District energy is currently at a small base in Japan, but this is beginning to change, as government recognizes these systems as part of the nation’s larger Kyoto Protocol energy efficiency and GHG reduction strategies. District energy is therefore one area to watch for growth in the future. The other key area where Japan has made its mark in recent years via a concentrated effort to establish the country as a key provider of smaller-scale commercial and residential CHP units, is using micro-turbines and fuel cells in CHP mode. There are a variety of policies in Japan for small-scale CHP units, including subsidies for high-efficiency gas-fired units, accelerated tax depreciation for small- and medium-sized businesses, and expanded research, development and demonstration of fuel cell CHP. Figure 2 demonstrates the Ministry of Economy and Trade’s (METI) achievements in stationary fuel cell CHP demonstrations.
Recognizing Japan’s federal leadership, the IEA awarded the country three stars (out of five) for its general CHP/DHC policy efforts, with a special award of four stars for Japan’s micro-CHP/fuel cell efforts. Japan is beginning to recognize the role that CHP/DHC can play in GHG and energy efficiency targets, accompanied by the introduction of area-wide district energy and other measures to address barriers and raise awareness. However, the country lacks a national CHP/DHC development strategy, and could do more to reduce interconnection barriers and to provide recognition in environmental regulations, including those for GHG reductions. As a result, the IEA predicts that general CHP/DHC growth in the near future will be modest. However, Japan appears ready to take micro-CHP and fuel cell CHP to another level globally, and the IEA recommends that Japan continue to exert its leadership to expand energy efficiency and GHG reduction opportunities in developing country markets.
GERMANY In Germany, CHP represents almost 13% of electricity generation and is seen as a strategic technology to aid in the government’s climate change and energy policies. Federal laws, including the 2002 CHP Law, with a premium payment for electricity from CHP plants that are modernized, and for smaller (less than 2 MW) plants; and a new CHP Law, which aims to double CHP electricity production by 2020, provide a solid foundation for further growth in CHP in Germany. In addition, the country is a leader in the local use of district heating with CHP systems, with local utilities (Stadtwerke) investing heavily in CHP/DHC schemes. Finally, Germany has exerted real vision in expanding the use of biogas CHP via feed-in tariffs, making the German biogas CHP market one of the most active markets in the world. As a result of this support for biogas CHP, Germany has seen this technology grow dramatically over the past seven years (see Figure 3).
In addition to these strong policies, the German government has also led the way in addressing other barriers to greater use of CHP. For example, the German National Allocation Plan 2, under the European Union’s Emission Trading System, allocates emission allowances to CHP for both heat and power outputs (also known as double benchmarking), based on the emissions from separate heat and power. This innovative approach takes into account the overall emissions savings of CHP compared to the alternative. Germany also joins Japan in its support for micro-CHP and fuel cell CHP, with a supportive policy and subsidy structure. Based on Germany’s demonstrated leadership in CHP and DHC development, the IEA has awarded Germany four stars (out of five) for its efforts to address barriers. CHP/DHC is at or close to the top of the list of energy and climate policy priorities and a suite of effective policies is being implemented as part of a comprehensive strategy. Important growth in CHP/DHC markets (and resulting emissions reductions) can therefore be expected in Germany.
THE UNITED STATES While the United States (US) has the largest installed CHP electrical capacity at 85 gigawatts (GW) which provides about 8% of US electricity generation (see Figure 4), this was the result of a federal law in the 1980s (the Public Utilities Regulatory Policy Act- or PURPA), combined with active State policies in a handful of markets in the late 1990s and in this decade, including California, New York and other Northeastern states.
There clearly has been a transition from federal to state policy leadership in the US over the past several years, as the federal government has shifted from active CHP mandates like PURPA to voluntary approaches, including the US Department of Energy’s Regional Applications Centers, which focus on demonstrating CHP applications and tailor their offerings to each region’s needs, and the US Environmental Protection Agency’s CHP Partnership, which facilitates projects and offers recognition for the GHG reduction benefits of CHP. A handful of US States has begun to build from this federal activity level to foster new CHP investment, through a variety of policy measures. Figure 5 shows that only a handful of states have significant CHP capacity. This is a direct result of government action in these states.
For example, the State of Connecticut uses output-based air emissions regulations that relate air emission to the productive output of a process; thereby encouraging fuel conversion efficiency as an air pollution control measure. This sort of approach (also called double benchmarking) can be used to distribute allowances in GHG emissions trading schemes. In addition, to address a key barrier to CHP and other decentralized generation, the State of New York was one of the first states to establish standardized interconnection requirements for CHP units. Finally, a growing number of states, including the State of Pennsylvania, have established tradable renewable portfolio standards that include CHP (or waste heat recovery), which mandate that energy providers meet a specific portion of their electricity demand through renewable energy and/or CHP. The IEA has recognized the past federal leadership and the current state innovation by awarding the United States three stars (out of five) for its CHP/DHC policy efforts. There is a clear recognition of the role of CHP/DHC, accompanied by the introduction of some measures to address barriers. However, the country lacks a national CHP/DHC development strategy, and could do more to reduce interconnection barriers and to provide recognition in environmental regulations, including those for GHG reductions. As a result, the IEA predicts that CHP growth in the US will be modest.
LOOKING TO THE FUTURE It is clear that these three large industrialized countries have taken very different paths toward their goal of realizing the GHG and energy benefits of increased use of CHP and DHC. In the coming months, the International Energy Agency plans to issue additional country scorecards for other G8 countries, as well as major economies like China and India. These efforts are a part of the IEA’s International CHP/DHC Collaborative (see Box). It is the IEA’s hope that these country scorecards will provide policy makers and industry with valuable lessons, while we also work to tackle the more difficult problem of revolutionizing the way that energy is supplied and used.
The International CHP/DHC Collaborative The International CHP/DHC Collaborative was launched in March 2007 to help evaluate global lessons learned and guide the G8 leaders and other policy makers as they attempt to assess the potential of CHP as an energy technology solution. The Collaborative includes the following activities:
Participants in the Collaborative include the Partners, mentioned in the acknowledgments, as well as the Collaborators, a group of over 40 government, industry and non-governmental organizations that provide expertise and support. The Collaborative Network, the larger group that is informed about meetings, publications and outreach, has almost 300 participants. |
CHP Menu |
