Cogen "at risk" from EU emission trading scheme

Industry warns of disincentives for investors in CHP plants; urges revision of allowances allocation

Combined heat and power (CHP) industry association Cogen Europe has warned that the EU's draft carbon dioxide (CO2) emission trading scheme risks creating "serious barriers for the development of cogeneration" when it begins operating in 2005. This could undermine European efforts to limit greenhouse gas emissions in line with the Kyoto protocol, it says.

In a position paper issued yesterday, Cogen Europe urges changes to the way that emission allowances are distributed during the scheme's first three years so as to give credit to carbon emissions avoided by CHP plants. The European Commission's proposals for free distribution based on historical emissions will instead mean penalising any new or upgraded CHP plant, it warns.

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