Denmark’s Goal of Independence from fossil fuels by 2050

Lars Georg JensenChief Adviser, International Affairs, Danish Energy Agency, Ministry of

Climate, Energy & BuildingDublin, Ireland, 14 November 2012

Denmark 39 Years ago 1973-74 oil crisis: 2 countries were 99% dependent

of imported energy: Japan + Denmark Severe economic crisis, unemployment - and no

driving on Sundays...

But today Denmark has the…

Lowest energy consumption per GDP-unit in EU

Highest contribution to electricity from new renewables (non-hydro RE) in the world (33%)

Most efficient clean coal technology world wide (CHP)

Highest export rate of energy technology in the OECD – wind, energy efficiency (Vestas, Danfoss, Grundfos, Rockwool, etc.).

Gross Energy Consumption in Denmark 1972-2010 – from oil to a mix of fuels

1972 1975 1980 1985 1990 1995 2000 2005 2010*0

100

200

300

400

500

600

700

800

900

Oil Natural Gas Coal Renewable Energy

5

0

20

40

60

80

100

120

140

1980 '85 '90 '95 '00 '05 '10

PJ

Wind Straw Wood Biogas Waste Heat Pumps

Production of Renewable Energy1980-2010 – a mix of sources

Five key drivers of global – and Danish - energy policy

• Energy security: people & societies getting the amount of energy they need when they need it;

• Economic development: energy provided at a price which enables economic growth & welfare (i.e. that the energy is affordable for consumers).

• Environmental priorities: tackling climate change and local pollution.

• Energy safety: providing energy in a manner consistent with safety for people and societies.

• Public Accceptance (examples: nuclear, CCS, wind, etc.)

Certainties and uncertainties - some global energy trends 2012

• High and fluctuating oil prices - era of cheap oil is over.

• Lots of natural gas on the market, including shale gas, but many uncertainties about price, delivery & environmental impacts (of shale gas). LNG?

• Lots of coal, but prices are uncertain, CO2-emissions high, and development of CCS slow (who wants to pay?).

• Uncertainty about the future of nuclear power.• Demand for energy is rising fast in emerging

economies – and are still high in the OECD.• Global CO2 emissions in 2010 & 2011 were record

high.

Trends continued…

• Renewable energy is becoming more competitive, especially Solar PV.

• Renewable energy is growing at fast rates: half of all new electricity capacity is renewable and RE becomes 2nd largest source in 2015.

• Energy efficiency: huge potentials at limited costs are often not harvested.

Summing up: four good reasons why some countries are taking steps to move beyond fossil

fuels:

• The economy. Renewable energy is not cheap, but nor is continuing with fossil fuels and nuclear. Huge investments are required in any case – we can decide what to invest in!

• Predictability! Creating predictable prices for businesses and consumers.

• Political independence (>$100/barrel is ”the largest transfer of wealth in human history”.)

• The environment – we are heading for 3.5 – 6 degrees C global temperature increase…

This is why the Danish Government’s long-term goals for energy policy are:

• 100% Renewables by 2050 (entire energy supply – electricity, heating, industry and transport)

• Coal should be phased out from Danish power plants by 2030.

• Electricity and heat 100% renewable already by 2035.

0

100

200

300

400

500

600

700

800

900

1000

Energy consumption 2009 Renewable energy 2009Straw

WoodWaste

WindOther RE

Conversion loss etc.

Process(-

electricity)

Room heating

Transport

Electricityconsumption

Energy Efficiency

Renewable Energy

PJ/Year

What’s the trick?: 100% RE in 2050

…by improving energy efficiency

…in order for more energy services to be satisfied with less energy

…based on renewable energy sources

Key elements for a 100% Renewable Energy society in Denmark

• Electricity as main energy carrier.• Wind and biomass are main sources.• Strong interconnections to neighbours –

domestically and abroad (Germany, Sweden, Norway)

• High share of Combined Heat and Power and district heating systems.

• Focus on systems rather than individual sources & technologies.

New energy strategy – from political statements to broad agreement

• End of 2007: New Governmental declaration announces fossil fuels independence as political target and establishes Commission on Climate Change Policy.

• May 2008 – Sept 2010 Commission works, publishes report 28.09.2010.

• 2011: Government publishes its own plan for independency from fossil fuels.

• 2011: Election: New Government publishes its own plan.

• March 2012: Broad agreement on 2020 plan in Parliament.

New Policy Targets for 2020

Energy Agreement of March 2012

Wind: How to reach 50% of electricity by 2020

Adding net 2,000 MW capacity by:

Further 500 MW installed near the coast

Onshore development of total 1800 MW (replacing 1,300 MW)

1000 MW offshore wind turbines

Comprehensive strategy for Smart Grids

Converting to RE in buildings

From coal to biomass in large scale CHP

Promotion of new technologies e.g. geothermal energy and large heat pumps

Banning installation of oil-fired boilers in homes: In new buildings from 2013

In existing buildings in areas where district heating and natural gas is available from 2016

Other initiatives to reach the RE goals

Electricity and biomass in Transport Subsidies for recharging stations (EV) and

infrastructure (hydro and gas) 10% biofuels by 2020 New strategy for plug-in hybrids, etc. by 2013

Better framework conditions for Biogas Better and new funding schemes Increased capital installation subsidies

More renewable energy in Industry Increase of RE in process promote more industrial CHP

TRANSPORT

BIOGAS

INDUSTRY

Financing the energy agreement

PSO

taxtarifs

tax

tarifs

PSOTotal costs ca 500 mill euro

ca 165 euro/year per household ca 3 euro/week per household

Financed through Tariffs on energy distribution PSO financing RE increase in

electricity and gas grids financed through

Tax for heating

Key Policy Strategy in Denmark

Long term strategy and based on broad political agreement in the Parliament.

Cost-effective subsidy schemes with evaluation on a regular basis, avoiding over-subsidising

Energy taxes on fossil fuels makes RE and business more efficient & competitive.

A suitable legislative and planning framework creating predictability.

A combination of a strong state and the market!

Conclusions :- The transition to independence of fossil fuels is:

• Challenging- Amounts to no less than a structural shift in the economy - The necessary investments are considerable. - There are several roads to take, but also ”safe bets”

• Affordable. - For the economy as a whole the transition is expected to have limited negative impact, if any- For individual companies the transition will create winners as well as losers

• Technically feasible- Alternatives to fossil fuels are available and can deliver on a large scale- Alternatives to fossil fuels need supportive policy frameworks to be competitive in the short run

And presents new business opportunities- politically created demand for wind power, biomass and bio fuels, building components, - incentives for profitable energy renovations in industry and other business sectors- first mover advantages for cleantech companies

Thanks for your attention!

More information:

http://www.ens.dk

http://www.kebmin.dk