US bets on cogeneration as Europe lags behind

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President Barack Obama's recent decision to set binding targets for the proliferation of cogeneration plants by 2020 is casting a doubt on the level of ambition of the EU's green agenda.

The cogeneration industry praised Obama for issuing an executive order – a non-legislative directive - on 31 August that would see the number of cogeneration plants double by 2020. 

Cogeneration (also called combined heat and power, or CHP) is seen as a promising and efficient technology that captures the heat generated in the production of electricity and uses it to produce hot water or other thermal energy. It can achieve energy savings of up to 90% at a manufacturing plant.

Obama’s order was aimed at accelerating investments in industrial energy efficiency to help manufacturers.  This could result in the US reducing 150 million metric tons of carbon dioxide emissions annually while generating up to 40GW – nearly the total volume of power supplied by photovoltaic panels in Europe - by 2020, government figures show.

"What is interesting about the USA’s approach is that it is especially targeting barrier removal. For industry this is a key element of what is needed," said Fiona Riddoch of COGEN Europe.

Europe lagging behind

The American Council for an Energy-Efficient Economy (ACEEE) ranks Europe much higher than the US on energy efficiency progress. However, when it comes to cogeneration, Europe is lagging behind. The level of CHP penetration in European markets is 11%.

In its Impact Assessment for the Energy Efficiency Plan 2011, the European Commission identified an additional economic potential for CHP of around 350 TWh of electricity, representing 15-20 Mtoe of primary energy savings per year.

Obama’s initiative will make the USA an even more attractive market for CHP, Riddoch said, adding that Europe has substantial CHP expertise and must maintain its lead in energy efficiency.

The EU had a chance to strengthen its CHP laws in 2012, when member states agreed, after assiduous rounds of negotiations, to adopt the Energy Efficiency Directive, or EED. But the CHP industry called the directive a missed opportunity for combined heat and power in Europe.

"What the USA has done is give a strong signal to their own industry to keep up with energy efficiency opportunities," Riddoch said. "The target and the clear signal of concern from the federal government is a wake up call."

That signal in Europe is weaker. EU countries are not bound by a binding target, but they must carry out cost-benefit analyses for the installation of CHP when new electricity or district heating plants are being considered.

"Obama’s executive order is judged by many … as having more of an impact than the EED, and actually increasing the number of cogeneration plants in the US by 50% by 2020," energy expert Randall Bowie of the Rockwool International consulting firm said.

Riddoch agreed, saying the CHP industry “was least well served by the new EED and this at a time where Europe needs to put extra efforts into supporting and growing the industrial base." 

Using Obama’s action as a blueprint for Europe doesn’t have universal support.

Peter Botschek, director Energy for the European Chemical Industry Council (CEFIC), said new regulations would drive industry out of Europe.

"Plants will not be necessarily built here, but outside Europe – and this will cost jobs. That could be the consequence of [setting] ambitious targets beyond the local possibility,” he said.  “We could have a binding target – but it's one thing to have high-flying targets and another one to have concrete measures which are balanced and supportive.”

Timeline: 
  • 10-13 Sept. 2012: Formal adoption of the Energy Efficiency Directive in the European Parliament
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