Heat Pumps and Tradable Emission Permits - On the Carbon Dioxide Emissions of Technologies Crossing a Tradable Emission Permit Market Boundary

Conference poster, 2005

Tradable emission permits may be considered as a policy instrument that gives incentives to reduce greenhouse gas emissions in a cost efficient way. Due to transaction costs it may not be cost efficient to include sectors in which there are many small emission sources. One example of a sector that could be considered as made up of many small emission sources is the household or residential sector. If the residential sector is not included in a tradable emission permit system but the power or district-heating sector is included some technologies for residential heating, like heat pumps and district heating are affected since fuel for production of electricity to heat pumps and fuel for district heating are used in the trading sector while the heat is used in the residential sector. In this study, the implications for carbon dioxide emissions from heat pumps in households of a tradable emission permit system where power producers but not households are obligated to have emission permits are discussed. The results indicates that when considering how actors in the emission permit market are affected by measures in the household lead to different conclusions regarding greenhouse gas emissions compared to a system where there is no emissions trading.