Cogeneration, or combined heat and power, is seen by the European Commission as having an enormous potential to reduce energy demand, increase energy efficiency and help to meet the EU's greenhouse gas targets.
A communication - or policy paper - on cogeneration was due to be prepared in time for last week's Energy Council. Because of delays, Energy Commissioner Christos Papoutsis merely informed ministers that a communication was imminent. ENDS Daily now understands that a draft paper has been virtually completed and is likely to be formally adopted by the Commission in early July.
The most significant feature of the draft proposal is that it sets an EU-wide target for increasing the share of electricity produced by cogeneration to 20% by 2020. Europe's electricity producers have argued against setting an EU target, on the grounds that electricity markets and existing cogeneration shares vary too much between countries (ENDS Daily 5 February).
The European cogeneration industry, on the other hand, has argued for ambitious cogeneration targets to be set. Michael Brown, Director of Cogen Europe, told ENDS Daily today that a 20% share could easily be reached "well before 2020". He reiterated the association's call for an EU target of 30% cogeneration by 2010.
In the policy paper, the Commission is expected to propose a range of measures to promote cogeneration. They include removing barriers to the take-up of cogeneration - for example by making the link-up to electricity grids easier for cogeneration producers; encouraging third-party financing to help with the high start-up costs of installing combined heat and power generators; using market instruments - like energy taxes and voluntary agreements - to make cogeneration more competitive with traditional forms of energy; and further liberalising the energy market to establish a clear link between the cost of producing electricity and the price at which it is sold.
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