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Short-term impact of green certificates and CO2 emissions trading in the Swedish district heating sector

Author

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  • Knutsson, David
  • Werner, Sven
  • Ahlgren, Erik O.

Abstract

Swedish district-heating (DH) systems use a wide range of energy sources and technologies for heat-and-power generation. This provides the DH utilities with major flexibility in changing their fuel and technology mix when the economic conditions for generation change. Two recently introduced policy instruments have changed the DH utilities' costs for generation considerably; the tradable green-certificate (TGC) scheme introduced in 2003 in Sweden, and the tradable greenhouse-gas emission permit (TEP) scheme introduced in the EU on January 1, 2005. The objective of this study is to analyse how these two trading schemes impact on the operation of the Swedish DH sector in terms of changes in CHP generation, CO2 emissions, and operating costs. The analysis was carried out by comparing the most cost-effective operation for the DH utilities, with and without, the two trading schemes applied, using a model that handles the Swedish DH-sector system-by-system. It was found that the volume of renewable power generated in CHP plants only increased slightly owing to the TGC scheme. The TGC and the TEP schemes in force together, however, nearly doubled the renewable power-generation. CO2 emissions from the DH sector may either increase or decrease depending on the combination of TGC and TEP prices. The overall CO2 emissions from the European power-generation sector would, however, be reduced for all price combinations assuming that increased Swedish CHP generation replaces coal-condensing power (coal-fired plants with power generation only) in other European countries. The trading schemes also lower the operational costs of the DH sector since the cost increase owing to the use of more expensive fuels and the purchase of TEPs is outweighed by the increased revenues from sales of electricity and TGCs.

Suggested Citation

  • Knutsson, David & Werner, Sven & Ahlgren, Erik O., 2006. "Short-term impact of green certificates and CO2 emissions trading in the Swedish district heating sector," Applied Energy, Elsevier, vol. 83(12), pages 1368-1383, December.
  • Handle: RePEc:eee:appene:v:83:y:2006:i:12:p:1368-1383
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    References listed on IDEAS

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    4. Pereverza, Kateryna & Pasichnyi, Oleksii & Kordas, Olga, 2019. "Modular participatory backcasting: A unifying framework for strategic planning in the heating sector," Energy Policy, Elsevier, vol. 124(C), pages 123-134.
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    7. Ivner, Jenny & Broberg Viklund, Sarah, 2015. "Effect of the use of industrial excess heat in district heating on greenhouse gas emissions: A systems perspective," Resources, Conservation & Recycling, Elsevier, vol. 100(C), pages 81-87.
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    14. Tsai, Ming-Tang & Yen, Chih-Wei, 2011. "The influence of carbon dioxide trading scheme on economic dispatch of generators," Applied Energy, Elsevier, vol. 88(12), pages 4811-4816.
    15. Torchio, Marco F. & Genon, Giuseppe & Poggio, Alberto & Poggio, Marco, 2009. "Merging of energy and environmental analyses for district heating systems," Energy, Elsevier, vol. 34(3), pages 220-227.
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