phase III should reward the building and utilisation of lower carbon emitting forms of generation such as CHP, consistent with its low emissions and global CO2 savings. If it fails to do this,” says Cogen, “then the scheme is fundamentally flawed.”

Cogen proposes a number of ways around this problem, including exemption for either the carbon produced through heat production or from power generation. Something has to be done, though. “We believe all [these] approaches will create a more fair and even market and level potential unfair treatment of CHP under auctioning,” says the association. “Only via a clear – financial – recognition of CHP benefits can investors and operators be expected to realise the EU’s CHP potential.”

u www.cogeneurope.eu