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Peat and its role in the EU ETS and in the electricity certificate system – Swedish experiences

Håkan Sköldberg, Profu. Peat and its role in the EU ETS and in the electricity certificate system – Swedish experiences. Peat and its role in the EU ETS and the certificate system. Peat is an important fuel in Finland, therefore experience from other countries may be valuable

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Peat and its role in the EU ETS and in the electricity certificate system – Swedish experiences

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  1. Håkan Sköldberg, Profu Peat and its role in the EU ETS and in the electricity certificate system – Swedish experiences

  2. Peat and its role in the EU ETS and the certificate system • Peat is an important fuel in Finland, therefore experience from other countries may be valuable • In Sweden, peat is included in both the EU ETS and the electricity certificate system • What is the Swedish experience? - The policy instruments function together, but the consequence is that peat is being phased out

  3. The use of peat peaked in 2004: 4,3 TWh The use of peat is now decreasing rapidly Biofuels (e.g. wood chips) are taking its place Some peat is still needed for ”combustion reasons” Investments are required if all peat should be substituted Peat will in some cases be substituted by wood pellets Subsidy systems for peat are discussed, expected i February Large Swedish peat users - trends

  4. Policy instruments – changes and uncertainties 2003-05-31: Certificatesystem introduced, peat not included 2004-01-01: Reduced tax on CHP 2004-04-01: Peat included in the certificate system 2005-01-01: EU ETS introduced, peat included 2002 2003 2004 2005 2006 Should peat be included in the certificate system? Future development of the certificate system? Should peat be included in the EU ETS? Should peat still be included in the certificate system? What happens with the CO2-tax? Based on: ÅF, 2005

  5. Competition between coal, peat and biofuels in CHP-production (Sweden) Current situation 25 Peat 20 Biofuels 15 EUR/MWh cert 10 5 Coal 0 0 10 20 30 5 15 25 EUR/t CO2 Fuelprices (~ 2005):- biomass 140 SEK/MWh- peat 110 SEK/MWh- coal 60 SEK/MWh - - - = excl. CO2-tax

  6. Peat price + Sulphur tax + CO2-price ≤ Biofuel price Sulphur tax = 1,5 EUR/MWh CO2-price (20 EUR/ton) = 7 EUR/MWh (In some cases the switch to biofuels requires investments) What is needed in order to keep peat competitive?

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