Rewarding energy efficiency: The perspective of Emissions Trading

Hopefully, the flexible mechanisms of the Kyoto protocol will be introduced within some years. As one of the three mechanisms, Emissions Trading will bring an international value for emissions of carbon dioxide (CO2) to the atmosphere. The district heating community must then estimate the competitive strength of district heating and Combined Heat and Power (CHP) within an emissions trading system in order to understand and communicate its own position. In order to summarise both the technological aspects and the market conditions for district heating and CHP into one dimension, a simple bar diagram has been created for various technical options available for heating buildings. In this bar diagram, all CO2 emissions associated to heating buildings are allocated to the heat produced. The CO2 emission for electricity produced in CHP plants has been set equal to the marginal production on the international electricity market. The bar diagram shows very clearly the CO2 emissions for each individual choice of technical option. In this article, the bar diagrams are presented for both the current and the future situation with respect to marginal electricity production in the international electricity market. The conclusions for the future are presented from a combination of the current and the future situation.