BACKGROUND

Despite important steps taken by government and industry to mitigate air pollutant and greenhouse gas (GHG) emissions, carbon dioxide (CO2) emissions have increased by over 20% in the past decade. Without further action, the carbon intensity of the world’s economy will increase dramatically, due in part to greater reliance on coal for power generation. As a result, CO2 emissions in the IEA’s projections are forecast to rise 55% -- from 27 gigatons (Gt) in 2005 to 42 Gt in 2030 (see World Energy Outlook 2007 Edition - China and India Insights).

In particular, improving supply efficiency in the heat and electricity sectors offers an important near-term opportunity. For example, the average global efficiency of traditional fossil-fuelled power generation has remained stagnant for decades at 35-37%. About two-thirds of the primary energy that is converted to produce electricity is lost as “waste” heat that can, in part, be used to satisfy the demand for heat in industries, buildings, towns and cities. Further, the transmission and distribution (T&D) of this electricity from large central power stations contributes further losses of around 9% of net generation, so that only about one-third is delivered to the end customer. The following figure shows these losses for the global power system, demonstrating that 68% of total energy input is lost in energy each year before it reaches the end consumer.

There are a variety of strategies for reducing this waste through increasing global average power plant efficiencies. For example, in coal-fired power plants, the use of pulverised coal combustion with supercritical (very high pressure and temperature) steam turbines offer an important opportunity to increase energy supply efficiency. However, there are even more dramatic efficiency gains that can be realised by pursuing energy efficiency in the heat and electricity sectors simultaneously through greater use of combined heat and power and district heating and cooling. CHP and DHC include a family of proven, cost-effective technologies in the industrial, commercial and residential sectors that merit a closer look (see Fossil Fuel-Fired Power Generation: Case Studies of Recently Constructed Coal- and Gas-fired Plants).

Energy Flows in the Global Electricity System (TWh)

WHY ARE POLICY MAKERS AND INDUSTRY PURSUING CHP?

CHP systems are attractive because they can deliver a variety of energy, environmental and economic benefits. These benefits stem from the fact that these applications produce energy where it is needed, avoid wasted heat, and reduce T&D network and other energy losses. Other benefits cited by policy makers and industry include:

• Cost savings for the energy consumer;
• Lower CO2 emissions;
• Reduced reliance on imported fossil fuels;
• Reduced investment in energy system infrastructure;
• Enhanced electricity network stability through reduction in congestion and ‘peak-shaving’; and
• Beneficial use of local and surplus energy resources (particularly through the use of waste, biomass, and geothermal resources in district heating/cooling systems).

In addition, findings from the IEA report, Combined Heat and Power: Evaluating the Benefits of Greater Global Investment, quantify these benefits under aggressive policy scenarios.  The following is a snapshot of the potential CO2 savings from CHP, under the aggressive assumptions.

Carbon Dioxide Emissions, 2015 and 2030