Combined Heat and Power Generates Climate Change Benefits

The capture and use of waste energy, now unrestrained through the U.S. economy, is widely recognized as one of the lowest hanging fruits in the effort to improve efficiency in the economy and reduce emission of greenhouse gases (GHG’s). Known as Combined Heat and Power (CHP), or cogeneration, the practice in 2006 provided more than 12% of U.S. power, more than is supplied by nuclear reactors.

The capture and use of waste energy could further reduce carbon dioxide emissions by 17%, according to the Lawrence Berkeley National Laboratory. Recognizing this, EPA has indicated that future climate change regulations will be CHP friendly. As a first step, EPA proposed on April 12 to require facilities already subject to mandatory GHG reporting to check a box to indicate whether some or all of the GHG emissions they report are from CHP. However, existing regulatory programs, and lack of equal treatment with other GHG reduction technologies, could stand in the way of more widespread implementation of the practice.

Some believe that the new source review (NSR) program under the Clean Air Act (CAA) has a chilling effect on the development of CHP, because of fears that plant modification will trigger the requirement for a Title V air permit under the CAA.

Also, while there are government incentives available for CHP, including a 10% investment tax credit, it is unclear whether other provisions of energy laws place an adequate value on CHP. For example, CHP is not generally considered eligible for meeting renewable portfolio standards (RPS) currently in effect in some states and proposed under federal climate change legislation, though some states do provide eligibility.

For more information on CHP, its regulatory status, and available government incentives, contact Steve O’Day or another member of SGR’s Sustainability Practice Group.

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