Browsing by Author "Arto, Tiina"

To combat climate change, emission reduction measures are needed in all sectors of the economy. Finland's effort sharing sector has a binding 39 percent emission reduction obligation for 2030. Achieving the obligation requires actions in every field of activity in the effort sharing sector. Emissions from decentralised heating systems in buildings are included in the effort sharing sector. In Finland these emissions originate mainly from oil heated buildings. Currently there are still around 130 000 oil heated detached houses in Finland whose carbon dioxide emissions could be reduced by utilising renewable energy. In this study oil heating is completely replaced with a ground source heat pump, a pellet heating system or an air-to-water heat pump. Partial replacement of oil heating was also studied, whereby an air-to-water heat pump is installed alongside the old oil heating or part of a fossil light fuel oil is replaced by bio-based fuel oil with the distribution obligation. The study was conducted from the perspective of environmental economics and the main purpose was to examine the cost-effectiveness of these emission reduction measures and the policy measures directed to the oil heated detached houses. The method used was a cost-effectiveness analysis based on a 15-year calculation period. Based on the results, the social costs of emission reduction measures varied from 35 EUR/tCO2 to 114 EUR/tCO2. From the societal point of view, the most cost-effective emission reduction measure proved to be an air-to-water heat pump alongside an existing oil heating system. Based on the results, the most expensive emission reduction measure for the society is the distribution obligation of bio-based fuel oil, which is why emissions from oil heating in detached houses should be reduced primarily by other measures. The tax and support levels used in the calculation were based on the 2020 levels. Based on the results, private emission reduction costs varied from -50 EUR/tCO2 to 169 EUR/tCO2, depending on the policy option and the discount rate. Based on the results, the tax level used in the calculations is insufficient for making the measures profitable for households which apply a higher discount rates than the society. The aid policy is therefore justified in order to promote the measures.