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.

Over the last 25 years, Denmark’s economy has grown by around 75% - with nearly stable 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
Denmark’s energy efficiency is today among the highest in the EU, and continues to rise each year. Danish energy intensity, that is, energy consumption relative to the gross domestic product, is thus the lowest in the EU.

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.

Renewable energy
In spite of having almost no hydro power resources and no long tradition of using biomass, Denmark has managed to be among the leading nations in renewable energy.

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.

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.

Research and development
Research, development and demonstration of new technologies and systems have been crucial to the strong Danish position in the energy sector. Denmark also has a long standing tradition of broad cooperation in energy research and development as well as good experience with effective cooperative projects and networking between private businesses and research institutions. The government has supported this effort through public funding of basic research at public institutions and through a number of research and innovation programmes.

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
As a result of the more or less stable level of energy consumption and the growing share of renewable energy, CO2 emissions in Denmark (adjusted for fluctuations in weather and electricity exchange with other countries) have been reduced by nearly 14% since 1990. As can be seen in the figure below, a slight increase in the corrected CO2 emissions occurred from 2005 to 2006, partly because wind power production fell in 2006 due to unusually poor wind. Nonetheless, the slight increase does not alter the general falling trend of CO2 emissions since 1990.

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.

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.

Denmark – a competitive country
Overall it can be concluded that since 1980 Denmark has succeeded in maintaining its status as a competitive country with high economic growth while keeping energy consumption at an almost constant level and reducing greenhouse gas emissions.

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.