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Danish Climate Energy Policy

Denmark makes use of a feed-in tariff, a net metering framework, and a heavy fiscal policy, including the use of what are sometimes called ‘green taxes’ or environmental taxes. For instance, Denmark levies a number of taxes on fossil fuels and has special taxes on environmental externalities such as carbon pollution, which increase the costs of gasoline, diesel, coal, and heating oil. Collectively, these taxes serve to make it more attractive to use local, renewable sources of energy instead of continuing to rely on fossil energies.
Denmark also offers special tax incentives and in some cases even cash grants to encourage specific technologies, such as electric vehicles. This combined use of regulatory instruments, fiscal instruments, and an overarching national energy strategy represents the core of Denmark’s 100% plan.

An ambitious 100% renewable energy target is not only about transforming our energy supply but also about a more holistic vision of a better future. A transition towards a fully renewable energy powered society offers several other benefits such as reduction in air, water and land pollution, health benefits, improved energy security and resilience, sustainable economic growth, employment, social and human development. Given that Denmark builds on the inherently decentralised nature of RE, it particularly harvests opportunities for improved democratic decision-making processes and citizen involvement at the local level. Hvinde Sande for example is only one community among many where local ownership of a small wind farm helps the development of the local economy. (see more here: http://www.power-to-the-people.net/2012/10/wind-energy-co-ops-empower-local-communities/). This participatory approach is actually embraced in Danish law as well: The Danish Act on Renewable Energy requires an obligation on all new wind energy projects to offer minimum 20 % ownership to local people. Hereby the local value creation as well as social acceptance should be enhanced. Denmark’s energy ambitions, furthermore, align with the 2030 Agenda for Sustainable Development, and its overarching goal to eradicate poverty and achieve sustainable development. In particular to SDG 7 Affordable and Clean Energy, SDG 8 Decent Work and Economic Growth SDG 9 Industry Innovation and Infrastructure and SDG 13 Climate Action.

Our “Best Policies” are those that meet the Future Just Lawmaking Principles and recognise the interconnected challenges we face today. The goal of principled policy work is to ensure that important universal standards of sustainability and equity, human rights and freedoms, and respect for the environment are taken into account. It also helps to increase policy coherence between different sectors.

   Sustainable use of natural resources

Denmark’s energy and climate policy framework includes an ambitious target of meeting 100% of electricity and heating needs with renewable energy sources by 2035 and it aims to phase out fossil fuel use entirely in all energy sectors (including transportation) by 2050. It will thus allow for a more sustainable environment and use of natural resources.

   Equity and poverty eradication

An ambitious 100% renewable energy target is not only about transforming our energy supply but also about providing for a more sustainable future for all. A transition towards a fully renewable energy powered society offers several benefits to all, including reduction in air, water and land pollution, health benefits, improved energy security and resilience, sustainable economic growth, as well as employment, social and human development. This holistic view of the future also aligns with the 2030 Agenda for Sustainable Development, in particular to SDG 7 Affordable and Clean Energy, SDG 8 Decent Work and Economic Growth, SDG 9 Industry Innovation and Infrastructure and SDG 13 Climate Action. Further, the case of Denmark shows that facilitating this transforming with a participatory approach in which ownership of energy infrastructure is shared, socio-economic value can be created locally as well as regionally and equity can be enhanced. This is indeed embraced in Danish law: The Danish Act on Renewable Energy requires an obligation on all new wind energy projects to offer minimum 20 % ownership to local people. While many energy experts and governments see citizen participation and the involvement of communities as a necessity to ensure acceptance and avoid nimbyism, the benefits go much beyond this. In fact, adopting a people-centered approach and empowering citizens, farmers and small businesses to invest in renewable energy projects, is a tool for socio-economic development and wealth distribution.

   Precautionary approach

Denmarks 100% plan is in line with the precautionary principle, as the stepping back from using natural resources as energy sources, including fossil fuel, and, as Denmark envisions, by 2050 none, constitutes a decrease in harm to the environment and to the people living therein from the current state.

   Public participation, access to information and justice

Given Denmark’s 100% project’s inherently decentralised nature there are a variety of opportunities for improved democratic decision-making processes and citizen involvement at the local level. The key characteristic of especially the Danish wind energy sector is the cooperatives or guilds. Many of the wind turbines erected in the 1980s and early 1990s were and still are owned by local cooperatives/guilds. Since then, single-person ownership has emerged and now also utilities and large energy companies play an increasing role in the establishment and ownership of wind turbines in Denmark, especially when it comes to large-scale wind farms. However, cooperative ownership is still an important factor, and legislation from January 2009 is aimed at stimulating the local engagement and ownership in new wind energy projects. The Danish act on renewable energy requires on all new wind energy projects to offer minimum 20 per cent ownership to local people, e.g. cooperatives. An important factor underpinning Denmark’s 100% strategy is also the high level of energy and environmental awareness among both its citizens and its politicians. Denmark also benefits from a relatively small population, a highly educated workforce, and a number of world-class companies and research institutes to contribute to the implementation of its strategy.

    Good governance and human security

Denmark’s 100% plan builds on participation and interconnectedness across sectors and governance levels. It is contributing to human security through establishing clean energy sources for the future and thus a more sustainable environment for people to prosper in. But more importantly, it provides a model for democratizing the energy sector and hereby for good governance.

   Integration and interrelationship

Denmark’s 100% strategy leads to a substantial reduction in environmental pollution and natural capital degradation, whilst at the same time generating economic growth, and job opportunities through, for example, plans to expand transmission links with neighbouring Germany and Sweden which allows for greater imports and exports of renewable electricity, and thus an expanded industrial, commercial, and residential sector.

   Common but differentiated responsibilities

The principle of common but differentiated responsibilities isn’t directly addressed by Denmark’s 100%RE strategy. Although the state estimates an average of EUR 920 Million (6.9 Danish Krone) in expected savings in energy cost by 2020 4, some have argued that high taxes and high energy costs in Denmark 5 will make it difficult to maintain public support for the 100% strategy and may particularly impact lower income residents in the country. One of the main critiques is that Denmark levies a number of taxes on fossil fuels and has special taxes on environmental externalities such as carbon pollution, which increase the costs of gasoline, diesel, coal, as well as heating oil and could negatively impact residents who rely on those in their daily life and do not have access to renewable energy sources.

Denmark has a long history of leadership on energy and climate change, initially as a pioneer in wind power technologies and then as a major proponent of concerted action on climate change at both the European level and on the international stage. This leadership is now reflected in Denmark’s domestic energy policy, which aims at a complete 100% transition of the energy system toward renewable energy technologies.

An important factor underpinning Denmark’s 100% strategy is the high level of energy and environmental awareness among both its citizens and its politicians. This awareness has been cultivated over several decades since the 1973 oil crisis (and indeed before), helping create and maintain public support for a comprehensive energy strategy based on fully harnessing domestically available renewable energy resources. Denmark also benefits from a relatively small population, a highly educated workforce, and a number of world-class companies and research institutes to support the implementation of its strategy.

Denmark expects that the renewable energy strategy will prove economically profitable. Estimates indicate planned investments of approximately EUR 750 Million by 2020, with expected savings in energy costs of over EUR 920 Million over the same period, making the launch of the strategy a direct saving for the government, businesses, as well as local residents.

In order to achieve its 100% objectives, Denmark is relying heavily on a broader electrification of its energy sectors, combining the heating and cooling, transportation and end-use sectors.

This will involve, among other aspects, converting greater volumes of the country’s abundant wind resources into thermal form (e.g. funnelling more wind power into the district heating system as well as into on-site water heaters) as well as into electric battery storage for the transportation system 6. Denmark also envisions a significant increase in the use of solar thermal technologies to supply heat directly into the country’s district heating systems. Due to a combination of high electricity prices and high taxes on fossil fuels, the solar thermal market has grown from approximately 19.000m2 of solar collector space in 2000 to over 300.000m2 in 2012, making it an increasingly important contributor to the country’s heat supply mix 7.

In addition, powering the transportation sector with renewable energy will involve a massive expansion in the use of electric vehicles and continued growth in the use public transit. The current share of renewable energy in the transportation mix was estimated at less than 1% in 2011, compared to a share of approximately 40% in the electricity mix. Thus, by shifting more of transportation energy needs onto the electricity system, Denmark will make progress toward achieving its overall 100% renewable energy target.

Plans are also underway to expand the use of renewable energy in its island regions, such as the Faroe Islands 8. Combined with plans to expand transmission links with neighbouring Germany and Sweden to allow greater imports and exports of renewable electricity, and a motivated industrial, commercial, and residential sector, Denmark has the human, the natural, as well as the technological capital to make its transition a success.

Despite the clear vision underpinning Denmark’s strategy, there remain a few key challenges. Some have argued that high taxes and high energy costs in Denmark 9 will make it difficult to maintain public support for the 100% strategy, particularly for lower income residents in the country Others are sceptical that the country will be able to phase out the use of coal in its district heating network completely by 2030, as currently planned 10. Also, adding significant additional volumes of wind power into the network will require expansions in transmission capacity with its neighbours Germany and Sweden, and greater cooperation on cross-border electricity trade, developments that take time and resources.

However, despite these concerns, the political commitment at the local and national level in Denmark remains strong 11. And in light of estimates conducted for the government, Denmark plans to actually save money by implementing its 100% renewable energy strategy. To keep its strategy on track, and keep the momentum behind it in the years and decades ahead, it will be important that these economic benefits are shared with citizens.

Denmark’s comprehensive target to supply 100% of total energy needs with renewable energy sources can be used as a transferable model in that targets play a central role in global, national, and local renewable energy policy and strategy. Since the 1970s, jurisdictions around the world have adopted targets to diversity their energy mix, boost the share of renewable energy sources, and reduce their reliance on imported energy resources. Setting an ambitious, long-term renewable energy target also demonstrates political commitment, and can provide both stakeholders and the population as a whole a clearer view of the long-term vision for the region, as well as a better understanding of how they fit within it. It catalyses change by providing an official mandate for action.

Identifying and communicating a 100% renewable energy target has a number of additional advantages: it can help engage a wide range of stakeholders; it can ensure a more efficient deployment of both technical and administrative resources, and reduce the risks of duplication and competing policy goals; it can help give key stakeholders (such as utilities, or private investors) the confidence required to make large investments, such as in transmission and distribution grids.

Different kinds of 100% targets have already been established across the globe. Including targets for 100% renewable electricity, such as in Cape Verde; 100% strategies that are being implemented in parallel with a 100% carbon neutral strategy, such as in Frankfurt and finally, 100% targets for renewable energy in rural electrification, such as in Bangladesh.

That said, it is important to highlight that target setting alone is not sufficient to ensure effective implementation. As shown by a number of unmet targets in several jurisdictions around the world, targets need to be credible and achievable. Moreover, targets are more likely to be achieved when they are supported by a stable policy and regulatory framework as well as by a clear, step-by-step roadmap with indicators and regular progress reports.

http://www.go100re.net/?s=denmark&lang=en
http://www.ens.dk/sites/ens.dk/files/policy/danish-climate-energy-policy/our_future_energy.pdf