Danish policies bringing about the green energy transition or grøn omstilling

Cross-posted from David Roberts at vox.com

Back in the early 1970s, Denmark got almost all its energy from imported oil. Then came the oil crisis, which, naturally, had a big impact. Political discussions throughout the ’80s resulted in two big strategic decisions.

One, Denmark would develop its own North Sea oil and gas resources. Two, it would implement a green energy transition, or grøn omstilling, to get off fossil fuels entirely.

Both strategies meant it would never again suffer at the mercy of international oil markets.

Here’s how the first strategy has gone:

 (Danish Energy Agency)

This enormous surge in energy production made Denmark a net energy exporter for many years.

Demark has seen rapid growth in wind turbines; small-scale combined heat-and-power (CHP) systems run on natural gas, biomass, or waste; and (more recently) rooftop solar panels.  Here’s a graphic from a presentation on Denmark’s energy efforts:

“In 1990,” writes the Rocky Mountain Institute, “the country had 15 central power plants. It now has 20 central power stations (4,200 MW), 45 electric boilers (550 MW), 5,300 wind turbines (5,070 MW), and 94,000 solar PV panels (785 MW), in addition to the 670 local combined heat and power plants (2,300 MW).”

In 2013, renewable energy accounted for 46.7 percent of Danish electricity supply. Wind power alone supplied 42 percent in 2015.

Ambitious targets

Denmark’s ambitions have steadily risen over the years. In 2012, after a deliberative, country-wide, multi-stakeholder process (so Danish), the country implemented a newEnergy Agreement, which among other things established some stringent targets.

  • By 2020, Denmark aims to get 50 percent of its electricity from wind power and 35 percent of its total energy consumption from renewable sources.
  • By 2030, no more coal.
  • By 2035, 100 percent of electricity from renewable sources.
  • By 2050, 100 of all the country’s final energy consumption — electricity, heat, transport, industrial — from renewable sources.

Yup: completely fossil-fuel-free by 2050. Sounds pretty good! Or as the Danes say, det lyder temmelig godt! (Don’t yell at me, Danes, yell at Google Translate.)

A Danish goal. (Shutterstock)
A Danish goal.

Energy democracy

Many countries have found, when they try to increase the number of small-scale, distributed energy resources, they run into a lot of NIMBY opposition. (More on that subject here.)

The Danes thought ahead. There are policies in place to compensate homeowners for any lost value that comes with nearby siting of power, and each power project is required to set aside 20 percent of its shares for local buy-in and ownership. Consequently, the benefits of decentralized power are more widely shared and opposition is muted.

A danish (which, it turns out, originated in France).(Shutterstock)
A Danish (which, it turns out, originated in France).

Maximizing local resources

Denmark boasts unusually high wind speeds, so they’ve built the hell out of wind turbines. Wind hit 42 percent of total Danish power in 2015 and is targeted for 50 percent by 2020.

 (Energinet.dk)

Onshore wind is now, according to a government analysis, the cheapest form of electricity available in Denmark, about half the cost of new coal or natural gas plants.

Denmark also has lots of natural gas (from the North Sea), biomass, and organic waste, so it made a concerted effort to encourage CHP. Now 80 percent of Danish heating co-generates electricity, and more than 50 percent of electricity is co-generated with heat. It’s the most extensive CHP system in the world.

CHP only counts as “renewable” if it burns straw, wood chips, wood pellets, biogas, or waste. The vast bulk burn natural gas.

To allay concerns about the use of biomass for electricity, in 2014 the country announced that it would only purchase sustainable biomass.

Amager Bakke, a waste-to-energy plant being built in Copenhagen. It's also going to be a ski hill. Seriously.(Amager Resource Center)
Amager Bakke, a waste-to-energy plant being built in Copenhagen. It’s also going to be a ski hill. Seriously.

Taxing and spending

As Matt Yglesias noted in his piece on Denmark, the country pays for its high level of social services with very high taxes on both the wealthy and the middle class.

The same is true of its energy policies.

The Danes have had a carbon tax in place since 1992. It covers all fossil fuel consumption except that used to generate electricity, which is covered by separate energy taxes.

The carbon tax is now up to $31 USD per ton; 40 percent of the revenue goes to environmental spending and 60 percent goes back to industry, to reward energy and environmental innovations.

The country also has a number of taxes on energy — Danes pay the world’s highest per-kilowatt electricity rates, mainly because Denmark crams a lot of taxes into electricity bills, a higher share than any other EU country.

Some 66 percent of Danish electricity bills are taxes — the highest anywhere.(Eurelectric)
Some 66 percent of Danish electricity bills are taxes — the highest proportion anywhere.

Denmark also has a 150 percent tax on new cars. Yes, 150 percent — recently down from 180 percent! There’s also a 95 percent surtax on heavier cars and an annual tax on fuel inefficiency. Electric cars, meanwhile, were exempt from auto taxes through 2015 and can still be parked for free in any Danish city.

Those taxes, plus numerous incentives for non-car travel, plus tens of thousands of miles of separated bike lanes, mean that Denmark is a bicycle paradise. In the capital city of Copenhagen, fully 50 percent of trips to work or study are by bicycle.

Overall energy use in Denmark’s transport sector is slowly falling.

Bikin' in Copenhagen. (Shutterstock)
Bikin’ in Copenhagen.

Deregulated utilities, efficiency, and smart grids, ja!

Denmark’s utilities are deregulated, which means generation companies, which sell energy, are separate from distribution utilities, which manage local grids and deliver power. Most distribution utilities are municipally or customer-owned — operated for the good of citizens, not profit. And ratepayers have retail choice as well, meaning they can choose their own power provider.

The country has both national and sector-specific (oil, gas, electricity, district heat) goals for energy savings. They are mandatory, but highly flexible and market-based. There is also an emphasis on boosting the efficiency of existing buildings through stricter codes, energy labelling, and a raft of other policies.

The Danish government has also launched a smart grid initiative to help coordinate dozens or hundreds of small-scale resources on both the generation side (wind turbines, solar panels, biodigesters, CHP facilities) and the demand side (grid-connected appliances, batteries, and vehicles), aggregating them together into a “virtual power plant” that can operate reliably and predictably.

 (Energienet.dk)

The Danes are already grid wizards, coordinating power capacity that’s well over half renewables and accommodating surges of wind power that sometimes exceed total demand — last summer wind generated 140 percent of Denmark’s power.

Yet Denmark’s grid is the most reliable in Europe, writes RMI, and “about ten times more reliable than U.S. electricity supply.”

How do they do it? That brings us to our final piece…

Interconnections

This mesmerizing interactive shows Danish power flows in real time. What you will notice is that the Danish grid is well-connected to a number of surrounding grids — there are interconnections to Sweden, Norway, and Germany.

denmark interconnections(Energienet.dk)

These interconnections allow Denmark to export excess wind power when necessary, and to import power when the wind is still.

This turns out to be crucial to grid stability, which is why the government is focusing onstrengthening those interconnections.

Steal this Denmark

If we’re going to start copying Denmark, let’s do it right. Let’s not just cherry pick the high taxes, paid parental leave, and free college. Let’s tax carbon, decentralize energy production, enforce efficiency goals, support the rapid build-out of renewables, improve the grid, interconnect new grids, and make the electricity sector more flexible and dynamic.

It’s a classic social democratic approach: ambitious in its goals, egalitarian in its effects, flexible in its means, well-run in its execution.