Support Measures For DHC

Support Measures for DHC

Country

Sweden

#

Name and reference of measure

Type of measure

Responsible organ

Existing or planned?

System Conversion Subsidies SFS: 2006:125

Support system for conversion from oil and electric heating to DH

County Administrative Board/Länstyrelsen

In action since January 1, 2006, ends 2012

Quotations from the measure

1 § The purpose of this regulation is to promote efficient and environmentally friendly use of energy and a reduction in electricity use for heating in residential buildings

The Purpose of the measure

System Conversion Subsidies

Even if there are no price regulation in place for district heating some subsidies concerning stimulating the conversion from oil or electricity panels to district heating as well as the use of primarily different heat pumps are in place. The law (SFS 2006:125) states that the subsidy can be given to single and double household houses as well as to residential buildings and “other types” of buildings, which usually means official buildings. The law started on the first of January 2006 and runs through to December 31 2010. The total amount of subsidies to be handed out during this period is set to 1.5 billion SEK.

A subsidy support is given to conversions from electricity panels to district heating, heat pumps or the use of some sort of bio fuel such as chips or pellets, conversion from an oiled based heating system is no longer subsidized only replacement of electricity panels. For conversion to heat pumps of any type subsidies are given only if the electricity consumption during peak hours is at maximum 35% of the total heat demand per building. For a conversion to district heating subsidies are given to the cost of material for the distribution system (rebuilding to water based heating system), radiators and heat exchangers with main central. For conversion to a bio fuelled system subsidies are given for the cost of material for water based distribution system, radiators, chimney and equipment for accumulation. In this case the bio fuel must represent at least 70% of the total heat demand per household.

Up to 30% of the cost of material and labour are subsidised with a maximum amount of SEK 30000. These subsidies are very unevenly spread throughout the country with a strong bias towards counties and municipalities with low cost district heating and high proportion of earlier usage of electricity panels, thus the conversion also included a change to a water based in-house distribution system.

Eligibility Criteria

Eligible measures

§ 3 Where there are funds supported under this regulation is to the measures specified in § § 4-7.
§ 4 grants may be provided to a rendering which means that direct electric heating in a dwelling or Housing-related local total or partial replacement with a water heater in which heat energy is supplied by connection to district heating.

Support given to such a conversion requires that the district heating accounts for 70 percent of residential apartment and the room projected annual heat demand for space heating. District heating also account for all the estimated annual heating requirement of heating of hot water except in cases where the solar heating is responsible for a portion of the heating load. Regulation (2008:1248).

§ 5 grants may be provided to a rendering which means that direct electric heating in a dwelling or Housing-related local total or partial replacement with a water heater in which heat energy is supplied by Installation of a mountain, sea or ground heat pump.

Support will be given to such a conversion requires that the means that electricity accounts for more than 35 percent of residential apartment respective premises estimated annual heat demand for heating space and domestic hot water, including electricity use at particularly low outdoor temperatures (tip load).

Assistance may be given to installing an air heat pump. Regulation (2006:125)

Impact of Measure

Effectiveness of the measure

There has so far been no evaluation of the measure. There is a tendency that oil heated houses convert to heat pumps and electric heated houses converts to DH.

The support is an indirect measure but impacts DH. Most of the electricity heated houses within this support scheme has converted to DH. One reason for this that these houses are small and build in groups, semi detached or detached.

III. SUPPORT MEASURES FOR DHC

Country

Sweden

#

Name and reference of measure

Type of measure

Responsible organ

Existing or planned?

Climate Investment Programmes (Klimp)

Support to Green House gas reducing projects

Swedish Environmental Protection Agency

Running till 2012

Quotations from the measure

Link

Transport and energy investments

The investments are made in the sectors that have the largest impact on climate. This applies above all to measures in the transport and energy sectors. They include expansion of district heating, transition to biofuels, measures to boost energy efficiency and local information about the climate issue and the ongoing projects. Almost one third of the Klimp grants have been invested in biogas measures.

Best measures

Only the best measures in the best climate investment programmes have received funding. The Swedish EPA and the sector agencies, the Swedish Road Administration, the National Board of Housing, Building and Planning and the Swedish Energy Agency have thoroughly assessed the applications received by the EPA. The programmes have been awarded points depending on how well they demonstrate good climate strategies, overall perspectives, collaboration and efficient use of funding and environmental effects. The Council for Investment Support (RIS), whose members are appointed by the Government, decides on the grants.

The Purpose of the measure

The Swedish Government’s support to Climate Investment Programmes, “Klimp”, is a tool for reaching the Swedish climate objective as formulated in the Swedish climate strategy in 2002. Klimp has enabled municipalities and other local actors to receive grants for long-term investments that reduce greenhouse gas emissions.

The grants have been distributed five times by the Swedish Environmental Protection Agency between 2003 and 2008. The Government has no plans to make any further grants. The investments are estimated to reduce emissions by 1.1 million tons of carbon dioxide per year.

Klimp is helping Sweden to achieve its climate objective in three ways:

• The investments lead to reduced emissions of greenhouse gases.
• The work on a climate investment programme strengthens local climate work and cooperation between various actors.
• Collecting and disseminating knowledge and experience of climate investments encourages climate work in other parts of the country.

Billions invested nationwide

Between 2003 and 2008, Klimp funding of SEK 1.8 billion was granted for 126 climate investment programmes, as well as 23 special projects known as “guldklimpar” (“gold nuggets”). The grants have been invested in 67 municipalities, seven municipal associations, five county councils and four companies in all counties throughout Sweden. Guldklimpar are particularly effective measures that have been granted funding within programmes that have not been granted other funding. Together, the programmes comprise about 900 measures and an investment volume of just over SEK 8 billion.

Programmes run for four years

The climate investment programmes normally run for four years, after which a final report is submitted to the EPA. This is when decisions are made on how much final funding is payable to those who have made investments, depending on how well they have met their objectives. In 2007, final reports from the climate investment programmes began to be submitted to the EPA. By 2012, all programmes will have been concluded.

Impact of Measure

Effectiveness of the measure

Reduced emissions of greenhouse gases

The measures that were granted funding between 2003 and 2008 are estimated to reduce emissions of greenhouse gases by 1.1 million tons of carbon dioxide equivalents per year. This corresponds to about a third of the Swedish climate objective, which is to cut the level of greenhouse gas emissions by four percent over the period 2008-2012 compared to the 1990 level.

Energy savings

The programmes are also estimated to save 1.2 TWh of energy per year. The largest reductions are expected within the categories Energy (production & distribution), by almost 344,000 MWh per year, and Transport (road), by almost 293,000 MWh per year.

III. SUPPORT MEASURES FOR DHC

Country

Sweden

#

Name and reference of measure

Type of measure

Responsible organ

Existing or planned?

Carbon dioxide tax.

SFS 1994: 1776

Fuel taxation proportional to carbon content in the fossil fuel

Ministry of Finance/Swedish Tax Agency

In action since 1991

Quotations from the measure

The Policy in Brief

Economic Instrument: Carbon dioxide tax.

Problem: Emissions of greenhouse gases which may induce global warming.

Goal: Reduce or stabilize CO2 emissions, generate revenue for the national budget and serve as a model for applications internationally.

Description: A tax on CO2, levied primarily on fossil fuels including oil, coal, natural gas, LPG and gasoline. Part of the wider energy taxation system, the tax is generally higher for the household sector than for the industrial one so as not to hamper competitiveness on international markets.

Administering Institution: National Tax Board (Sweden).

Key Stakeholders: Industry and consumers.

An Overview

Economic instruments have become increasingly important in Scandinavian environmental policy. The carbon dioxide (CO2) tax within the energy taxation system in all the Scandinavian countries is a prime example. Each country introduced its CO2 tax or taxes at different times, at different tax levels, with different sets of exceptions. The Finnish CO2 tax is both the first and lowest, the Swedish tax the highest and the Danish industrial tax the latest.

The CO2 tax is least suitably applied to energy-intensive industries (for instance, pulp and paper, and iron and steel) which must compete on international markets. This is because a high CO2 tax rate would hamper competitiveness if similar measures were not also taken abroad. For a small country like Sweden, highly dependent on international trade, special rules had to be established to safeguard the international competitiveness of Sweden's energy-intensive industries, international aviation and shipping included. Tax abatement rules were thus introduced for energy-intensive industries, causing the industries most vulnerable to increased energy taxes to be unaffected until 1993, when a new energy taxation system was introduced.

Of the Scandinavian CO2 taxes, the Swedish one is the leading example of the 'greening' of the taxation system. Not only are the tax rates high, causing total energy taxation to increase considerably, but the revenue generated is used to decrease taxes on labour. The CO2 tax was accompanied by a reduction in the general energy tax, as well as a tax on sulphur and a value-added tax on energy. When the Swedish CO2 taxes were first introduced in January 1991, their rates varied according to the average carbon content of different fossil fuel types, but they were applied equally across "basic" users (households and non-manufacturing industries) and industries (mining, manufacturing and horticulture). In January 1993, however, the industry rate was reduced to one-quarter of the (now modestly increased) basic rate. The only exceptions are for gasoline and LPG (motor fuel), which share identical basic and industry tax rates along lines similar to those in the EU.

Tax carbon tax together with the energy tax on oil is presented in the figure below. All fossil fuel, natural gas and coal have the same carbon tax as oil.

Exceptions.

· Pure electricity production no Carbon tax or Energy tax

· CHP tax on fuel corresponding to the heat production, appr. 20 % of general carbon tax

· Boilers used for industrial processes, 20 % of general carbon tax

The Purpose of the measure

The purpose of the tax is to phase out fossil fuel for heating. District heating has been the most successful sector in this field.

Impact of Measure

The fuel mix in the generation has changed rapidly due to the energy taxation and the carbon tax especially.

DH has increased due to the Carbon tax because of the increasing cost for oil heating ,the main competitor over the years.

Effectiveness of the measure

Very effective. This can be illustrated by the change of fuel within the DH sector. Even though it is a tax the market players have been able to react on the measure with any fossil free solution. This has resulted in an extensive use of surplus heat from industry as well as biomass and energy from waste.