A shared future - balanced development
13. Energy
Energy consumption and energy supply are paramount activity areas for achieving sustainable development. Therefore, anthropogenic climate change and SO2 and NOx emissions must be limited, but at the same time maintain balance in the economy. Therefore, there must be efforts for stable and cost-effective energy supply.
The Danish Government will liberalise the Danish electricity and gas markets in order to improve energy production efficiency, reduce energy prices, and ensure that energy is produced with less pressure on the environment. The Danish Government will also strive for more coordination in energy policy across borders, not least in the EU, so that the price of energy in individual countries reflects the actual cost, including the environmental cost. Denmark has entered ambitious international obligations to reduce the negative impacts of energy on the environment. With its commitment to reducing emissions of six greenhouse gases by 21 per cent compared to 1990 levels between 2008-12, Denmark will make a significant contribution to the Kyoto Protocol and thus to counteringglobal climate change. Furthermore, Denmark intends to reduce SO2 emissions by about 30 per cent and NOx emissions by about 45 per cent compared to the 1998 levels by the end of 2010.
Denmark has applied large expenditure on energy saving and efficiency, and expanding renewable energy.While enjoying substantial economic growth during the 1990s, Denmark managed to keep total energy consumption at a fairly constant level. A major reason for this is that we now utilise surplus heat from electricity production more efficiently than previously.Thus, more than 80 per cent of district heating is today co-produced with electricity.The use of natural gas and renewable energy has also risen during this period. On balance, CO2 emissions dropped by about 10 per cent between 1990 and 2000. Combined with better flue-gas cleaning systems, cleaner energy sources have contributed to a considerable reduction in SO2 and NOx emissions from the energy sector.
Denmark still has some way to go to reach the national targets set for CO2 emissions in 2005 and to meet the Kyoto commitments in 2008-12. But the most recent assessment shows that we are on the right track.The Government has initiated work to revise the estimates of the expected development in Danish emissions of greenhouse gases and the difference in relation to the Kyoto objective. Furthermore, there should be considerations as to how this difference can be eliminated in the most costeffective way.
To a great extent, Denmark has already implemented the "easy solutions" to reducing its energy consumption and CO2 emissions. Consequently, it is crucial to ensure a higher degree of economic efficiency when planning new action and introducing new instruments.
Objectives and activities in the future
The potential for making the energy sector more efficient remains large.Through national efforts and active cooperation within the EU, the Government intends to develop market-oriented instruments that can ensure stable, cost-effective energy supply, and promote environmental objectives while maintaining balance in the economy.
The reforms of the framework for electricity and gas supply in 1999-2000 were the start of a process of liberalisation of the electricity and gas markets which the Government intends to further.
From January 2003, Denmark is required to open its electricity market fully, thus allowing all consumers to choose their own supplier.The Danish Government will investigate how costeffective and flexible regulation of the electricity sector's CO2 emissions can be established when the present programme involving CO2 quotas expires at the end of 2003. This will be coordinated with following up compliance with the Danish obligations with regard to emissions of SO2 and NOx. Denmark supports the European Commission's proposal for a European CO2 quota system.The Danish Government is aiming at full deregulation of the Danish gas market from 2004, and will work to open the market in the same way throughout the EU.
Denmark intends to do its part in reducing global warming.The Government aims to bring down CO2 emissions by 20 per cent of 1988 levels in 2005. At the same time, the Government will take the initiatives that are necessary to fulfil its commitments under the Kyoto Protocol, compelling it to reduce total emissions of greenhouse gases by 21 per cent of 1990 levels in 2008-12.
The so-called flexible mechanisms under the Kyoto Protocol can be cost-effective tools which should be utilised and further developed.
The expansion of renewable energy supplies must continue as renewable energy also contributes to a cost-effective means of fulfilling environmental goals - including the CO2 objective. One possibility could be that Danish renewable energy is incorporated in a future European CO2 quotas market. The current erection of off-shore windfarms is providing a lot of experience. In 2005, Denmark will use approximately 1.4 million tonnes of biomass.The Danish Government will also promote research and development into renewable energy where businesses and research institutions can see opportunities for good results. Therefore, the Government has presented a bill regarding a two-year test scheme with 150 per cent tax relief for enterprises' research activities, if these are in cooperation with public-sector institutions.The Government will work to see renewable energy account for 29 per cent of the total electricity consumption. The targets in the EU Renewable Energy Directive are that renewable energy should account for 22.1 per cent of total EU electricity consumption by 2010. As part of the energy sector's contribution to meeting Denmark's goal for reductions in CO2 emissions, it is relevant to consider benchmarks for the proportion of renewable energy in gross energy production in the longer term so that renewable energy continues to expand to the extent it can contribute to cost-effective fulfilment of environmental targets.
However, we must also develop strategies to regulate the periodical production of surplus electricity generated by rising volumes of heat-bound and wind-dependent electricity generation. It has been politically agreed that renewable energy should account for a minimum of 20 per cent of Denmark's electricity consumption by as early as 2003.
Nuclear power is not considered a sustainable source of energy. However, it is possible to reduce CO2 emissions by converting from coal to naturalgas based electricity production.
As part of its efforts to boost energy savings, Denmark introduced a new Energy Savings Act in 2000, intended to pave the way for better planning, coordination and prioritisation of overall efforts to cut energy consumption.
Efficient efforts in the energy area are best secured through international cooperation. Parallel with the liberalisation of the international energy markets, international solutions to global environmental problems should be promoted.This will ensure that efforts will be in the most appropriate areas, and it will ensure equal competition for businesses operating in individual countries. Denmark supports the use of flexible mechanisms advocated in the Kyoto Protocol and as a first step will establish a concrete scheme to promote Joint Implementation energy projects in Central and Eastern Europe.
Improved energy utilisation The Danish economy grew by approximately 27 per cent from 1988 to 2000. During this period, Denmark's gross energy consumption (adjusted for climate fluctuations and net electricity exports) rose by a mere two per cent.This means that energy utilisation was almost 20 per cent higher in 2000 than in 1988. Some of the reasons for this improvement are:
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