10-09-2008 Energy efficiency associations call for fair treatment of heat under emissions trading scheme.
Euroheat & Power and EFIEES welcome the high-level debate in both the Environment and the ITRE
Committee on the Commission’s proposals to revise the rules governing the emission trading scheme from 2013. We are confident that amendments bring further improvement over the
Commission’s proposal, especially as regards the status of heat.
With a view to the upcoming votes in the first reading, we recall that the final version of the Directive must draw a clear line between the electricity and heat markets which obey to fundamentally different principles. District heating networks should be treated as an industrial sector in itself.
The provisions must unambiguously allow for the allocation of free allowances to heat on the basis of benchmarks to ensure fair treatment in relation to small-scale fossil-fired installations (below 20 MW) which constitute the bulk of the heat market and are not covered by CO2 trading – or any other Community measure with a similar effect.
Unlike electricity suppliers on the electricity market, district heating companies do not set the price on the heat market and therefore most of the time cannot, pass through the additional CO2 cost on to their customers. The consequence of auctioning would thus inevitably be a loss of competitiveness for district heating though it is a proven solution for CO2 abatement on the heat market. Unfair competition would particularly affect the ability of district heating schemes in the new EU countries to invest in upgrading their networks to higher standards and new technologies. Hence it is critical to ensure that a clear status is established for heat in general (not limited to combined heat & power production) and to treat producers of district heat in the same way as industrial sectors with a risk of carbon leakage.
Our suggestions for compromise amendments on article 10.3 aim at ensuring that heat supplied to both district heating networks and to industries (notably from outsourced installations) is fairly treated. We believe that a benchmark approach is an appropriate route to ensure that emission trading reward the most efficient techniques and to prevent distortions on the heat market.
The use of benchmarks for heat will ensure that
1 Directive COM 2004/8/EC on the promotion of cogeneration based on a useful heat demand in the internal energy market.
2 Proposal COM(2008) 19 for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources.
Download press release here (pdf, 68Kb).
With a view to the upcoming votes in the first reading, we recall that the final version of the Directive must draw a clear line between the electricity and heat markets which obey to fundamentally different principles. District heating networks should be treated as an industrial sector in itself.
The provisions must unambiguously allow for the allocation of free allowances to heat on the basis of benchmarks to ensure fair treatment in relation to small-scale fossil-fired installations (below 20 MW) which constitute the bulk of the heat market and are not covered by CO2 trading – or any other Community measure with a similar effect.
Unlike electricity suppliers on the electricity market, district heating companies do not set the price on the heat market and therefore most of the time cannot, pass through the additional CO2 cost on to their customers. The consequence of auctioning would thus inevitably be a loss of competitiveness for district heating though it is a proven solution for CO2 abatement on the heat market. Unfair competition would particularly affect the ability of district heating schemes in the new EU countries to invest in upgrading their networks to higher standards and new technologies. Hence it is critical to ensure that a clear status is established for heat in general (not limited to combined heat & power production) and to treat producers of district heat in the same way as industrial sectors with a risk of carbon leakage.
Our suggestions for compromise amendments on article 10.3 aim at ensuring that heat supplied to both district heating networks and to industries (notably from outsourced installations) is fairly treated. We believe that a benchmark approach is an appropriate route to ensure that emission trading reward the most efficient techniques and to prevent distortions on the heat market.
The use of benchmarks for heat will ensure that
- emission trading reward the most efficient techniques on the heat market and does not lead to an overall increase of CO2 emissions;
- there is no discrimination between heat producers in- and outside the emissions trading scheme.
- emission trading does not produce perverse incentives running against the objectives of the EU to expand the use of cogeneration1, heat recycling and renewable energy sources2.
1 Directive COM 2004/8/EC on the promotion of cogeneration based on a useful heat demand in the internal energy market.
2 Proposal COM(2008) 19 for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources.
Download press release here (pdf, 68Kb).
