THE DANISH EXAMPLE – TOWARDS AN ENERGY EFFICIENT AND CLIMATE FRIENDLY ECONOMY
Friday, November 21st, 2008| The original post can be found on the Cop15 homepage www.cop15.dk
Experience from Denmark shows that with a persistent and active energy policy focused on increasing energy efficiency it is possible to maintain high economic growth while at the same time reducing the dependency on fossil fuels and safeguarding the environment. |
| Note: Energy consumption for international maritime traffic (international bunkering) is not included in the individual country’s energy consumption under international rules for energy statistics, but is calculated separately; therefore it does not appear on the figure. |
| At the same time, the composition of the energy consumption has changed significantly as a result of a political effort to promote the use of renewable energy. Today renewable energy comprises over 15% of overall energy consumption.
This has increased energy supply security and contributed significantly to the attainment of Denmark’s climate targets. From 1990 to 2006 economic activity in Denmark increased by more than 40%, while CO2 emissions decreased by nearly 14% (corrected for fluctuations in weather and electricity exchange with other countries). This paper outlines how Denmark has managed to sustain economic growth while keeping energy consumption almost at the same level and reducing CO2 emissions. Energy consumption |
| Among a long series of measures to increase energy efficiency, the spread of combined heat and power production (CHP) has contributed significantly to Denmark’s good results. Combined production of heat and power ensures a much more effective use of the fuels involved. The most effective combined heat and power (CHP-) plants have an efficiency rate of more than 90%. As shown in the figure below, the share of district heating produced by CHP-plants has more than doubled the last 25 years, from around 40% to over 80%. This corresponds to the doubling of the share of electricity from coproduction with heat, from around 25% to about 50%. |
| Along with more energy-efficient energy production, a number of initiatives have been implemented to increase end-use energy efficiency, i.e., among consumers and businesses. Among the measures are high energy standards for buildings, energy labelling schemes for electrical appliances, public campaigns for energy savings in households, energy savings agreements with industry and not least, taxes on energy consumption. Environmental and energy taxes in Denmark has contributed to the reflection of environmental externalities of production, use and disposal in the energy prices
In the last four years there has been a slight increase in energy consumption in Denmark. It is expected that this increase will be brought to a halt, not least in light of the greatly increased energy saving effort backed by a broad political majority in 2005 that entered into force from the end of 2006. The Energy Policy Agreement of 21 February 2008 has further raised the target for the energy savings effort. The new goal is that gross energy consumption in 2020 should be reduced by 4% and that of 2011 by 2%, compared to 2006. It is notable that these targets are for a period in which continued strong economic growth is expected.
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| Denmark’s share of renewable energy in overall energy consumption has sharply increased since 1980. In 1980 the share of renewable energy in Denmark’s overall consumption was 3%, in 1990 it was 6% and at present it is over 15%. (Provisional figures for 2007 show a 16% share. The final figures for 2007 will be released in the autumn of 2008.) |
| Note: 2006 was a year with unusually little wind, causing decreased wind power production and thereby a decreased share of renewable energy in the overall energy consumption. |
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The contribution of renewable energy to overall energy consumption comprises several forms of renewable energy. As can be seen on the figure on the right, various forms of biomass constitute the largest share. Wood is the largest of these, followed by biodegradable waste and straw. Renewable energy today accounts for about 27% of electricity supply, overwhelmingly due to the entry of wind energy in electricity production. Denmark currently has 3,100 MW of wind power installed, of which a little less than 500 MW comes from offshore windmills. |
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| The Energy Policy Agreement of 21 February 2008 establishes a number of initiatives to ensure that renewable energy will constitute at least 20% of gross energy consumption in 2011. The government’s goal is that renewable energy should comprise at least 30% of gross energy consumption in 2025, i.e., twice as much as today.
Renewable energy increases energy supply security and is a central element in fulfilling the government’s long-term vision of making Denmark completely independent of fossil fuels. Renewable energy is also generally CO2 neutral, thus helping to reduce greenhouse gas emissions. Studies show that the costs of introducing renewable energy in Denmark have been relatively high, but falling costs over time and rising prices on fossil fuels have made renewable sources gradually more competitive with traditional energy sources.
In recent years a significant increase of public funding has been allocated towards energy research and it is the government’s goal that the public efforts in energy research and development should be doubled by 2010. The latest initiative is the new Energy Technology Development and Demonstration Programme (EUDP), which focuses on helping new energy technologies and solutions over the last hurdles on their path to the market place. Reduction of greenhouse gas emissions |
| Note: The figure shows that actual CO2 emissions vary widely from year to year, which is because Denmark is in some years a net exporter of electricity and in other years an importer. The adjusted graph shows CO2 emissions discounting the import and export electricity. |
| The CO2 emissions presented above are only those from the use of energy, but they constitute about 75% of Denmark’s total greenhouse gas emissions.
With respect to Denmark’s ambitious Kyoto targets of reducing greenhouse gas emissions by 21 % in the period 2008-2012 (relative to 1990 levels) the overall greenhouse gas emissions have to be calculated. Thus, CO2 from non-energy activities, nitrous oxide – which comes primarily from agriculture, methane – primarily from agriculture and waste disposal on land, and the industrial greenhouse gases from coolants and protective gas in large electrical equipments, are also included in the overall greenhouse gas emissions. The latest historical greenhouse gas inventory for Denmark is from 2006. It shows that unadjusted emissions for that year are 1.8% over the baseline years 1990 and 1995. Adjusted for variations in weather and electricity exchanges with other countries, the 2006 figure reflects a drop of 15% from the baseline years. |
| Note: Under the Kyoto Protocol, Denmark’s baseline years comprise emissions of CO2, methane, nitrous oxide from 1990 and industrial greenhouse gases from 1995.
As a consequence of the ambitious targets for reducing energy consumption towards 2020 and an increasing share of renewable energy, the Danish CO2-emissions is expected to follow a decreasing trend in the future.
The constant political and commercial focus on energy efficiency and the introduction of new technologies has meant that for several years Danish companies have developed – and gained much valuable experience with – new energy technology solutions that have also translated into growing exports. For example, Denmark is now the leader in wind turbine production, covering approximately one third of the global market. Total Danish energy technology exports in 2006 grew by 18%, reaching a volume of about 6.2 billion Euro (provisional figures for 2007 show exports in the category of approx 6.7 billion Euro). This represents a tripling from 1996 to 2006, and energy technology exports now comprise over 8% of the country’s total exports. |
It is not just in the energy sector that Denmark stands out as a competitive country. Danish companies take advantage of the possibilities afforded by globalisation, and the country is now among the world’s ten most prosperous nations. Denmark has a higher per capita GDP and lower unemployment than the EU-15 average. The country is also attractive to foreign investors, with a proportion of foreign direct investment (FDI) relative to the size of the economy that is above the OECD average.
Source: Energy Statistics 2006, Danish Energy Authority, September 2007 and Denmark’s National Inventory Report 2007, Danmarks Miljøundersøgelser, April 2007.