The DETR has released its consultation paper for Combined Heat and Power (CHP) schemes. The proposals for the Climate Change Levy identify CHP as one of the most cost-effective approaches to cutting emissions. In November, Gordon Brown outlined proposed exemptions from the Levy for 'Good Quality' CHP and Enhanced Capital Allowances (ECAs) for other energy efficient technologies.

CHP is the simultaneous generation of heat and power (usually electricity) in a single process. Unlike power station generation, CHP provides energy for a single customer (typically hospitals, universities or industrial estates). It is also much more efficient than large-scale generation, resulting in significant cost and emissions savings.

The consultation outlines the quality assessment to determine the eligibility of schemes for exemption from the Climate Change Levy. To achieve this 'Good Quality' status, firms must:

• apply for registration
• install monitoring systems and keep appropriate records
• conduct a quality assessment
• provide access to operational data
• comply with verification and audit obligations

In order to benefit from the exemption, schemes must be assessed and verified by April 2001.