Browsing by Author "Luomaranta, Johanna"

The parties of the Paris Climate Agreement agreed on stopping the global warming to 2°C compared to the pre-industrial level and to make efforts to keep the temperature rise below 1,5°C. Finland among other countries has set goals for the future to meet the wanted emission reductions. The plan is to increase the use of renewable energy sources to be over 50 % of the final consumption, increase energy self-sufficiency to more than 55 %, give up hard coal in the energy production, cut the domestic use of imported oil to half and raise the share of renewable fuels in traffic to 40 % until the year 2030. The long-term goal is to have a completely carbon neutral society by the year 2050. Hard coal, peat and natural gas have been the most utilized fuels in combined heat and power (CHP) production among different wood fuels. The share of hard coal in CHP production is significant in some parts of Finland. Approximately 90 % of hard coal consumed in energy production in Finland in the year 2016 was used for CHP production in 8 different localities. Most of these are planning on switching to other energy sources during the years 2025-2030. There are several possibilities to integrate renewable energy sources to a district heating system. For example heat pumps, waste heat, geothermal energy, solar energy, biogas, biomass and waste energy can all be utilized in a district heating system. Biomass is considered to be the number one alternative to conventional energy sources among CHP and heat production. For example heat pumps and waste heat are also planned on being utilized and in Helsinki natural gas a well. Hard coal use in energy production in Finland is regulated through the European Union emissions trading system and nationwide taxation. The Finnish Parliament has decided on a law against the use of hard coal and it will come into effect in 2029. Giving up hard coal in energy production affects largely in Helsinki. 30 % of all hard coal used in energy production in Finland was burned in Helsinki and 60 % of district heat in Helsinki was produced with hard coal. This thesis seeks to find out the optimal tax based on emissions from hard coal that will cause hard coal to phase out from the markets. It is studied with an energy business model. The model is used to maximize the profit of different energy production methods: CHP plant consuming hard coal and wood pellet, heat only boiler (HOB) burning wood pellet and heat pump. The numerical applications are based on the situation of Helen energy company in Helsinki. According to the numerical applications the yearly profit of Salmisaari B power plant in Helsinki is 33,27 million euros when the emission allowance price is 20 €/tCO2. This more or less represents the current situation. The yearly emission reduction of giving up hard coal use in the CHP power plant would be approximately one million tCO2. Investing to HOBs burning wood pellets and producing heat the same amount as Salmisaari B power plant leads to yearly profit of 9,77 million euros. A tax of 21 €/tCO2 in addition to an emission allowance price of 20 €/tCO2 would be needed to make the pellet-burning HOBs more profitable than burning hard coal. Investing to several heat pumps in order to produce heat a similar amount to the Salmisaari B CHP plant would gain yearly profit of 20,95 million euros. For this investment to be profitable compared to hard coal a tax of 11 €/tCO2 would need to be imposed in addition to an emission allowance price of 20 €/tCO2.