Figure 2. Combined Heat and Power Generation by Entity Type, United States, 2005.
Source: U.S. Energy Information Administration, 2005 EIA-906/920 Monthly
Time Series File, EIA-906/920 and EIA-860.
41% Industrial 56% NAICS- 22 Electric Utility 1% Commercial 2%
Figure 3. Carbon Dioxide Emissions per MWh of Electricity by Facility Type, United States, 2005.
Source: FVB Energy Inc., based on analysis of U.S. Energy Information Administration 2005 EIA-906/920 Monthly Time
Series File, EIA-906/920 and EIA-860. Metric tons CO2 per MWh electricity
0.90
0.80
0.70
0.60
0.62
0.50
0.49
0.40
0.30
0.32
0.20
0.10
0.00
NAICS- 22 CHP All Power-Only Plants
could be integrated into existing district
energy systems to displace currently used
fossil fuels and to support growth.
Bioenergy, including biomass combustion
to displace current coal use and biogas
and bioliquids to displace natural gas and
fuel oil, will be an important element in
reducing the carbon footprint of a growing
district energy industry.
During the next 10 years, energy sources
for district heating can move from the
current mix depicted in figure 5 to the mix
shown in figure 6. Greenhouse gas reductions resulting from this shift would exceed
45 million metric tons of CO2. At the 2020
emission allowance price projected by the
U.S. Environmental Protection Agency
($16 per metric ton CO2), these reductions
would be worth $720 million annually.
0.79
The Right Policies
What will it take to realize this potential?
It is critically important that the pending
climate change legislation adjust provisions
regarding allowance surrender obligations
for CHP facilities. In addition, the climate
bill and other energy policy legislation
should include district energy and CHP in
provisions that create incentives for energy
efficiency and renewable energy, including
the Renewable Electricity Standard and
other programs.
Commercial and
Industrial
Power-Only Plants
excluding Nuclear
opportunities. Before addressing this, I will
step back and characterize the total U.S.
district energy sector as it exists today. This
characterization is based on analysis of a
wide range of studies undertaken by
government agencies and IDEA.
We estimate that there are more than
2,500 district energy systems in the country
serving 8. 4 billion sq ft of building space,
equal to 12 percent of total commercial
floor space. About 13 percent of district
energy systems incorporate CHP. Because
it is the larger systems that tend to install
CHP, these sources provide a higher percentage ( 20 percent) of the country’s total
district heat production.
Figure 4 summarizes district energy
fuel consumption in the U.S. The predomi-
nant fuel is natural gas, providing 77 percent
of total fuel, with coal a distant second at
15 percent. Oil, biomass and other fuels
are currently minor sources, collectively
providing 8 percent. We estimate that
greenhouse gas emissions by district energy
systems total 57 MMTCO2E, or 1 percent
of total U.S. energy-related greenhouse
gas emissions.
District Energy in 2020
With supportive policies, district energy
can make significant further contributions
to greenhouse gas reduction. Total district
energy output could grow 5 percent
annually through 2020, resulting in a total
growth of about 80 percent over 2008.
An additional 8,000 MW of CHP capacity
CHP Allowance Surrender
In both the House-passed American
Clean Energy and Security Act and the
Senate Clean Energy Jobs and American
Power Act, electricity sources with “utility
units” are required to surrender allowances.
Recognizing the ability of CHP to contribute
to greenhouse gas emission reductions,
these bills appropriately exempt CHP from
the definition of “utility unit.” Without this
exemption, cap-and-trade would create
perverse results by discouraging rather
than encouraging this energy-efficient,
environmentally beneficial approach. These
results would occur because CHP significantly decreases total societal emissions
but increases emissions at the CHP site.
Unfortunately, the exemption only
applies to CHP units that sell under 25
MW and that sell under one-third of their
electrical output. We estimate that this
exemption criterion will be met by more
than 75 percent of district energy campus
CHP power production but less than 25
