Cogeneration in Europe1s challenging market moving towards a Directive in energy po/icy, we sit a t a crossroad today. This year, most likely, the Climate ChangeAgreement ofKyoto Protoco/ wi/1 come into force legallywhen Russia ratifies. This commits the industrialized countries cutting greenhouse gas emissions. The European Union has commitment to cut emissions by 8% based on 1990 /evels during the first commitmentperiod of2008-2012. The implications ofthis commitmentarejust starting to be realizedin European countries. The EU is in the final stages of an agreement on an emissions trading scheme for Europe. This will cover all large industrial sites and electricity generation. The core of the scheme will be the allocation of property rights to emit carbon dioxide. As you can imagine, a lot is at stake because, if you do not get a full allocation for your activity, then you will need to purchase additional emission permits from others in the market or face a fine of €100 (US$120) per ton. Cogeneration, with its high efficiency and low carbon emissions, should be a winner in this process. However, the key to our success is the allocation method and COGEN Europe is working hard on this area. The second major change is the structure of the European energy market: both gas and electricity markets are now opening up to competition. This has been a very rough experience for many of us. For cogeneration, falling power prices and high natural gas and oil prices have squeezed our market. However, the process is coming towards a conclusion and we are hopeful that the market will start to stabilize and cogeneration will start to grow once again. Finally, there are serious considerations regarding security of energy supply. Currently, Europe imports around 50% of its energy needs. This is set to grow to 70% by 2020. a top priority is how to reduce demand through energy efficiency. The European economy is stili very wasteful as a whole, with electricity efficiency being only slightly better than the world average figure of about 31 %. This is a disgraceful situation. High-efficiency cogeneration, renewable energy systems, and improvements in energy use can all contribute to better resource deployment. Fortunately, it looks as though measures are at last being taken to address this wastage - but not without resistance. Europe now has laws that promote renewable energy for electricity production and energy efficiency in buildings - and we are finalizing a law on cogeneration. AII of these are essential building blocks for a future energy market that tackles sustainability, reduced environmental impact and long-term security.
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