The ambitious and long awaited U.N. Climate Change Conference of the Parties (COP15) in Copenhagen recently concluded after two weeks of somewhat contentious discussion, marked largely by dialogue, diatribe between the U.S. and China, and general discord among the rich and poor nations. Reaching consensus among 192 nations on such complex matters as emissions mitigation and monitoring, reparations for prior pollution and how to finance clean technology transfer may have been too lofty an undertaking, given current global economic difficulties.
Ultimately, the outcome was only a modest, nonbinding agreement, known as the Copenhagen Accord ( click to download a copy), brokered by President Obama and supported by the national leaders of India, China, Brazil and South Africa. Participants are signing on as this is written, but the aftermath will likely bring varied opinions, interpretations and even recriminations.
The Accord will provide billions of dollars in climate aid to poor nations but does not require the world's major polluters to make deeper cuts in their greenhouse gas emissions. Some have deemed the outcome a disappointment, while others have hailed it as a starting point that achieved consensus on key issues such as long-term global emissions reduction targets, funding and technology support to developing countries, and transparency. Suffice it to say, that absent a legally binding, widely endorsed global agreement, emission reductions of greenhouse gases will remain largely voluntary and therefore, lacking a negotiated imperative. The Accord will not fully incent the market with a "price for carbon" that is most needed to change behavior and catalyze green investment.
The conference was certainly the focus of world attention for days and even weeks. I was privileged to travel to Copenhagen and experience COP15 in real time and found it to be exciting and enlightening. While U.S. media mainly showed video images of angry protests and long lines, my experience was gracious hospitality from the people of Copenhagen; engaging art installations in every public square; clean, reliable public transit; and an almost festive mood throughout.
During the middle weekend of the conference, the Bright Green Exposition showcased technology companies and solutions providers and included presentations by U.S. Commerce Secretary Gary Locke and U.S. Energy Secretary Steven Chu, reinforcing high-level U.S. commitment to addressing climate change through technology and trade. Our Danish colleagues showcased worldclass leadership in district energy development and integration strategies. Still, district energy and combined heat and power remain some of the best-kept secrets in the energy industry.
Copenhagen boasts one of the world's greenest and most innovative networks of district heating systems, with 80 percent of the heat supply recovered from electric generating stations — combined heat and power plants. Combined heat and power captures heat that is normally wasted and exhausted to oceans or the atmosphere and turns it into "green gold." You probably recall a time when "black gold" and "Texas tea" were what turned heads and lined bank accounts. While oil is still a highly valued commodity, some countries are discovering that energy now being wasted is a lot easier to find than oil and the resulting green gold can cut energy costs and benefit the environment.
Ninety-seven percent of Copenhagen's 35,000 buildings do not have boilers or furnaces and instead receive hot water orsteam — largely from CHPbased plants — for space heating via an underground piping network. You could not ask for a better venue to spotlight our strengths as an industry. Pointing to Denmark's success can be a guidepost for others.
Combined heat and power has been the cornerstone of Denmark's energy and climate strategy, cutting dependence on foreign oil by 1.4 million barrels per year, reducing carbon dioxide emissions by 655,000 tonnes per year and helping transform the national economy from a negative energy trade balance of $5.2 billion in 1980 to a surplus of $6 billion in 2007.
Yet, even in Copenhagen where district energy service is highly reliable, ubiquitous and costeffective with very high customer satisfaction ratings, the technology is still mostly underground and largely underappreciated, especially in policy circles. In contrast to picturesque wind turbines spinning off shore or blue solar panels gleaming in the sunlight, district energy systems don't seem to have the "sizzle."
District energy could be considered the Rodney Dangerfield of energy technologies; it "gets no respect at all."
Now is the time for government leaders and policy makers to recognize the importance of thermal energy and learn how recovery of waste heat through combined heat and power can cut emissions, conserve fuel and stimulate economic growth. If large global cities are to reduce carbon intensity in the near term, they would do well to learn from Copenhagen's success with district heating. That's why I attended COP15. It was a perfect venue to show everyone what's possible.
District Energy in the United States
It's not that the U.S. doesn't have district energy systems. To the contrary. With about 2,500 district energy systems in the United States, including most large cities and college campuses, there are widespread opportunities to integrate combined heat and power into existing district energy systems or connect renewable thermal sources like ocean or lake water.
While not at the integrative scale of Copenhagen, district energy systems have been operating in the U.S. for more than 100 years and currently serve more than 7 billion sq ft of buildings, including landmark buildings like the U.S. Capitol and Supreme Court, Empire State Building, Mayo Clinic and Harvard Medical School. IDEA, comprised of district energy utilities, campuses, service providers and vendors, has been in operation since 1909, affirms the technology's longevity.
Since 1990 the North American district energy industry has added more than 467 million sq ft of customer space to its networks, averaging about 40 million sq ft per year over the past five years. In St. Paul, for example, the district energy system has undergone extensive renewal and expansion over the past 25 years. Converting its primary fuel from coal to municipal waste wood, District Energy St. Paul (Minn.) now produces heating, cooling and power for two times the customer base with half the fuel, cutting emissions by 250,000 tonnes of CO2 per year.
So the U.S. has district heating systems and the potential for combined heat and power exists. But we haven't begun to tap its potential. What can we learn from Copenhagen? And how can we turn waste heat into green gold?
Oil Embargo as Catalyst for Change
It wasn't always clean and green in Copenhagen. Thirty-six years ago, at the time of the first oil embargo of 1973, Denmark relied on almost 80 percent imported oil. A severe price shock and supply curtailment nearly froze the Danish economy as the oil embargo triggered emergency nationwide measures to conserve oil, including a moratorium against driving on Sunday.
Determined to reduce its economic exposure to foreign supply volatility, the Danish federal government, in conjunction with municipal governments, began a shift to energy efficiency through combined heat and power and to indigenous energy supplies and away from fossil fuels. In 1976, Denmark passed the Electricity Supply Plan to establish a national policy that electricity generating stations would be required to recover waste heat, rather than simply exhausting useful thermal energy to the oceans and atmosphere, establishing CHP as the standard for electricity generation.
Denmark then passed the first Heat Supply Law in 1979, which contained regulations for heat planning in Denmark. This launched a new public planning approach for municipalities to optimize investments in energy infrastructure. The Heat Plan effectively diminished customer choice by mandating heating supply options, much like zoning in the U.S. where municipal sewer and water districts assess betterment fees to contiguous properties regardless of whether they hook up or not. The Heat Plan also reduced development risk and resulted in uptake rates of nearly 100 percent with even lower costs than projected for customers. Although Denmark still relies on coal for 52 percent of its electricity, the efficiency gained through CHP has allowed the country to reduce its emissions substantially. Nearly 60 percent of Danish electricity is produced in CHP plants, compared to a global national average of only 9 percent.
Regional Planning Optimizes Resources
In 1984, the mayors of Copenhagen, Frederiksberg, Gentofte, Gladsaxe and Taarnby decided to scale up and set up a common wholesale district heating network. This heating transmission backbone is analogous to the high-tension electricity transmission business, operating out of a modern operations control center in Frederiksberg.
The Metropolitan Copenhagen Heating Transmission runs the system in partnership with an affiliated company in the west of the city, known as VEKS. The two networks are interconnected so that excess heat and/or reserve capacity in one area can be utilized by the other and as a result, the district heating system is extremely reliable. The wholesale heat networks collect, dispatch and manage heat supply from four CHP stations, four waste incinerators and more than 50 peak-load boiler plants with more than 20 distribution companies in one large pool-operated system, with a total heat production of around 8.3 million MWh. Copenhagen takes 70 percent of the total heat and the other four municipalities share the 30 percent balance.
The most efficient CHP plants have an average energy efficiency approaching 90 percent and are dispatched based on competitive pricing. For example, Avedøre 1 and 2 CHP plants produce 810 MW of electricity and 900 MW of thermal energy at an average fuel efficiency of over 90 percent. By simultaneously generating heat and electricity, Avedøre 2 utilizes as much as 94 percent of the energy in the fuel burned and has an electrical efficiency of 49 percent, making the unit one of the most efficient in the world.
The share of district heating produced at CHP plants in Denmark has more than doubled, at 80 percent today up from 39 percent in 1980. Similarly, the share of electricity cogenerated with heat has gone up from just under 18 percent to more than 60 percent in 2006. The fuel mix for production of district heat has evolved from 67 percent oil to approximately 6 percent oil, and renewable fuels (biomass, straw, etc.) have increased from 16 percent to 45 percent. Because district energy aggregates the heating needs of hundreds or thousands of buildings, it creates the economies of scale for central plants to use renewable and fuel flexible solutions. These multifuel facilities would not be economically feasible on an individual building basis.
Improved Energy Intensity and Balance of Trade
Although the promotion of cogenerated electricity and heat (aka CHP) is just one approach in a series of measures to improve energy efficiency, CHP has been extremely important for Denmark's environmental footprint and economic prosperity.
In 1981, according to the Danish Energy Authority, Denmark's National Energy Account operated at a deficit of nearly 26 billion DKK ($5.2 billion). Twenty-five years later, in 2006, Denmark had become a net exporter of energy with a trade surplus of over 30 billion DKK ($6.1 billion) in oil, natural gas and a small amount of electricity. Exports grew with discovery of North Sea oil in the late 1990s and emphasis on CHP also preserved fuel resources for export, contributing to a positive trade balance. Denmark's focus on clean energy investment contributed to a GDP increase of 80 percent while gross energy consumption increased only 5 percent and CO2 emissions have declined approximately 18 percent.
Policy Opportunities Ahead
District energy and CHP hold much potential, but one has to wonder how they will fair when the U.S. Congress finally convenes around a climate bill. It is critically important that cap-and-trade regulations not impair district energy/CHP systems with an imbalance in allowance costs, particularly if electric utilities are granted free allowances. The current House (Waxman-Markey) and Senate (Kerry-Boxer) bills provide limited allowance exemptions to a certain class of CHP systems, but fall short of leveraging the potential efficiency gains and carbon reductions possible with expansion of district energy/ CHP in cities and campuses nationwide.
If a national objective is to stimulate jobs by investing in green infrastructure to improve energy security, there are hundreds of cities and campuses ready right now to invest in system renewal and expansion. This was borne out by a November 2009 U.S. Department of Energy funding program for district energy/ CHP that was oversubscribed by a factor of 25 to 1. Achieving 80 percent or even 90 percent fuel efficiency is neither a technology issue nor a capital problem.
The U.S. industry is poised for rapid growth. District energy and CHP utilize off-the-shelf technologies that are proven, reliable and widely available. With new emphasis on a smarter grid, wouldn't it make sense to use more of the two-thirds of the fuel burned to make electricity instead of simply throwing all that heat away? These systems can turn waste heat into green gold no matter if it's day or night, rain or shine, windy or calm.
If a national objective is to reduce carbon emissions, then energy and climate policies should address thermal energy and not solely focus on electricity. The advantage of scale with district energy is that in serving dozens or hundreds of buildings, efficiency investments in the central plants provide benefits to the aggregated customer base. For instance, Princeton University successfully tested biofuels in its campus CHP facility. As a result, when the comparative fuel costs are again compelling, with the turn of a single valve they would essentially convert 150 buildings to renewable fuels.
The real uphill climb is a policy gap that fails to value thermal energy, does not encourage energy efficiency and lacks the visionary common sense embraced 30 years ago in Denmark. Lacking a binding global agreement for emissions reductions from the COP15 in Copenhagen, it is even more urgent that IDEA members be more effective advocates for community-scale energy efficiency. Mayors have become our most important audience. IDEA hopes that policy makers experienced the "best-kept secret" in Copenhagen this December and returned home with a new-found respect for the green gold that can be turned into district heating for cities and campuses from coast to coast.
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