New Danish energy agreement

Photo: Blue Square Thing / Creative Commons

A massive expansion of wind power, reforms to promote biomass and an expansion of mandatory energy savings are the main features of the Danish energy agreement. The measures combined are estimated to reduce carbon dioxide emissions by 34 per cent by 2020.

The energy agreement that was adopted by the Danish left-centre government and four opposition parties on 22 March 2012, is described by the climate-energy and construction minister Martin Lidegaard as the “greenest and the longest-lasting energy settlement ever in Denmark” and is expected to halve the use of coal and fossil gas to 2020. Consumption of oil is however projected to remain roughly on the same level, since transport is only marginally addressed in the deal (Figure 1).

Figure 1: Consumption of fossil fuels and renewable energy in 2010 and 2020

One of the more prominent features of the deal is the extensive investment in wind power, which today covers 28 per cent of Danish electricity consumption. The ambition is to increase this share to 50 per cent by 2020 (Figure 2). The plan includes the development of two large offshore wind farms, Kriegers Flak and Horns Rev, with a joint capacity of 1 GW, an additional 500 MW from offshore wind in other locations and new planning tools that are expected to increase the onshore wind production capacity by another 500 MW. The total planned capacity increase is equivalent to the electricity consumption of 1.5 million households.

Figure 2: Share of wind power in electricity consumption 2010-2020.

The deal also involves large-scale changes to the Danish electricity grid. To manage the increased share of wind power, a strategy for smart grids will be presented later this year. The development of Kriegers Flak will also mean an increased integration with the German grid, since the wind farm will have power lines to both countries.

Increasing the share of biomass in the energy mix is another cornerstone of the deal. This will be carried out mainly through legislation against new oil-fired boilers and financial assistance to municipalities, power companies and households that want to convert from fossil to bio-energy. Reforms in order to facilitate enhanced biogas production are also going to be undertaken. In total it is estimated that 34 per cent of the energy supply will come from renewables by 2020 compared to the current 22 per cent.

Ella Maria Bisschop-Larsen, president of the Danish Society for Nature Conservation who otherwise is strongly in favour of the deal believes that there is reason for caution as regards bioenergy: “We look forward to contributing to an in-depth analysis of biomass resources in Denmark, since our land and not least our natural areas are limited and therefore there is competition for them. We must therefore strive to promote development that will provide energy without negative consequences for nature and the environment.”

The Danish Society for Nature Conservation also believes there should be more committed efforts to promote solar electricity. Under the plan, solar energy is treated as an experimental technology with grants for research and development, but there is no targeted assistance to businesses and individuals for solar panel installations.

Investments in renewable energy will also be followed by measures for energy savings of seven per cent by 2020 compared with 2010 (Figure 3). This will be done by increasing the existing savings requirements for energy companies by 100 per cent and by developing a coherent strategy for energy renovation of all Danish buildings.

Figure 3: Development in gross energy consumption (PJ) 2010-2020.

The agreement also includes funding for all proposals:

Increased efforts for energy savings by the energy companies are funded by the companies’ tariffs.
The expansion of renewable electricity and the gas network is partly financed by so-called PSO (public service obligation) schemes, and thus the energy bill.
A “security of supply tax” on space heating will cover state subsidies for biogas, industrial cogeneration and renewable energy industries and the state tax loss resulting from a lower consumption of fossil fuels.
Part of the “security of supply” tax is offset by an easing of energy taxes on electricity and fuel for the industry in order to maintain the Danish business sector’s competitiveness.
Additionally, a number of efficiency improvements in the Danish energy sector, will together reduce the cost of measures by €240 million in 2020.

Kajsa Lindqvist

A short version of the agreement can be found on the website of the Danish Energy Agency: http://www.ens.dk/en-us/info/news/news_archives/2012/sider/20120328newdanishenergyagreement.aspx

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