2.2.3. The Market-Based Method

The market-based method is used for assessing the amount of electricity and GHG emissions that are associated, purchased and sold through energy attributes as certified electricity (CE) [49]. Certified electricity is the electricity that meets the criteria for GO of electricity produced from renewable energy sources as set in Article 15 of RED Directive.

• Instead of purchasing the "mixed" electricity from the grid, the local authority/other local actors can decide to purchase certified electricity. The LA will report the amount of purchased electricity (∑ *CEpurchased*), which is not already reported under LPE.


$$
\sum CE = \sum CE\_{purchased} - \sum CE\_{sold} \tag{5}
$$

#### 2.2.4. Indirect Emissions due to Local Electricity Consumption

Based on the considerations and assumptions presented, the EFE at the local level should be calculated as follows:

• In the case where the local authority would not be a net exporter of electricity (TCE ≥ LPE + CE), the average emission factor will be equal to the total amount of emissions from electricity consumption assessed with (location-based + market-based instruments) over the total amount of electricity consumption as provided in Equation (6):

$$EFE = \frac{\left[\left(TCE - \sum LPE \ - \sum CE\right) \* NEEFE + \sum CO\_{2LEE} + \sum CO\_{2CE}\right]}{TCE} \tag{6}$$

• In the case where the local authority would be a net exporter of electricity (TCE < LPE + CE), Equation (7) will apply:

$$EEE = \frac{\sum CO\_{2LPE} + \sum CO\_{2CE}}{\sum LPE + \sum CE} \tag{7}$$

where:


2.2.5. Indirect Emissions from Local District Heating and Cooling Consumption

Indirect emissions from the consumption of heat/cold are estimated based on the emissions that are occurring due to the production of locally consumed heat/cold. If a part of the heat/cold that is produced in the local territory is exported, then the corresponding share of CO2 emissions should be deducted when calculating the emission factor for heat/cold (EFH). In a similar manner, if heat/cold is imported to the local territory from a plant that is situated outside the local territory, then the share of CO2 emissions from this plant that corresponds to the heat/cold consumed in the local territory should be accounted for when calculating the emission factor for heat/cold.

In principle, the total amount of heat/cold produced is different than the quantity of heat/cold that is consumed locally. Differences may occur due to auto-consumption of heat/cold by the utility producing it and or due to the transport and distribution losses of heat/cold.

The following formula (Equation (8)) should be applied to calculate the CO2 emission factor for heat/cold (EFH), taking the above-mentioned issues into consideration:

$$EFE = \frac{\sum CO\_{2LPH} + \sum CO\_{2IH} - \sum CO\_{2EH}}{\sum LHC} \tag{8}$$

### where:


In the case of CHP plants, it is first required to distinguish between the emissions due to heat and electricity production. District cooling, i.e., purchased chilled water, is in principle a similar product as purchased district heating. However, the process to produce district cooling is different from the process to produce district heating, and there is a larger variety of production methods. If local production of district cooling occurs, or if district cooling is consumed as a commodity by end-users, then the local authority is recommended to contact the district cooling provider for information on the use of fuels or electricity to provide cooling. Accordingly, the emission factors for fuels and electricity presented in this paper can be applied. The approach as put forth in this paper is essential for enabling LAs to account for indirect emissions accurately and realistically.

### **3. EU Energy and Climate Policies**

EU energy and climate policies have large influences on the transition to sustainable local energy systems. In the following, a brief description of the main updated EU energy and climate policies as a total governance system, which strongly influences the municipal policies for climate actions, is reported.

A first major milestone of climate change in the EU policy was the launch of the EU emission trading scheme (ETS) (2003/87/EC) in 2005, establishing a scheme for greenhouse gas emission allowance trading within the EU. According to the ETS directive and subsequent amendments, all combustion installations above 20 MW of thermal input should be part of the scheme with the exception of installations exclusively using biomass, installations for the incineration of hazardous or municipal waste and installations used for research, development and testing of new products. Some installations are also temporary or conditionally excluded from ETS, such as hospitals and some installations below 35 MW. Having an EU established scheme for regulating the emissions of such large combustion installations means the jurisdiction of the LAs is limited. Therefore, the emissions from the ETS installations are not recommended to be accounted in the LAs emission inventories, unless the local government is somehow involved through ownership or operation, or the installation is a CHP power plant.

A second milestone relates to the "A Clean Energy for all Europeans" package, launched in November 2016. By the end of December 2018, a political agreement for the adoption of this package has been reached, formulating three key energy and climate targets by 2030: (1) to reduce greenhouse gas emissions further by at least 40% by 2030 as compared with 1990, (2) a binding renewable target of 32% and (3) an energy efficiency target of 32.5%. The important role of the Covenant is mentioned and acknowledged in the package as a collaborative platform that allows local authorities to learn from one another, as also highlighted in literature [12,23–26]. The package is introduced and is updating a set of legislations including the new Governance Regulation of the Energy Union, the revised Renewable Energy Directive, the revised Energy Efficiency Directive, the revised Energy Performance in Buildings Directive and the revised Electricity Directive and Regulation. The main aspects of these updated EU policies to supporting local energy policies are analyzed in the following:




(I) Article 14 with the overall objective to encourage the identification of cost-effective potential for delivering energy efficiency, principally through the use of cogeneration, efficient district heating and cooling and the recovery of industrial waste heat or, when these are not cost-effective, through other efficient heating and cooling supply options, and the delivery of this potential. An LA, through its capacity as a regulator and enabler, may facilitate and participate in the process of planning cost-effective heating and cooling networks, identifying possible recovery of waste heat in facilities located within the territory.

(II) Article 7 on energy savings obligations: MS, in designing the policy measures to fulfill the obligations to achieving energy savings [50], should take into account the need to alleviate energy poverty through giving priority to financing the implementation of measures among vulnerable households, and where appropriate in social housing. The LAs are key player in this process of identifying and giving priority of implementing energy savings among vulnerable households.


In conclusion, the revised EU policy governance on energy and climate and its implementation at the national level calls for an enhanced communication process for boosting the multilevel and polycentric governance of urban climate action plans.
