Heat pumps generate savings by reducing the need to buy increasingly expensive emission permits.
In the 2015 Paris Climate Change Conference, a binding global climate agreement was reached. The goal of is to limit the rise in average global temperature to well below 2 °C. Additionally, the parties pledged to endeavor to take measures that will limit global warming to under 1.5 °C.
The world’s carbon sinks capture more CO2 than release it into the atmosphere. The biggest natural carbon sinks are the soil as well as forests and oceans. They are estimated to lock up 9.5–11 gigatonnes of CO2 annually. In 2019, when converted to CO2, the world’s total greenhouse gas emissions amounted to 50 gigatonnes.
Finland has pledge to reach carbon neutrality by 2035, EU by 2050, and China by 2060. These are ambitious goals. This means that we can release only as much CO2 to the atmosphere as our carbon sinks take up. After 2035, Finland should already start to capture more carbon than the country releases. To reach zero emissions, nations and companies worldwide must work towards recovering the entire world’s greenhouse gas emissions.
This goal can be reached only through wide-ranging changes in living, transportation, energy production, industry, and consumption. Companies, municipalities, and ordinary people are already taking action at their own initiative. Technological development is making low-emission solutions increasingly competitive. This is also one of the most important goals for Oilon’s product development.
Emissions trading is an EU-wide scheme where CO2-generating plants have the obligation to own a number of emission permits for each unit of emissions they produce. These emission permits are allocated to operators either free of charge or through auctions. Operators can trade emission permits with one another at their own discretion within the EU carbon market.
The purpose of emissions trading is to keep the greenhouse gas emissions from industrial and energy-producing plants as well as aviation within the European Economic Area within limits specified for the entire European Union’s emissions trading sector.
The emissions trading scheme covers more than 40 per cent of the EU’s greenhouse gas emissions, and, in Finland, slightly less than half.
Plants covered by the emissions trading scheme must hold a greenhouse gas emissions permit issued by a competent authority. The permit comes with monitoring and reporting obligations, such as the obligation to annually report the number of emissions permits that corresponds to the plant’s emissions for the previous calendar year. One emission permit is equal to one tonne of CO2. The scheme covers large industrial facilities, plants with a total nominal heat capacity greater than 20 MW, and internal aviation within the EEA. In Finland, on top of that, the system includes 20 MW and smaller district heating plants.
Emissions permit prices at an all-time high
Emission permits are a major cost for companies. The more expensive emissions permits are, the more effectively they steer companies towards low-emission production. In Finland, for example, higher emission permit prices have considerably increased the cost of using peat as a fuel. This price increase has the same effect as if the tax rate on peat had multiplied.
In the EU, the emissions trading scheme was introduced in 2005. After this, there has been great fluctuation in permit prices. The initial price was near 30 euros. For some time, the price was at zero and in 2010, it equalized to around EUR 5. Recently, emission permit prices have increased dramatically to between 60 and almost 100 euros (per tonne).
Heat pumps – the peak of modern climate solutions
Achieving carbon neutrality requires many different solutions, and heat pumps play a significant role in this. Industrial heat pumps have a multitude of applications in industrial production. They are well-suited for district heating and cooling, and they work well in large properties. They allow companies to recycle energy or alternatively tap into an increasing number of renewable energy sources. Industrial heat pumps have a high capacity and a high temperature output, and they are well-suited for applications that require accurate capacity control and a wide operating range.
Naturally, there are technical and economical limitations to where heat pumps can be used. Each case must be analyzed separately. To achieve the goal of carbon neutrality, we must also utilize low-carbon fuels and other renewable alternatives, such as hydrogen. The amount of low-emission or emission-free energy needed is huge. In light of climate goals, fossil-based energy sources are still used too often. Oilon’s innovations and R&D are, and will continue to be, a major factor in achieving emission-free and low-emission energy production.
Oilon has completed heat pump projects for a wide range of different use cases, and the technology advances in leaps and bounds. As a solution, heat pumps have matured. The use of large, energy-efficient heat pumps is becoming commonplace, even though widespread adoption is still several years ahead. Heat pumps have a wide range of applications. In the future, they will be a big help in reducing emissions.