2. Auctioııing of ali allowaııces from the begiııııiııg. This would put a price on ali enıissioııs from existiııg aııd ııew installations covered by the Directive. Due to its higher effıcieııcy CHP would produce more useful output at the same costs compared to separate productioıı aııd thus have a competitive advaııtage. Yet, it is uıılikely that more thaıı a margiııal share of allowaııces - 15% accordiııg to the latest proposal ofthe Eu ropeaıı Parliameııt - will be allocated by auctioııiııg duriııg the 2005-08 period. This leaves much of the problem uıısolved. This leaves the choice ofcomplemeııtary mechaııisms to the followiııg: 5. 1 Treat CHP as new entrant The proposed Directive requires Member States to consider in allocation plans how new entraııts to the Emissioııs Trading Scheme will be treated. This could iııclude coıısideriııg ııew CHP capacity, modernisation ofCHP, or upgrade to CHP as "new capacity". in each case the allowances used to cover the increase in emissions from CHP could be allocated for free. Member States could e stablish a sort of "allowaııces reserve" to be able to provide ııew CHP entraııts with the allowaııces required. Such a measure would at least be cost-ııeutral and preveııt CHP froııı being penalised for the increase in direct emissions which it implies. But the CHP operator could not realise a profıt from the CO2 savings which his installation actually realises. in the examples in the Annex this profil would amount to €c 0.26 per kWh electrical output in the industry example, aııd €c 0.75 in the District Heating example (see Anııex). 5.2 Al location of al lowances to useful heat and/or power output The proposed Directive does possibly not prohibit Member States undertaking the initial allocation of allowaııces based on the useful energy output. This approach, which has been suggested in previous occasions (Euroheat & Power 2002), would imply that the operator ofan electricity generating installation would obtain no free allowances to cover CO2 emissioııs from the losses on his system. Specifıcally, the operator of a power plaııt with an anııual coııversion effıciency of 40% would need to purchase allowances for 60% of his CO2 emissioııs, corresponding to the eııergy coııversion loss of 60% on his system. in the case ofa CHP installation this would be only I 5% if its total effıcieııcy were 85%. This initial allocation model would thus imıııediately reward carbon savings from existiııg CHP installations and thus respond to the need to treat "early action" in a distinctive manner. For instance, the cost advantage of CHP against the heat and power production in the examples in the Annex to this paper would be in the order of€c 0.24 perkWh cogenerated electrical output in the industry example, aııd €c 0.71 in the District Heating example (see Aııııex). This allocation mechanism would, however, not capture the difference in CO2 eıııissions due to differeııt fuels. For instance, the CO2 savings gas-fuelled CHP would be even bigger if its electricity replaced power from a coal-fı red power plaııt. 5.3 Determine and deduct CO, savings from CHP The forthcomiııg European CHP Directive (Europeaıı Commission 2002) will ıııost probably establish a EU-wide methodological framework to determiııe the primary eııergy savings of CHP compared to a reference systeııı of separate heat aııd power production. This Directive is likely to enter iııto force in 2003 and will be transposed in EU Member States around 2005, in parallel to the Emissions Trading Scheme. This provides an opportuııity to use the methodology proposed also for purposes of the emissioııs tradiııg Directive. Notably, it could provide the basis for calculatiııg CO, savings from CHP in order to credit these to the CHP operator <9> and determine the number of allowances to be submitted. The number of allowances would then correspond to the total direct CO 2 eıııissions from the site minus the CO2 savings from CHP. A graphical representation ofthis approach, combiııed with the fıgures from the industry exaıııple in the Annex, is shown in Figure 2. This approach appears to be fair and transparent, reflect the particulars of different CHP installations, and has the chance to be harmonised across the EU with the likely approval ofa CHP Directive. This would avoid distortions in the market for allowaııces and unequal treatment of CHP in different Member States. in the examples in the Aııııex to this paper it would reward the CO2 reductioıı from CHP with €c 0.26 per kWh electrical output in the industry example aııd €c 0.75 in the District Heatiııg example (see Annex). 35,000 tonnes '" Direct CO, emissions before installation of CHP 63,000 tonnes Direct CO2 emissions after installation of CHP CO2 saving from CHP compared to the reference systems 77,000 tonnes i 14,201 1 _______ : __ tonnes _ : ""��.--� : l : 14,201 : CO, emissions which the reference case (seperate heat and power) would produce : tonnes ; 20,799 tonnes CO, emissions for which allowances would have to be submitted Figure 2: Proposed method to determine the number of allowances which CHP operators would have to submit based on the C02 savings of their installations. The figures used are laken from the industry example in the Annex of this paper. 9 linkiııg ılıe ıwo Direcıfres iıı ılıis ıı-ay is acıııall yrecoııııııeııdahle for ıııaııy ıııore reasoııs lıighliglııed in a reccnı COGEN Europe Posiıioıı Paper (COGEN Europe 2002) EC0GENERATI0N W0RL0 59
RkJQdWJsaXNoZXIy MTcyMTY=