01 Feb Frontrunner on energy transformation seen as model for larger markets
Dan Jørgensen, Minister of Climate, Energy and Utilities, Denmark, outlines opportunities gained in transitioning economies towards sustainable energy sources and the country’s desire to be a model and leader in worldwide energy transition.
What lessons has the world learned in confronting the COVID-19 pandemic?
The way that governments across the planet have dealt with the pandemic have been diverse. However, common denominators in places that most successfully handled the crisis are strong public sectors, low inequality, functional health systems and trust between citizens and politicians. Many of the same values and tools that one needs for a green transformation are ones used to successfully take on the pandemic. Billions and billions of euros will be spent on restarting economies. This will offer many opportunities depending on where the money is being spent. If a nation chooses to invest in green infrastructure, energy efficiency and renewable energy, it will have a much healthier economy. It will create jobs and help in our battle against climate change.
Funding spent on restarting the economy after the COVID-19 crisis needs to be spent in a smart and constructive way. This means focusing on necessary transformation and taking advantage of these investments to make a real difference in the everyday life of Danish citizens. Fortunately, much of the green investments have these exact goals. When we support energy efficiency, it is good news for households. When a home is properly insulated it translates to a smaller heating bill. It is good for homeowners; it is good for combating climate change; and it is good for us as a society because it creates jobs. This transformation is already happening on a European level because of the EU Commission’s strategy. The pandemic heavily affected Danish citizens. It took a lot of resources, attention and the postponement of pressing business. However, we have managed to make up for lost time in the past six months and put things back on track. We have already made decisions that have brought us halfway to our 2030 targets. We have achieved extremely good progress, despite being in the middle of a difficult situation.
What reasons does Denmark have to stress sustainability in all levels of government?
Green transformation in Denmark began in the 1970s. However, we did not consider it green back then. The reason why we developed more renewables and new energy efficiency technologies was because we no longer wanted to be dependent on foreign energy sources, especially oil. This was sparked by the oil crisis. As a small country, we are responsible for only around 0.1 percent of the world’s greenhouse gas emissions; one might question if it even matters what we do. However, we think it does matter. We have a chance to influence countries who are more responsible for emissions. We set high targets for ourselves that some argued could not be achieved without hurting our competitiveness and economy. However, we have demonstrated that it is viable. The biggest argument against green transformation is that it is expensive and that it will hurt a country’s equality. Through clear examples, we have proven this argument to be wrong.
When we put pressure on ourselves to reach an ambitious target, we are also forced to innovate and develop new solutions and technologies that others can use. We are now pioneers in many areas. In 1991, Denmark was the first country in the world to build an offshore wind farm. At the time it was extremely expensive. However, we are happy we took the initiative. This first step has led the way into a global transformation. Today, offshore wind competes with coal and nuclear energy in many places in the world. The next step for us is to take offshore wind into a new era, which is why we are building an artificial island the size of 64 football fields with a 10-GW capacity. It is fully scalable and will deliver electricity to potentially 10 million European households. This is much more than we need ourselves and can be exported to other countries to help in their decarbonization efforts. Most Danish industries support our goals. They know that when the Danish government puts pressure on industry to produce energy efficiently and use more renewables, it will be beneficial for them because they will be global frontrunners. Our companies allow us to compete on the world market in new dimensions, far ahead of competing countries. Denmark has shown that it is possible to reduce emissions significantly while becoming more competitive, creating jobs and having better health and higher living standards. We want to spread this success story to other countries.
What kind of state-led initiatives will be required to move industry towards lowering its carbon footprints?
When you make climate policy—especially when you have very ambitious targets—you need to know that it will affect all of society. There needs to be a holistic approach because we are not talking about just one sector. The energy sector is often pointed to as the most important one in the green transformation, which makes sense in it being the lowest hanging fruit. If we do not become more energy efficient, we will not be able to reach our targets. Evidently, oil, gas and coal need to be phased out. However, since we need to be carbon neutral by 2050 at the latest, we need to also transform our agricultural and transport sectors. We cannot point to just one policy instrument. We need a broad range of tools that include economic incentives and market-based instruments such as the European Union Emissions Trading System and green taxes. We need to make it cheaper to produce energy in an efficient way and more expensive to use fossil fuels. Regulations, public expenditure and state budgets will be crucial. We must be proactive and sign agreements with industry leaders to promote positive climate actions with regulations that make day-to-day activities less bureaucratic.
What kind of partnerships does Denmark have with other markets and in what way is the country helping these markets with their green transition?
Denmark has 19 bilateral government-to-government agreements with countries surrounding collaborations on energy. We use Danish experiences to help other countries use more renewables and become more energy efficient. This has been a huge success. We are the only country in the world that has a green strategic partnership with India. India would like to expand their renewable energy to 450 GW. When speaking of the partnership, Indian President Modi outlined that Denmark has the knowhow and India has the scale; in this sense it is a perfect partnership. We are also collaborating with the U.S. on energy in a wide range of areas. We have made the most progress in the offshore wind sector. There are agreements on a federal level and with certain individual states to study streamlining approval processes, for instance. While this may sound boring and bureaucratic, it is extremely important in smoothening the green transformation. Some of our knowledge sharing has resulted in methods that are now implemented in the U.S.
What investment opportunities does Denmark have in its renewable energy sector?
We are creating energy islands, one in the Baltic Sea on Bornholm that will have a capacity of 2 GW and a second artificial island. We are changing the map of Denmark 80 kilometers out into the North Sea. Hundreds of wind turbines will line the island. When fully implemented it will have a 10-GW capacity. We hope this will attract investors. There will be a surplus of green wind power from the artificial island that we will be able to export to other countries. It can also be used in power-to-x technologies that electrolyze green electricity and transform it into hydrogen. Hydrogen can then be used or transformed further into green fuels for airplanes, vessels or trucks. This solves two main issues we normally have with renewable energy. The first is how to store energy for days when the wind is not blowing. The second one is how to use that energy in parts of our energy system that cannot be easily decarbonized, like aviation and maritime transport. The potential here is infinite.
What challenges need to be overcome to properly transition to sustainable energy?
We are in the middle of a massive transition. We already have a lot of jobs in the green tech sectors in Denmark, but we know for a fact that we can create more. Every time we make investments that create 1 GW of extra offshore wind capacity, the industry has estimated that it creates more than 14,000 new jobs. We will be losing jobs in some sectors, such as oil and gas. We were the first country with sizable oil production that said it would cancel all future licensing rounds and put an end to oil and gas exploration in 2050. A lot of people stand to potentially lose their jobs, which is why it is important that we have alternatives. It is not enough to say that the green transformation will create more jobs; these jobs need to be destined to the same people and regions that lost them. This is something that we are working hard to make a reality. The green transformation is possible. Many of the technologies that we need to make it happen already exist and are based on energy efficiency and renewable energy. The green transformation will make society better; it will make you richer; it will not lead to inequality; and if one does it the right way, it will create high-paying jobs that are beneficial for all.