Figure 1. Greenhouse Gas Reductions in Climate Change Legislation.
Courtesy the World Resources Institute 2007.
STAY IN IT
FOR THE
LONGER RUN.
Upgrade and Revamp.
Changes in your operating
requirements don”t always mean
new equipment. Dresser-Rand
offers a broad range of upgrades
to maximize reliability and extend
mean time between repairs. We also
provide a number of comprehensive
revamp solutions to help meet your
changing performance requirements.
So, regardless of who originally
manufactured the equipment,
we have the product designs and
experienced technical resources to
help keep your rotating equipment
on track—and your business up
and running.
to emissions inventory, planning and compliance. The opportunities come from the
potential for enhanced economic value of
carbon reduction measures that district
energy systems can implement, such as
combined heat and power or conversion
to biomass.
The ultimate cost of allowances will
depend on many factors, including the
level of GHG reduction commitments made
by the U.S. and the rest of the world, the
specific rules of the U.S. cap-and-trade
program and the policies for integrating
the U.S. trading program with international
programs. Prices in the Chicago Climate
Exchange program are currently $4 per metric
ton CO2, but this is a voluntary program
with relatively few participants. A number
of corporations are using ‘shadow prices’
(an assumption of CO2 emissions cost for
the purpose of comparing options) of at
least $9 per metric ton. Prices in the European
Union emissions trading system, still in the
beginning stages of implementation, averaged $25 per metric ton of CO2 equivalent
in 2006, spiked to almost $40 in early 2006,
then tumbled to $12 later in 2006.
I believe that it is prudent to consider
the CO2 price to be at least $25 per metric
ton within a decade. At $25 per ton, the
total estimated cost of emission allowances
for the district energy industry would be
$5.3 billion annually (this is my estimate
based on data from U.S. Department of
Energy and IDEA survey data). The impact
on cost per million Btu of heat from heat-only boilers is illustrated in Table 1 for a
range of CO2 values per ton. Biomass is
GHG neutral, although it emits CO2 during
combustion. During its growth, however,
living biomass absorbs CO2 from the atmos-
phere by photosynthesis, so the net GHG
effect of the biomass is neutral. Carbon
dioxide emission factors are summarized
in Table 2.
Implementation of biomass energy,
fossil fuel CHP or other low-carbon technologies has the potential to reduce a
district energy system’s annual allowances
costs, or even generate net revenue depending on the nature of the system and the
cap-and-trade program rules. There are a
number of major issues for district energy
in the design of these programs.
The Americas (713) 467-2221
European Served Areas33-2-35-25-5225
Asia-Pacific 603-2093-6633
info@dresser-rand.com
Key District Energy Issues
There is enormous diversity in the
district energy industry – in system sizes;
types of fuels and technologies; and the
various public, private and third-party forms
of ownership. All result in different perspectives and priorities relative to climate
change legislation.
The impacts of climate change legislation on specific systems, and the district
energy industry overall, will depend on the
specific provisions of the legislation, including
which entities are covered in a cap-and-trade system, how allowances are allocated,
credit for early action, and whether and how
emission reductions occurring outside the
boundaries of the covered facility are credited (e.g., emissions from building boilers
or grid power plants).
©2007 DRESSER-RAND COMPAN Y
Covered Entities
A key question is, What criteria are
applied for inclusion as a ‘covered entity’
in a cap-and-trade system? Although large
energy users would rather see economy-wide carbon constraints, governments tend
to go after the large fuel users because this
