ARTICLE / MAKALE Cogeııe.ratwı,ı Waste reanıug,. �ııewabfes & CiJ.ıı--site (jımeratwnı, properly designed and fully functioning. Vo nevl uenrttahreyletsrasdcirnegatineidtiaativmeasrkaentdadrerivative assets have ound the world for emission reduction, within and cross borders. Today, much trading takes the form of 'options on forward trades', with only a proportion made up by 'spot' trades. As a result, current trading is quite different from the full-scale market that is envisaged. in order to trade on a market without rules or infrastructure, companies are today fınding ways to seli their emission reductions. Besides a number of flexible trading agreements among companies without binding emission limits, two specific frameworks exist for today's market, and are outlined below. Examples are examined for how cogeneration projects have applied for credit within each framework. Basclirıe-arıd-Credit Tradirıg in Canada, a country that currently lacks a formal cap, and greenhouse gas emissions trading system, companies can voluntarily participate in the Greenhouse Gas Emission Reduction Trading Pilot (GERT) and/or Clean Air Canada ine. (CACI - formerly known as the Pilot Emission leading to increased transaction costs. For no line trading allows companies to trade emissiown , rcerdeudci tt i aon n d s baseachieved on a project-by-project basis, until a cap and allowance system is put in place. Dupont CHP unit at Maitland chemical production facility An example of a baseline-and-credit projeci under consideration in Canada is the 38 MW natural gas-fıred cogeneration unit at DuPont Canada's Maitland, Ontario production facility (See Photo). The cogeneration unit reduces greenhouse gas and smo producing emissions in several ways. Recovering the hea g t released by the cogeneration unit for steam production purposes (which is then used for the on-site production of adipic acid) displaces the emissions that the use of separate boilers would generale. Furthermore, use of natural gas displaces part of the emissions from utility generation mainly using coal and/or oil-fired facilities. Base/ines Used Reduction Trading programme [PERT], where voluntary emission reductions are reviewed with an opportunity for subsequent registration through a private registry. Each programme body assesses the emission reduction against predetermined criteria. Successful project proponents can then claim that their respective emission reductions have passed a higher level of verification, thus providing additional assurance to potential emission reduction buyers and trading sceptics. Companies that have declared voluntary emissions targets can then trade these emission reductions as a means of meeting their targets. in order to trade The baseline used to determine the reductions achieved through the use of a heat recovery steam generator is the rate of emission per pound of steam produced, prior to the subject action, in the lowest emission, highest efficiency 'on the margin' boiler. on a market without rules or infrastructure, The baseline used to determine the reductions that resul! from the displacement of part of the utility-generated emissions, is taken from OPG's 'on the margin' statistics and emission rates. companies are today finding ways to sell their Ca/culations Used Cap and allowance trading schemes allow companies to trade their allocated allowances at any time, as long as the company is in emission reductions. The yearly volume of emission savings is obtained by multiplying the quantity of steam produced over the year (in 1bs) by the compliance with its commitment by the specified date(s). Such a system will soon be implemented in the UK far companies wishing to take on targets and take part in emissions trading, in lieu of paying the UK Climate Change Levy. The absence of a cap and allowance trading system requires a more cumbersome analysis, including setting of baselines (the reference scenario identifying the emissions that would have been generated in absence of the emission reduction activity) and calculating reductions. Allowances are easily defined commodities that result in lower transaction costs and a liquid market. However, allowance systems typically target a particular sector and do not offer inter-sectoral trading, thereby restricting the opportunity to find low-cost emission reductions. On the other hand, credit systems al low all relevant sectors to be engaged, offering lower-cost emission reduction opportunities and broader participation. c Nevertheless, credit trading requires clear rules that define the ommodity to be treated because each emission reduction has its own characteristics, which can be valued quite differently, measured and calculated emission rate. Utility-generated emission reductions are worked out by multiplying the total electricity produced by the plant over the year (in kWh) by the difference between the CO2 emissions per kWh of electricity produced by the existing OPG plants and the CO2 emissions per kWh of electricity produced in the cogeneration plant. Emission Reductions Using these calculations, reductions from 1993 to 1999 comprised 673.045 tonnes of CO2 from the displacement of steam boiler emissions, and 270.561 tonnes from the displacement of utility generation emissions. Company-Wide Emissions Trading Another option for companies wishing to trade their reductions on the current market, to gain experience and to encourage further, internal, reductions, is to undertake a voluntary, gro wide emission trading system, as both BP and Shell have d uop ne recently. This option is more interesting for companies with many
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