Denmark, with a population of 5,6 Mio. people, 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.
Denmark has set a target of phasing out fossil fuel use entirely in all energy sectors (including transportation) by 2050.
In the electricity system, reaching the 100 % RE target will involve a significant expansion of wind and solar power as well as the continued deployment of combined heat and power (CHP) systems. Specifically in the heating sector, Denmark plans to expand the use of both renewable sources of gas (such as biogas) and other renewable forms of heating such as solar thermal, ground-source heat pumps, and wood-based biomass. 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.
An economy-wide focus on energy efficiency correlating to current EU plans that envision a 20% reduction in energy use by 2020 is also part of Denmark’s energy and climate strategy. Efforts to increase energy efficiency in existing buildings via extensive retrofitting and raising the standards on all new construction in the country will help achieve this target.
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. 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. Plans are also underway to expand the use of renewable energy in its island regions, such as the Faroe Islands. 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.
On the policy front, in addition to a feed-in tariff and a net metering framework, many of the policy measures being used by Denmark to achieve its objectives rely heavily on 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.
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.
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Thursday, September 14th, 2017