Trade in emissions reductions

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A minimum standard for the amount of combined heat and power (CHP) in German electricity supply, backed by a system for trading CHP green certificates, is to be ready by the end of the year with legislation to follow six months later. The aim is to double CHP's share of supply -- now about 12% or the equivalent of the whole Danish electricity market -- by 2010.

A system of premium payments as exists for renewable energy is not suitable for CHP because the large number of different technologies and the varying framework conditions of the heating market make it virtually impossible to arrive at exactly the right sized payment, says Michaele Hustedt, energy spokeswoman for the Greens party.

"The CHP market at 12% is much larger than the renewables sector which contributes about 2.5%," she adds. This excludes large hydro. Premium payments for renewable energies are needed to help small private operators market their electricity, argues Hustedt. CHP plant, however, are larger and often operated by utilities which can function well in a competitive market of certificate trading, she says.

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