Lars Bach Jensen: The Danish Green Transition

Lars Bach Jensen, Head of International Energy and Climate Policy, Dansk Industri

Being a small and open economy, Denmark relies on free trade, innovation and a competitive edge in our products, services and labor force. Denmark is a prosperous country none the least due to successful trade with other countries; due to innovative leaders and employees in Danish companies, who skillfully seize new opportunities and win orders and export revenue in the global competition; and due to ongoing efforts to ensure that more citizens become active participants at the Danish labor market. Dansk Industri (DI) is the strong voice of corporate Denmark. On behalf of our Danish member companies, we aim at providing the best possible conditions for growth and competitiveness.

DI’s mission is to increase awareness of the business environment of enterprises to ensure that each individual member can produce and develop under still better conditions. A significant part of the Danish business are the green companies. Most of the large green Danish companies are member of the Federation of Danish Energy Industries, a part of DI.  These members cover the full energy value chain from extraction of energy, production, distribution of energy, manufacturing of energy technology to energy consultancy services.

Danish Energy transition

Denmark has a long tradition of active energy policy, initiated as a reaction to the first oil crisis in 1973. Over the years, a broad consensus in the Danish Parliament has been utilized to transition Denmark’s energy system towards reduced energy consumption, increased decentralized energy production and increased utilization of renewable energy sources. Consistent, determined and long-term political objectives have formed the foundation of the low-carbon transition of the Danish energy sector.

It is possible to sustain significant economic growth and simultaneously reduce fossil fuel dependency

The results of clear political direction have been significant and convincing: the Danish experience shows that through persistent and active energy policy focused on enhanced energy efficiency and ambitious use of renewables in a cost-efficient manner, it is possible to sustain significant economic growth and simultaneously reduce fossil fuel dependency while protecting the climate and environment.

The Danish energy model has delivered a good balance between climate, energy security and competitiveness.

Research, development and demonstration of new technologies and systems have been critical elements in establishing a Danish stronghold in the energy sector. Public-private sector cooperation, coupled with stable political and regulatory frameworks, has fostered important innovation and breakthroughs in energy concepts and -systems. The foundation of the low-carbon transition has been threefold: energy efficiency, renewable energy and system integration including electrification.

Many paths lead to a green, low-carbon economy

Many paths lead to a green, low-carbon economy. Apart from a long-term policy approach, a focus on producing, consuming and managing sustainable energy, ensuring water security, moving towards a circular economy and creating smart, green and livable cities are also critical factors. However, no single technology or sector can achieve this transition alone.

Energy efficiency, renewable energy and smart energy systems are amongst Danish competences.

Denmark and Danish companies are considered as frontrunners of the green transition. Exports of energy technology 85 billion DKK (11-13 billion EUR) in 2017, equal to 11 per cent of the Danish exports. In 2016 73.000 jobs was related to the Danish energy sector.

Ilmastonmuutos ja Tanska

35 years of dedicated work towards greening our society has taught Denmark that a holistic approach and collaboration across sectors and borders are paramount in developing integrated, affordable and sustainable solutions. An example of this is the collaboration between the water and electricity sector, where sludge from wastewater treatment plants is used to produce energy. Another example is the synergies created in the cogeneration of heat and electricity, where surplus heat from electricity production is used to heat water piped into the district heating system.

Finally, a key factor in Denmark’s secure supply and high integration of renewables into its energy system is its electricity trade with neighboring countries. Therefore, Denmark actively works to develop the Nordic and European integrated electricity market.

Latest political initiatives in Denmark and EU

Regulation and politically agreed frameworks are pivotal for the energy sector and the green transition. In 2018 important political agreements in Brussels concluded the 2030 EU legislation for energy efficiency, renewable energy, power market design and many more topics. Through key directives, regulations and decisions, the EU will reduce CO2-emissions by at least 40 percent in 2030. In 2030, energy efficiency will be 32,5 per cent improved. The share of renewable energy will be at least 32 per cent.

The green transition is growing, and cooperation between countries is increasingly a key part of the efforts.

There is a trend towards more market-based regulation

As in the EU, there is a trend in Denmark towards more market-based regulation. The driver behind is growing ambition in EU Member States coupled with still more competitive renewable solutions. The penetration of solar and wind power has moved beyond national borders.  This has been the core of the Nordic power-market cooperation, the so-called NordPool. Based on strong interconnections between the Nordic countries, green electricity is traded and transported over the Nordic boarders. Without this market, the penetration of wind-based electricity in Denmark would not have been so competitive.

In June 2018 all parties in the Danish Parliament sealed a new national energy agreement. The agreement will deliver a 55 per cent share of renewable energy in Denmark. Combined with efficient market bases regulation, energy efficiency measures and a good financial model, the Danish energy intensive sectors will at the same time achieve improved competitiveness. The situation could be even more improved if the energy efficiency ambition was raised further, in DI’s view.

In October the Danish Government published a new Danish climate- and air pollution plan. The Danish EU target to reduce CO2-emissions from the so called non-ETS sectors is 39 per cent in 2030. These sectors (transportation, buildings and agriculture) are the ones not covered by EU’s common Emission Trading System (EU ETS). Reducing emissions from these sectors are complicated, but also of key importance to be able to fully decarbonize the Danish economy, and to develop a well-integrated cost-efficient national green energy system.

In November 2019 the EU-Commission published a new long-term climate strategy. The strategy shows how Europe can lead the way to climate neutrality by investing into realistic technological solutions, empowering citizens, and aligning action in key areas such as industrial policy, finance, or research – while ensuring social fairness for a just transition. The long-term strategy is an invitation to all EU institutions, the national parliaments, business sector, non-governmental organizations, cities and communities, as well as citizens – and especially the youth, to participate in ensuring the EU can continue to show leadership and hold other international partners to do the same.

DI and Nordic recommendations

Seen from a DI perspective, combatting climate change is one of the most important challenges for mankind. Denmark and Europe must lead the way by our lessons learned so far. To showcase our experiences and the Nordic energy cooperation, DI along with DI’s Nordic sister organizations has formulated a Nordic Climate Vision.

The Nordic business federations from Denmark, Finland, Iceland, Norway and Sweden are committed to an ambitious climate policy and support a firm implementation of the global Paris agreement. Nordic businesses are committed to contribute positively to the discussion on EU’s long-term climate policy.

The Nordic region and Nordic business have successfully accelerated the green and just transition, while increasing the level of welfare and maintaining a competitive industrial stronghold. The path towards a low carbon economy in the Nordic region illustrates that high climate ambitions, based on market-based instruments and the right regulatory framework, are crucial components of a modern business policy and economic growth.

The Nordic region illustrates that high climate ambitions, based on market-based instruments and the right regulatory framework, is path towards a low carbon economy.

Innovative and competitive companies are key in the low-emission transition. Business can provide the solutions and products needed to reduce emissions and increase economic and social welfare. Combined climate-, energy- and business policy is necessary to further stimulate innovation and development of new technologies, products and services.

Competitiveness and climate ambition

Competitiveness and climate ambition go hand in hand. Firstly, only competitive companies will have the necessary resources to invest in future solutions. Secondly, companies that develop and export competitive low-emission products will contribute globally to tackle climate change, while competitiveness is strengthened. A generally good business environment in the Nordic countries is therefore an important part of a successful climate policy framework.

As for Europe, the Nordic business federations strongly believe that Europe should continue to have a leading role in combatting climate change, also providing solutions beyond Europe.

The aim of the EU’s long-term climate vision should therefore be to:

  1. Adopt an ambitious, coherent and market-based climate policy for Europe that will deliver on the Paris agreement.
  2. Pave the way towards a competitive EU with net-zero emissions by 2050, through a balance between emissions and uptakes.
  3. Stimulate the possibility for European companies to innovate and provide still better and more competitive climate solutions globally.
  4. EU must demonstrate commitment and firm action onwards to 2030.

Lars Bach Jensen
Head of International Energy and Climate Policy, Dansk Industri


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