CHP saves CO2 due to two reasons (see Figure 1 ): O First, CHP electricity displaces centrally produced electricity fronı power plants which are always less effıcient and therefore ınore CO2-intensive<•> O An important feature of CHP is that it entails higher direct fuel consunıption and lıigher direct CO2 emissions coınpared with a site without CHP. Yet, by replacing centrally produced electricity it reduces even more the indirect fuel input and CO2 emissions for generating a specifıc amount ofelectricity, tlıus leading to tlıe overall saving. O Second, most CHP is decentralised generation, where tlıe electricity produced is either consumed on-site or in the iınınediate neighbourhood. CHP therefore avoids electricity losses froın centralised production that occur during electricity transport and transformation. These losses typically range between 5 and 15%.<5> Seperate Production of Heat and Electricity 55 Electricity ı 110 fuel Ce P n o tr w a e l T r P he la r n m t al -losses ,------------, : -so "'"'""- : ,o f"' 100 fuel P wr oil tndhudocuutsi tot rCni aHSl Pi t e Combined Heat and Power . ,, ,,..y.., 156 fuel P wr oli tndhudocuutsitot Crni aHSl Pi t e TFihgeurseite1:wCitohmCpHaPrishoansoaf abighgigehrlydireefcfitcifeunetl CinHpPut iannsdtalClaOtion with the separate production of heat and power using latest technology. 2 emissions. Yet, it reduces total CO2 emissions by 26% by replacing indirect emissions from the central power planı, and by avoiding transport losses.<•> lt has been estimated that, depending upon the reference scenario used, increasing the share of cogenerated electricity to 18% in the European Union could result in additional CO, savings in the range between 65 and 194 Million tonnes per year compared to the 1 997 situation (Euroheat & Power 2001, European Commission 2001 b, future cogen 2001 ). The most realistic scenario might be between these extrenıes, i.e. in the order of 120-130 ınillion tonnes COı- This represents 36-39% of the EU's total Kyoto commitment for the 2008-12 period (336 nıillion tonnes CO2 less than in 1990). 4. PRINCIPAL QUESTIONS AND POTENTIAL PROBLEMS FOR CHP An Eınissions Trading Scheıne should, in principle, fully reflect the CO2 savings froın CHP thereby rewarding the operator ofthe installation for his investment. Yet, the proposed European Emissions Trading Schenıe gives rise to the following open questions and problems. 4.1 lnstallation of new CHP or upgrade increases direct CO2 emissions As explained in section 3, ifthe operator ofa site installs a new CHP unit where there has not been previously CHP, or ifan existing CHP installation is being upgraded to bigger capacity or higher-effıciency CHP, this will normally increase direct fuel consuınption and CO, eınissions froın the site.<1> lfthe operator ofthe installation has received his allowances based on the previous, lower eınission froın the site, he would then have to buy additional allowances on the market to cover ıhe increase in CO2 emissions. The potenıial cosıs of this have been calculated for ıwo exanıples which are detailed in the Annex of this paper. Based on an assuıned average price of allowances of€ 20, they show that the Enıissions Trading Sclıenıe could imply additional costs of€ 560,000 per year or more for the installation ofa gas-fıred industrial CHP scheme with a capacity of about 15 MWe or € 554,400 for a 20 MWe coal-fıred District Heating plant (see Annex) 4 fiıelled) ııor power[ı-0111 regeııeraıive eııergy sources (plıoıovolıaics. ıviııd, lıydro), bııı /rom ıııiddle /oad power plaıııs wiılı a fııel ıııix o fcoal, oil or gas (Gailjiıj) 2002). in Gerıııaııy, depending 011 ıvlıaı elecıriciıy CHP rep/aces, it ıypical/y realises CO1 saviııgs betweeıı 20 aııd 80% (Gailfııjl 2002, Tolle 2002, Traııbe & Sclııılz 2000). /ıı order ıo bejiıel neıııra/, ılıe draf/ Europeaıı CHP Direcıive sııggesıs an approaclı wlıereby ııew CHP is coıııpared ıviılı separate prodııctioıı based 011 ılıe saıııejiıe/. S in Germaııy, ıransmission losses amoımıed ıo abom 4. 7% in tlıe Wesıern parı oftlıe country, and 9% in the East in /995. in 1999, total transmission losses in ılıe eıııire coııııııy were 5.5%. Tlıe Wesıerıı /eve/ is coıısidered ıo be close ıo ılıe ıeclıııical/y aclıievable opıiıııııııı (VDEW (1997 aııd 2000). in France, grid losses o f 2. 5% in tize Jıigh-voltage network, 4% for mediwn-voltage, and 7% at low-voltage /eve/ are ıaken iıııo accoımt wlıen calcıılaıing ılıe beııefits o f decenıralised generaıioıı (Clııb cogeıııiraıioıı 2002). 6 it is assıımed tlıaı tlıe same fiıel type is ıısed in boılı cases. 7 Tlıe replaceıııeııı o f/ıeaı-011/y app/icatioııs ıviılı CHP. or ılıe ııpgrade o fexistiııg CHP plaıııs. is iıııportaııı ııoı 011/y for ılıe existing EV ıerriıoıy bııı also for ılıe candidate coımıries. in some EV Aılember Staıes ınore ılıaıı 65% ofDH sysıems are eqııipped witlı CHP (lor insıance Aıısıria, Denmark, Finland, Germany, according ıo figııres ji-0111 Eurolıeaı & Power). Yeı, ılı is slıare is probably ıııııc/ı sıııaller in Po/aııd (aroııııd 48%) aııd iıı Roıııaııia (aroııııd 58%). Tlıe laı-ge slıare o f11011-CHP industrial and District Heaıing sclıemes in tlıese coımıries oflers significanı potential ıo converı ılıem into CHP. Alsa, tlıere is mııclı scopefor modernising oıııdaıed, /ess efficieııt sclıeıııes ll'illı CHP ıo a lıiglıer efficieııcy aııd ılıııs CO2-saviııg perforıııaııce (Jiııııre cogeıı 2001). ECOGENERATION WORLD 57
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