The Effects of Different Policies Affecting the Composition of the District Heating in Sweden

Abstract: This thesis gives an insight in the Swedish district heating sector and its choice between two different ways of producing heat; either by using only heat boilers (OHB) or by combined heat and power (CHP). This choice is researched through different policy-instruments such as emission taxes and the EU ETS. A data set from Swedish District Heating Association and SEPA and an interview with one company within the energy sector is also analyzed. The analysis confirms that CHPs emit less CO2 and NOx per produced MWh, hence they are more environmentally friendly than OHBs. The policies have up to recently always favored CHPs. Though, it is hard to tell which policy or market force that affects the choice between OHB and CHP the most. However, when private companies deciding between the two, they want to maximize profitability and therefore CHPs, the most environmental friendly alternative, have not been constructed in quantities one might expect