Denmark's Fourth National Communication on Climate Change

Since the Brundtland Commission's report Our Common Future from 1987, Denmark's climate policy has developed in collaboration with the different sectors of society, the international climate policy, and results from related scientific research.

Thus, since the end of the 1980s and during the 1990s a considerable number of measures to reduce the emissions of greenhouse gases have been implemented.

These measures were aimed at achieving environmental improvements for society in general, e.g. by introducing environmental taxes and involving the public in the debate and decisions concerning the environment.

Since 2001, focus has been on making efforts to reduce emissions cost-effectively.

In order to be able to monitor the development in total effect of these efforts on greenhouse gas emissions from national energy consumption, the basis for and the follow-up has include emissions inventories corrected for annual temperature variations and variations in Denmark's imports of electricity.

Since 1990 Denmark has undertaken or committed itself to several targets with respect to reducing greenhouse gas emissions:

Section 2.1.1 gives a short description of the general, democratic decision-making processes, to which Denmark's climate policy is also subject.

4.1.1 National action plans

In 1988 the government of that time issued The Government's Action Plan for Environment and Development. The plan was a follow-up on the Brundtland Report and was based in principle on striving for environmentally sustainable development. One of the main messages in the plan was the need to integrate environmental considerations in decisions and administration within such sectors as transport, agriculture and energy.

In the years since then a number of ministries have prepared sector action plans in which environment is an integral element. The sector action plans thus deal with the entire development in a sector combined with solutions of environmental problems caused by the sector. The sector plans for energy, transport, forestry, agriculture, aquatic environment, waste, and development assistance are important examples.

The plans from the 1990s all contained specific environmental objectives and, usually, deadlines for achieving them. In addition, there were a number of concrete initiatives that are intended to lead to achievement of the objectives. Progress has been evaluated regularly to check whether the implementation of the plans resulted in achievement of the objectives. The results of the evaluations have been presented in political reports from the sector ministries or in special follow-up reports.

The evaluations and follow-up have often given rise to the preparation of new action plans, either because additional initiatives have been necessary in order to achieve the objectives or because the development of society or the development within the area in question has made it necessary to change both objectives and initiatives. Major sector plans that have been of importance for the reduction of greenhouse gas emissions are:

The sector plans deal with different aspects of the climate problem. In the energy and transport sectors the main environmental concern has been the emissions of the greenhouse gas CO₂. The plans in these sectors were therefore to a great extent concerned with reducing CO₂.

The frameworks for the Danish energy sector, however, have changed quite significantly over a short period of time. The goal of Danish energy policy today is to create well-functioning energy markets within frameworks that secure cost-effectiveness, security of supply, environmental concerns and efficient use of energy under conditions of a fully liberalised energy sector, and electricity production from Danish power plants is controlled by market forces and traded freely across national borders.

The introduction of CO₂ quota regulation as a common EU instrument has therefore been of absolute importance to Denmark meeting its climate commitments. From 2005, quota regulation will be the key instrument to ensuring that the Danish energy sector can contribute to the reductions requisite to fulfilling Denmark's climate commitments. The remaining initiatives in the energy area will thus primarily serve purposes other than climate-related.

The other sector plans are not primarily focused on reducing greenhouse gas emissions, in part because the sectors are battling with other major environmental problems that efforts have been made to solve through the plans. The main concern in the agricultural sector has been pollution of the aquatic environment. In the waste sector it has been reduction of the volume of waste, and in the industrial sector, reduction of emissions/discharges of harmful substances to the atmosphere/aquatic environment, the use of toxic substances, etc.

However, the implementation of the sector plans has to a great extent also resulted in reduction of greenhouse gas emissions. For example, the reduction in the agricultural sector's nitrogen emissions, which the aquatic environment plans are resulting in, is at the same time reducing the emissions of the greenhouse gas nitrous oxide. The initiatives to reduce waste quantities mean fewer landfill sites and thus less formation and emissions of methane, and the ongoing increase in forested area will mean increased removals of CO₂.

In addition, the energy and transport plans meant that changes were made in the energy and transport areas in all sectors. The initiatives in the energy area have thus resulted in reduced energy consumption and, with that, reduced CO₂ emissions within a wide range of sectors, including the domestic sector and the business sector.

In June 2002 the government's national strategy for sustainable development in Denmark, A SHARED FUTURE - balanced development, was adopted by the Folketing. The strategy must be seen in part as one of Denmark's responses to the challenge of Agenda 21, which was adopted at the UN General Assembly in Rio in 1992. Counteracting climate change is also an integral part of Denmark's National Strategy for Sustainable Development. The content of this Strategy is described in section 4.6.3.

On the environment policy front, Denmark has participated actively in improving environmental protection in Europe through the EU cooperation and through bilateral environmental assistance to Central and Eastern European countries. On a number of points, the EU's environmental regulation has put Europe ahead of the rest of world environmentally. There are also many examples of EU rules having helped to strengthen environmental protection in Denmark. With the adoption of the Amsterdam Treaty, sustainable development became a main objective for the EU, and integrating environmental considerations in the EU's sector policies became an obligation.

4.1.2 Denmark's Climate Strategy

The Folketing approved Denmark's present Climate Strategy in March 2003. The strategy lays down a framework for Denmark's future efforts on climate. The point of departure in the strategy is that Denmark is to fulfil its international climate commitments under the Kyoto Protocol and the subsequent Burden Sharing Agreement in the EU, and that efforts are to be arranged cost-effectively.

Although many important initiatives have already been launched in order to live up to the climate objective, considerable work still remains before Denmark can live up to its very ambitious Kyoto target. In the baseline projection for Denmark's greenhouse gas emissions, which was prepared as a basis for the Climate Strategy - that is a projection which only incorporates expected effects of measures implemented prior to the strategy - it was estimated that there would be a deficit of 20-25 mill. tonnes of CO₂ equivalents annually in 2008-2012 compared to Denmark's Kyoto commitment, if no additional measures were implemented^1,2.

The Kyoto Protocol makes it possible to plan climate action that is more flexible. The Climate Strategy combines cost-effective domestic measures with use of the Kyoto Protocol's flexible mechanisms.

Reduction efforts are first and foremost tasks for the private sector, not least for the sectors which are subject to allowance regulation. According to the Climate Strategy, efforts from central authorities could supplement private efforts, and in the initial phase they could contribute by getting the market for CO₂ credits started. Efforts from central authorities are concentrated on the flexible mechanisms of the Kyoto Protocol which implement concrete projects to reduce greenhouse gas emissions in foreign countries. They are JI projects (joint implementation of projects in other industrialised countries) and CDM projects (projects in collaboration with developing countries on the development of cleaner technology).

Since reduction costs for possible new domestic action in the various sectors are continuously developing as a result of technological development and changing economic frameworks among other things, the strategy contemplates assessing efforts on a regular basis with the aim of ensuring that the most cost-effective measures are chosen.

In order to ensure correlation of reduction efforts across sectors and measures, the government has set a benchmark at DKK 120 per tonne of CO₂, which can constitute a basis for the implementation of domestic measures outside the sectors and businesses subject to the EU allowance scheme. The benchmark is an expression of the value of the CO₂ reduction which can be included in the assessment of concrete measures. The value of any other benefits from an initiative can be added, for example other environmental benefits.

As regards climate issues, the 2005 government platform is based on the Government Climate Strategy. A number of elements with climate-policy aspects are also emphasised. These elements are presented briefly below.

One element of the government platform was the presentation of a new long-term energy strategy looking ahead to 2025.

In June 2005 the government presented a new long-term energy strategy, Energy Strategy 2025. The strategy is an overall presentation of the government's long-term energy policy. The contents of the strategy is described in more detail in section 4.3.1.

The government platform also states that the government will promote energy saving initiatives to allow Denmark to remain at the forefront with regard to energy efficiency, and that the government will present an action plan for increased energy savings based on economically justifiable investments, environmental consideration and advancement of Danish energy and building technology.

Having presented its draft action plan for strengthened energy-saving efforts in December 2004, the government made a broad political agreement in June 2005 in accordance with the government platform, addressing future energy saving measures. It is an ambitious agreement, which sets out the framework for efficient and increased energy-saving measures in the years to come. The contents of the agreement and the final action plan for renewed energy-saving efforts presented in September 2005 is described in detail in section 4.3.1.

The parties have agreed on a goal of decreased total energy consumption (not including transport). Strengthened efforts will be made to achieve specific, verifiable energy savings, corresponding to 7.5 PJ on average per year in the period 2006-2013. Significant parts of these energy savings will be attained by more savings by grid and distribution companies within electricity, natural gas, district heating and oil. If, in some years' time, Danish energy consumption figures (not including transport) are not pointing in the desired direction, the parties of the agreement will discuss the situation and consider a possible enhancement of efforts via specific measures.

The government presented its final action plan for renewed energy-saving efforts in September 2005.

The government wishes to modernise and simplify the Danish energy and CO₂ tax system, taking into account the introduction of CO₂ quotas in the EU from 1 January 2005. The government will therefore present a proposal for the structure of the future energy and CO₂ taxes.

The government will appoint a committee to investigate the options for reorganising the total motor vehicle tax system over several years in a way that promotes the environment and retains existing revenue levels.

The aim is for Denmark to be one of the absolute leaders in Europe in terms of research and development. The government will present an action plan that aims to see public and private enterprises increase combined research and development spending to a level above three per cent of Denmark's gross domestic product in 2010.

The aim of the high-technology foundation is to promote high technology research and innovation, coordinating government research efforts and trade and industry.

Foundation funds will be targeted towards selected areas, in particular, nanotechnology, biotechnology and information and communications technology. Focus will be given to particularly promising areas where there are clear commercial interests and where Denmark has special advantages and opportunities, e.g. within the health and energy sectors.

The development and application of new technology can be one of the ways to solve environmental problems and can also have positive commercial effects. The government aims to boost the development of green technology, for example in the areas of energy and fuel.

In June 2005, three new research and development strategies were published: one for hydrogen technologies, one for liquid biofuels, and one for wave energy. The strategies supplement Energy Strategy 2025 and can be seen as a realisation of overall considerations concerning prioritising and focusing future technology-development efforts.

For hydrogen technology, the overall strategic target is to make Denmark among the best at developing and demonstrating efficient and competitive technologies and systems, so that hydrogen – based primarily on renewable energy – can become an integral element in clean, efficient, and reliable energy supply.

These strategies will be an important building block for the interdepartmental working group which is to establish a total overview of the possibilities for development and use of different alternative propellants in transport. The strategy suggests that there is a need for continu-ing the current Danish strongholds, particularly within development of new technologies for production of bioethanol fuel based on straw and other low value products.

Recently, the strategies for research and development within new energy technologies were supplemented by a strategy for wave energy. The general aim of the strategy is to enable Danish wave energy plants to contribute to cost-effective, sustainable electricity supply in Denmark, and to enable Danish enterprises to supply competitive wave energy products etc. in Denmark and abroad.

4.1.3 Progress in general concerning follow-up on the Climate Strategy

In order to ensure cost-effectiveness in climate policy, as part of the follow-up on the Climate Strategy, the government decided to appoint a standing climate committee to follow up regularly on the deficit and ensure cost-effective implementation of the climate policy. The committee is composed of the Ministry of Finance, the Ministry of Economic and Business Affairs, the Ministry of Food, Agriculture and Fisheries, the Ministry of Foreign Affairs, the Ministry of Taxation, the Ministry of Transport - now the Ministry of Transport and Energy - including the Danish Energy Authority, and the Ministry of the Environment -including the Danish Environmental Protection Agency (EPA). The EPA chairs the committee and provides the secretariat. The climate committee is to monitor the Danish climate deficit on a regular basis, i.e., the difference between the Danish target for greenhouse gas emissions in 2008-2012 and the expected emissions. On the basis hereof, the committee is to ensure proper co-ordination and prioritisation between different measures, which can contribute to the fulfilment of Denmark's reduction commitment, including the use of flexible mechanisms (international allowance trade, Joint Implementation and Clean Development Mechanism), allowance regulation, and other national policies and measures across various sectors. In this connection, the committee is to assess the socio-economic, state-financial, environmental, distributional and competition-related consequences of implementing various measures and initiatives.

In 2006 the climate committee is also to co-ordinate the preparation of a progress report on the fulfilment of Denmark's reduction commitment and up-date calculations concerning measures with regard to costs and potentials, aimed at a possible revision of Denmark's Climate Strategy.

In Denmark's Third National Communication to the Climate Convention, the main results of the analyses on possible new policies and measures carried out prior to the Climate Strategy are reproduced with regard to potential and socio-economic reduction costs.

The calculations illustrated that only relatively few domestic actions with a significant potential which did not exceed the benchmark of DKK 120 per tonne of CO₂ equivalents, would be cost-effective compared to the use of the flexible mechanisms. This must be seen in the light of the fact that Denmark has already made a massive national effort up through the 1990s, while there is a large, unexploited potential in other countries.

Due to this situation, the government's cost-effective strategy for meeting Denmark's reductions commitment is based to a certain extent on the use of flexible mechanisms, Emission Trading, and the project mechanisms, Joint Implementation and Clean Development Mechanism. The EU allowance scheme will constitute the framework for most of the reduction efforts. Therefore, the specific combination of efforts will depend on the extent to which the enterprises concerned choose to carry out own reduction measures or to buy allowances from abroad.

In order to up-date and investigate the possibilities of implementing additional domestic measures apart from the allowance-regulated activities, the follow-up on the Climate Strategy has also included implementation of an interdepartmental project, the Policies and Measures Project, which e.g. continues to investigate the potential of new domestic measures where previous calculations have indicated relatively low reduction costs. It also investigates more closely whether new information exists that could contribute to reducing previously calculated costs further, and whether additional cost-effective national measures could be found. The project is expected to end in 2006 where the results are to be part of the Climate Committee's status 2006 report.

Annex B1 contains a collection of data sheets with further information on existing measures and on some of the measures no longere in place.

The EU directive on a common allowance scheme (the EU ETS) constitutes the framework for efforts from 1 January 2005 for a large proportion of the energy producers and some of the energy-intensive industry. The businesses subject to the allowance scheme 2005-2007 are in the process of preparing their own climate efforts. They can choose to reduce their own emissions when this is most appropriate, or they can buy allowances or credits from project-based emission reductions when this is considered most appropriate. This ensures that businesses concerned can adapt their efforts to market conditions on a regular basis. Denmark's implementation of the EU allowance directive is dealt with in greater detail in sections 4.2.1 and 4.3.1.

As mentioned, using the flexible mechanisms under the Kyoto Protocol is also part of a cost-effective Danish Climate Strategy. Section 4.2.2 reports on progress with respect to allocation of funds and specific JI and CDM projects.

Section 4.2.3 reports in greater detail on progress regarding taxes of importance to Denmark's greenhouse gas emissions. The government tax freeze eliminates tax increases, but re-allocations may prove to be the outcome of the committee's deliberations, which are expected to conclude in 2007.

Within the energy sector, measures have been implemented to enhance further energy saving and improve energy efficiency. Section 4.3.1 reports on progress with regard to the future energy-saving efforts and the Energy Strategy 2025 (2005).

The Policies and Measures Project also investigates possibilities in the transport sector, cf. section 4.3.2. In most cases, however, new measures in the transport sector demand a common effort within the EU to become sufficiently effective.

With respect to business and industry, focus will be on CO₂ reduction by way of allowance regulations as incentives enhancing energy saving and reduction in CO₂-process emissions. Since the latter is primarily associated with the production of cement and tiles, technology offers limited reduction possibilities at present. Technologically, the prospects for reducing emissions of nitrous oxide associated with the production of nitric acid in the fertilizer industry are good. As shown in section 4.3.3, this is, however, no longer an issue, since Denmark ceased to produce nitric acid in 2004. Section 4.3.3 also described Denmark's important contribution to reducing the use and emission of fluorine-containing greenhouse gases.

Certain possibilities also exist for reducing greenhouse gas emissions in the agricultural sector. The potential and possibilities of implementing cost-effective measures in this sector were analysed more closely in connection with the preparation of the Action Plan for the Aquatic Environment III, which was adopted in 2004. The plan itself only resulted in minor reductions in greenhouse gas emissions, cf. section 4.3.4. Therefore, in continuation hereof, additional concrete measures are being studied at present as part of The Policies and Measures Project. In June 2005, the provisional results were presented and discussed at a project day, which was open to the public.

Apart from the measures described in section 2.3.4. concerning afforestation which have already been implemented and can be referred to article 3.3 of the Kyoto Protocol, in connection with The Policies and Measures Project, it is being investigated whether article 3.4 of the Protocol can include cost-effective reduction potentials in connection with forests and land (revegetation, forest management, cropland management, and grassland management).

Concerning the waste sector, The Policies and Measures Project is investigating whether there are cost-effective potentials connected to further expansion of extraction and utilisation of energy from methane from landfills, cf. section 2.3.6.

In March 2005 a major analysis of Denmark's efforts in 1990-2001 to reduce emissions of CO₂ and other greenhouse gases, and associated costs was finalised and published in the report Denmark's CO₂ emissions - the effort in the period 1990-2001 and the associated costs³, hereafter the Effort Analysis.

Prior to this analysis, quantitative estimates of the effect of separate measures on greenhouse gas emissions were often limited to ex-ante estimates before the measure in question was adopted. In a few cases, the implementation of a measure was followed by an ex-post evaluation. A major reason that only a few ex-post evaluations of individual measures have been carried out is that it is often difficult to clearly attribute an observed greenhouse gas reduction to a particular measure, since many areas (sectors/sources) are affected by several measures at the same time.

In the analysis of the importance of selected, implemented measures for greenhouse gas emissions as a result of efforts in 1990-2001, the effect and cost of a number of measures were estimated - both for the year 2001 and for the period 2008-2012. Thus, the latter case is a so-called without measures projection i.e. without the effects of measures implemented since 1990, which gives estimates of the size of mean annual greenhouse gas emissions in 2008-2012, if the measures until 2001 had not been implemented.

Please note that the statistical base for the Effort Analysis has included the emissions inventory submitted to the EU and the UN in 2003 (covering 1990-2001) and the “with measures” baseline projection (2008-2012), i.e. without additional measures, published in February 2003 together with the Government Climate Strategy.

4.2 MEASURES AND EFFECTS ACROSS SECTORS

4.2.1 Allowance regulation

On 1 January 2005 the EU Emission Trading scheme (EU ETS) replaced Denmark's national allowance scheme. In accordance with the Climate Strategy, this extended allowance regulation scheme has become part of the new central measures associated with the efforts to reduce Denmark's greenhouse gas emissions.

In its present form the EU allowance scheme will be valid in 20052007 and it will include CO₂ emissions from the sector-specific activities mentioned in Table 4.1 below.

TABLE 4.1 CATEGORIES OF ACTIVITIES COVERED BY THE EUROPEAN UNION GREENHOUSE GAS EMISSION TRADING SCHEME (EU ETS)

Denmark's national allowance scheme only included the major producers of electricity in the energy sector. Via the national allocation plan, the present allowance regulation in Denmark includes individual emission limits 2005-2007 for CO₂ emissions from 377 Danish production facilities within several sectors, which together produce approx. half of Denmark's total greenhouse gas emissions⁴. These are still, primarily, energy producers and energy-intensive businesses and industries. Further information on installations covered is included in section 4.3.1 on measures in the energy area.

Thus, in the following only the principles and general figures for Denmark's implementation of the EU allowance directive via the national allocation plan (NAP) will be described.

The national allocation plan settles the allocation of quota for set periods at a time. All EU Member States are required to prepare national allocation plans. Denmark's proposal for a national allocation for the period 2005-07 was published on 31 March 2004 and approved by the European Commission on 7 July 2004.

Relevant key figures in the proposed national allocation plan for Denmark for the period 2005-07 are shown in Table 4.2.

TABLE 4.2: KEY FIGURES IN THE PROPOSAL FOR DENMARK'S NATIONAL ALLOCATION PLAN 2005-07 OF 31 MARCH 2004

The Danish Allocation Plan entails a total allowance allocation of 15% below the baseline projection (with existing measures) available in March 2004 for the sectors subject to allowances - with the greatest reduction from the production of electricity. Provided that emissions from the other sectors remain fairly constant, the reduction will constitute approx. 7.4% of total projected emissions. Thus, Denmark will be on its way to fulfilling its climate target for the period 2008-12 as set by the EU burden sharing of the reduction target under the Kyoto Protocol.

The anticipated reduction effect of 7.4% of the new allowance regulation corresponds to a reduction of 6 mill. tonnes of CO₂ annually in 2005-2007.

The effect in 2008-2012 cannot be estimated before the Allocation Plan for this period has been prepared in 2006.

Changes to the EU allowance directive and/or to Denmark's implementation of it may have been made by then - e.g. regarding activities, sectors, and greenhouse gases to be included in the scheme.

Denmark has had an active, environmentally oriented energy policy since the 1970s, and since 1990 this has been supplemented by a climate policy as such, which, on an international scale, has entailed a major strain - economically and/or via administrative regulations - on most of the greenhouse gas emissions, especially from businesses and sectors that are not subject to allowances. Therefore the cheap reduction potentials are to a certain degree exhausted in these sectors. The additional reduction efforts needed to fulfil Denmark's climate commitment will, therefore, primarily affect sectors subject to allowances.

In connection with the new allowance regulation that entered into force on 1 January 2005, Denmark's national allowance registry – (DK ETR – Emission Trading Registry⁵), which is used to allot allowances to production facilities subject to allowances and enables trade in allowances among the allowance holders found in the registry, also opened. The allowance registry has also been prepared to contribute to Denmark's implementation of the Kyoto Protocol in such a way that Denmark's EU allowance registry can also be made to function as the national allowance registry, which is to be established pursuant to the Kyoto Protocol as a prerequisite for the application of the Kyoto mechanisms. Section 4.6.1 contains a more detailed description of the registry.

4.2.2 The Kyoto mechanisms

As mentioned above, the starting point in the Government Climate Strategy is that efforts aimed at fulfilling the international climate commitment under the Kyoto Protocol and the subsequent EU Burden Sharing Agreement are organised cost-effectively.

The flexible mechanisms are, therefore, important elements of the Government Climate Strategy, supplementing domestic reduction measures. The purchasing of CO₂ credits is primarily a task for the private businesses under the regulations of the EU allowance directive. The market for CO₂ credits is, however, still in the making. By involvement in project development, the government will contribute to “starting up” the market for CO₂ credits earlier than would otherwise have been the case. The buying of credits will also contribute to the fulfilment of Denmark's international climate commitment, just as the climate projects will entail a number of additional environmental benefits such as reduced pollution of air and water.

On this basis the government has allocated DKK 1,130 mill. for the purchasing of CO₂ credits from JI and CDM projects in 2003-2008.

With a mean allowance price in the projects of DKK 50 per tonne of CO₂, the allocated funds correspond to approx. 4.5 mill. tonnes of CO₂ annually for 5 years (2008-2012). A target-fulfilment projection that includes the effects of these additional measures in 2008-2012 is 4.5 mill. tonnes of CO₂ lower than the base line emission projection, which is a projection of Denmark's greenhouse gas emissions and removals inventoried under the Kyoto Protocol with implemented and adopted measures.

The implementation of specific JI and CDM projects is described in more detail in the following. The remaining “further information” under the Kyoto Protocol which the Fourth National Communication must contain, cf. the reporting guidelines, is included in section 4.6.

If a well-functioning market for CO₂ credits is to become a reality, it is important that the host countries have the necessary institutions and procedures for approval of climate projects in place. This is best ensured if the Danish state as purchaser of CO₂, becomes directly involved in the development of specific climate projects. By building on experience and network contacts gained from the well-established environmental assistance programme, the Danish state can help get the necessary approvals in place.

On this basis, Denmark has selected a number of promising climate projects in collaboration with countries in Eastern Europe. Contracts for the acquisition of approx. 2.6 mill. tonnes CO₂ credits from five projects have been entered into. The assessment is that the contracts entered into, and negotiations about other projects, have been directly influential in enabling national authorities to build administrative capacity to manage JI projects.

All five projects display good environmental profiles and for the majority also good social profiles. Thus, it shows how climate projects lead to several types of benefits, benefiting the country buying the CO₂ reductions as well as the host country. Annex C contains further information on three examples of the five JI projects.

Denmark has also instigated tenders, where private actors can offer CO₂ credits from specific projects. The objective is to explore the market for good and cost-effective climate projects. Furthermore, tenders will create more awareness about the Danish state's interest in purchasing CO₂ credits and will thus create better supply of projects. The first tendering round closed on 15 September 2004, and a contract has been entered into with one project from the round, a landfill gas project in Poland.

Not all enterprises interested in buying CO₂ credits abroad have the required capacity to get involved themselves directly in climate projects. These enterprises will probably be demanding credits from intermediary dealers offering less risky indirect CO₂ credits. In this way, they can avoid getting involved in complex project development and contract writing, and the risk associated with the individual project will be shared by several investors. By showing an interest in indirect credits from international emission quota banks and funds, the Danish state is helping ensure that a market for this type of credits will exist when enterprises subject to the EU allowance directive start showing a demand for CO₂ credits.

Three contracts have been entered into with suppliers of indirect CO₂ credits. These include: collaboration between the consultancy firm Eco-Securities and Standard Bank London (ESSB), the Testing Ground Facility (TGF) under the Nordic Environment Finance Corporation (NEFCO), and the World Bank. The ESSB and TGF are open for investments from private investors, whereas the Danish state's contract with the World Bank was entered into in collaboration with the two large Danish electricity producers, Elsam and Energi E2. The contract entered into with the World Bank represent the first time large private Danish actors have invested in CO₂ reductions in developing countries and Eastern Europe.

It should be noted that to the extent the JI projects lead to reductions in the greenhouse gas emissions of the host country, also before 1 January 2008, the reductions in question could, in accordance with the contracts entered into, be transferred to the Danish climate account from 1 January 2008 as parts of the assigned amounts of the host country, if the conditions of the Kyoto Protocol have been met. This procedure is called “early crediting” and will in practice be registered as allowance trading in the host country and in Denmark's national allowance registry.

Denmark wishes to create better interaction between environmental assistance and Denmark's other initiatives to protect the global environment, including through climate efforts under the Kyoto Protocol of the Climate Convention. This will be realised through collaborating with developing countries on acquisition of credits from projects that reduce the emission of greenhouse gases.

In accordance with the Danish Government Climate Strategy from February 2003, Denmark will live up to its commitments under the Kyoto Protocol in a cost-effective way. Efforts will be carried out by the state with the purpose, in particular, of contributing to a faster development of the markets for CO₂ credits, than would otherwise be the case. The government has allocated DKK 200 mill. in 2004 and 2005 for state purchases of CO₂ credits from CDM projects in developing countries. A further DKK 300 mill. is expected to be allocated to CDM projects in 2006 – 2008, out of a total allocation framework of DKK 1,130 mill. for the purchase of CO₂ credits from JI and CDM projects in the years 2002-2008.

CDM collaboration with developing countries is being managed by the Ministry of Foreign Affairs. The goal is to ensure the greatest possible synergy between CDM collaboration and Denmark's international effort within development assistance. The climate effort must contribute:

This collaboration includes e.g. Danish support to the development of energy planning and economic planning, capacity building with the authorities that are to manage the climate effort, e.g. that are to assess and approve CDM projects, and help in the development of the CDM component of selected projects. Denmark moreover intends to purchase CDM credits, especially from the projects that Denmark has helped develop.

Denmark has chosen to commence with the implementation of the CDM effort by collaborating with countries that have been covered by the special environment assistance (previously MIFRESTA) for a number of years. In this way, Denmark will be able to build on collaboration projects on capacity building and planning which have been operating for a number of years. Furthermore, the countries must have a large emission of greenhouse gases, and thus a large reduction potential and potential for purchasing CO₂ credits. Therefore, Denmark will be working together with Malaysia, South Africa, and Thailand for a start, since these countries live up to the conditions mentioned. From 2005, the effort will be expanded to include Indonesia and China.

In Malaysia, South Africa, and Thailand the Danish effort consists or three elements:

In addition to the CDM collaboration with the five countries mentioned above, general agreements have been entered into with Chile, Nicaragua, and Argentina with a view to paving the way for possible CDM credits trades between these countries and Denmark. An agreement has also been entered into with Mexico from 2005.

Furthermore, it is possible to carry out CDM collaboration by including projects being developed under the scheme for mixed credits. At yearend 2004, a significant number of projects were under development, primarily projects on biomass and renewable energy. Some projects have been presented before the CDM Executive Board to receive an approval of method or for registration; however no CDM project with Danish support has been approved yet.

Purchases of CDM credits can be bilateral, especially purchases from projects that Denmark has participated in the development of, or they can be indirect, through purchases of credits from CO₂ investment funds or similar. The Danish Foreign Ministry has of yet not bought credits from individual projects; however, the Ministry is participating with the Ministry of the Environment, Elsam, and Energi E2 in a Danish CO₂ fund, which will purchase credits from JI and CDM projects. This fund was established in collaboration with the World Bank and has a total capital DKK 200 mill.

Funds for purchasing credits from CDM projects are part of the Foreign Ministry's budget on a special account and separate from development assistance. The purchase of credits will thus not be at the cost of funds for development assistance.

The framework and work on CDM projects include broad collaboration aimed at promoting efficient methods for developing, applying, and disseminating environment-friendly technologies, know how, and procedures and processes that can influence climate change; and at promoting sustainable development in the developing countries. Also within CDM collaboration work, such technology transfer covers both soft technologies, such as capacity building, information network, training, and research, as well as hard technologies, such as equipment for controlling and reducing greenhouse gas emissions.

4.2.3 Taxes and duties

In Denmark, taxes and duties collected make up a total of approx. 48% of the GDP. The public sector provides childcare, education, unemployment benefits, health and disability benefits, old-age pensions, and many other services.

The personal income tax is the most important tax, making up more than half (53%) of total tax revenues. Other taxes are VAT, duties, corporation taxes, and labour market contributions. The Danish VAT is relatively high, 25%, and there are no differentiated rates. There are a considerable number of additional consumption taxes and environmental taxes. The corporation tax rate is 30%.

Total revenue from all taxes and duties is expected to amount to DKK 734 billion in 2005. The relative distribution is shown in Figure 4.1.

Retail prices on products that influence Danish greenhouse gas emissions are, in most cases, the decisive factor determining the degree to which they are consumed. Energy prices influence the composition and total size of energy consumption. Therefore extra taxes and duties put on products influence the consumption of these products and the size of greenhouse gas emissions associated with the use of the products.

Denmark has special taxes on motor vehicles, energy products, alcohol, tobacco, and a number of other products. During the 1990s a number of new environmental taxes were introduced. These taxes were imposed on consumer goods that caused pollution or were scarce (water, energy products such as such as oil, petrol, electricity, etc.) or on discharges of polluting substances (CO₂, HFCs, PVC, SF₆, SO₂, and sewage). Taxes are imposed on mineral oil, tobacco, and alcohol in accordance with EU legislation.

Taxes influencing Denmark's greenhouse gas emissions are described in more detail in the following. Data sheets for these measures are in Appendix B, which includes e.g. references to the legal basis for implementation of the measures.

4.2.3.1 Implemented taxes and duties relevant to CO₂, CH₄, and N₂O emissions Energy

Denmark has had taxes on energy for many years⁶. Since the first oil crisis in the early 1970s, the rates of the taxes has been aimed at reducing consumption and promoting the instigation of more energy-saving measures. Lesser energy consumption will reduce the emissions of both CO₂, methane (CH₄), and nitrous oxide (N₂O) associated with combustion of fossil fuels. Energy taxes from recent years are stated in Table 4.3 below.

Danish Energy taxes are laid down in the four Danish tax acts on mineral-oil, gas, coal, and electricity, respectively (Mineralolieafgiftsloven, Gasafgiftsloven, Kulafgiftsloven, and Elafgiftsloven).

The tax on mineral-oil act entered into force on 1 January 1993. Before that time the tax on petrol was regulated via the petrol tax act, which entered into force on 1 January 1983, and the act on taxation of gas oil and diesel oil, heating oil, heating tar, and crude oil was regulated via the act on taxation of certain oil products, which entered into force on 3 October 1977. Tax rates from recent years are shown in Table 4.4.

TABLE 4.4 TREND IN TAXES 1988-2005 UNDER THE MINERAL-OIL TAX ACT, STATED IN DKK/LITRE

The increase per 1 July 2004 was, as mentioned, part of a reorganisation of the taxes, and the total tax burden on the products did not change; the only thing that changed is the relative distribution between energy taxes and CO₂ taxes.

The purpose of introducing a tax differentiation from 1 June 1999 between light diesel and diesel low in sulphur was to encourage the use of diesel low in sulphur, which is less contaminant than light diesel. This was accomplished and a change took place soon after to the effect that almost all diesels sold were low in sulphur. The purpose of further differentiation from 1 January 2005 favouring sulphur-free diesel was likewise to encourage the use of this type of diesel in favour of diesel low in sulphur. This differentiation, however, will cease on 31 December 2008 with the entry into force of an EU requirement for sulphur-free diesel.

In addition, tax differentiation has been introduced in order to achieve environmental goals other than the direct reduction of greenhouse gas emissions. Thus tax differentiation has been introduced with a view to phasing out lead in petrol and collecting petrol vapours at filling stations. The rates of taxes to achieve these environmental goals are shown in Table 4.5.

was introduced in its current form on 1 January 1996. There has been taxation on gas, however, since 1 January 1979, when the tax on town gas and LPG was introduced. The tax on town gas was cancelled again in June 1983 and regulation of the tax on LPG was transferred to the mineral-gas tax act when this act entered into force. The tax rates on gas are shown in Table 4.6.

The tax on coal was introduced on 1 July 1982 and constituted DKK 127/tonne for hard coal and DKK 91/tonne for lignite and lignite briquettes on the day of entry into force. The rates have since then developed as shown in Table 4.7.

The tax on electricity was introduced on 1 April 1977. Table 4.8 shows the development in electricity tax rates since 1989.

Energy and transport: CO₂ taxes The CO₂ tax was introduced on 1 March 1992. CO₂ tax is placed on different types of energy products relative to their CO₂ emissions, cf. Table 4.9.

Table 4.10 shows examples of the different types of CO₂ taxes converted into consumer units.

In addition to this, there are CO₂ taxes on heating tar, crude oil, coke, crude oil coke, lignite briquettes and lignite, LPG, and other gases. As evident from Table 4.10, the CO₂ taxes were reduced from 1 July 2004. This reduction, however, does not mean a reduction in the tax burden and resulting increased CO₂ emissions. The tax reductions were part of a reorganisation of the energy taxes to make them more transparent, and the energy taxes on the different energy products have been raised correspondingly, so that the overall tax on the individual product is the same. As part of the reorganisation of the taxes, from 1 January 2005 a tax was placed on petrol and the energy tax on petrol was reduced correspondingly, so that the total tax burden on petrol remains unchanged. This reorganisation was introduced in order to make it possible to exempt biofuels from CO₂ tax.

In connection with the implementation of the CO₂ allowance scheme a decision was made to pay back the CO₂ taxes paid for fuels and heating used in industrial processes that are directly allowance-regulated in industrial enterprises covered by the allowance regulations. This amendment is pending approval by the European Commission and has therefore not yet entered into force.

In the transport sector, the number of cars in Denmark and the use of motorised vehicles are influenced by the tax on cars and fuel. The latter has been described above.

Since 1 July 1997 the annual tax on motor vehicles has been based on energy consumption (the green owner tax) measured in accordance with EU Directive 93/116/EC. Before this date, the taxation was based on weight. 24 classes of energy consumption have been defined for both petrol-driven and diesel-driven vehicles. Examples of classes from 2005 are shown in Table 4.11.

TABLE 4.11 EXAMPLES FROM THE DANISH STRUCTURE OF TAX INCENTIVES BASED ON ANNUAL TAXES ON MOTOR VEHICLES (2005), DKK/YEAR

From 1 January 2000, three new classes were defined for diesel-driven private cars. The annual tax is given in Table 4.12.

The reason for the fall from 2002 and onwards is a reduction in the green owner tax as a consequence of rising fuel taxes. With effect from 1 January 2002, there was an increase in the tax on diesel.

From 1 January 2000, a supplementary reduction in the registration tax for energy-efficient private cars was introduced, as shown in Table 4.13.

This means that from 2000-2005 diesel-driven cars that run more than 45 km per litre will have to pay only 2/6 of the normal registration tax, etc.

With the new system, there was an incentive to buy light commercial vehicles (LCVs) which fulfil the future EURO 3 and EURO 4 standards before these standards were made obligatory. The figures referred to are from the Commission's proposal KOM (97) 61, dated 20 February 1997 (EU Directive 98/69/EC).

The Danish system has 4 classes of LCVs based on gross weight of the vehicle. Examples of reductions in the annual tax on class 1 and class 4 vehicles are shown in Table 4.14. The system entered into force on 1 January 1998.

For the domestic sector, the taxes levied on consumption of electricity, water, and heat affect consumption figures, since with the introduction of taxes these products become more expensive.

The effect of taxes in the energy and transport area on the emissions of greenhouse gases

The introduction of CO₂ taxes and the increase in the rates of individual energy taxes since 1990 have had an effect on the consumption of a number of energy products and have therefore reduced the CO₂ emissions associated with consumption of these products.

The Effort Analysis³ from 1 April 2005 made an estimate of the effects of the measures implemented in the period 1990-2001. The report's calculations show that the total effect of the introduction of CO₂ taxes and raised energy taxes meant a reduction in annual emissions of about 1.5 mill. tonnes of CO₂ equivalents in 2001. The socio-economic reduction costs were estimated at DKK 325/tonne. The expected average reduction in emissions for the years 2008-12 is the same as for 2001, namely about 1.5 mill. tonnes of CO₂ equivalents.

The increased fuel taxes have led to an annual reduction of about 1.2 mill. tonnes of CO₂ equivalents in 2001 with a socio-economic reduction cost of DKK 775/tonne. The average for 2008-12 is expected to be at the 2001 level.

In 2001, the introduction of the green owner tax meant an approx. 2% reduction in CO₂ emissions from cars, corresponding to 0.158 mill. tonnes of CO₂ equivalents. The average for 2008-12 is expected to be around 7% (0.540 mill. tonnes of CO₂ equivalents).

4.2.3.2 Implemented taxes and duties relevant to consumption and emissions of HFCs, PFCs, and SF₆

Since 1 March 2001, imports of industrial gases HFCs, PFCs, and SF₆ (F-gases) have been subject to taxation. The tax is based on the Danish CO₂ tax correlated with the GWP up to a maximum of DKK 400/kg, cf. the examples in Table 4.15.

The effect of taxes on the consumption of HFCs, PFCs, and SF₆ on emissions of greenhouse gases The Effort Analysis has estimated that the tax on the industrial gases HFCs, PFCs, and SF₆, in combination with the effect of regulation adopted and introduced, led to a reduction of 49,000 tonnes CO₂ equivalents in 2001. In 2005, reduction is expected to be somewhere around 150,000 tonnes of CO₂ equivalents, increasing to around 370,000 tonnes in 2010. The socio-economic reduction cost is estimated at about DKK 200/tonne CO₂. Please note that it has not been possible to calculate the effects and costs of taxes and regulation separately.

4.2.3.3 New measures, measures no longer in place and that would increase emissions

The Danish government implemented an overall tax freeze from 2002 stipulating no tax increases, which means that no fixed rates in Danish kroner or in per cent may be increased.

In 2002-2003 a cross-departmental group reviewed the registration tax on private cars in order to see whether changing the system from a value-based system (approximately 200%) to a system based on energy consumption (CO₂) would constitute a more cost-effective tool for reducing CO₂ emissions. A report⁷ was published in April 2003 and the government subsequently decided not to make any changes to the current system. The report shows that the reduction costs will amount to about DKK 9,000/tonne, which exceeds the benchmark of DKK 120/tonne for implementing national initiatives laid down in the Government Climate Strategy.

The Danish Minster for Taxation has launched a detailed review of the Danish tax system in order to reduce its complexity. The third largest group of proposals concerns energy, CO₂, and sulphur taxes. A project group has been established. Its objective is to review the legislation in order to reduce the administrative burdens and improve transparency with regard to energy, CO₂, and sulphur taxes. Of the changes implemented⁸, the following, mentioned the text box next page, are of potential significance to reducing greenhouse gas emissions.

All the energy agreements and CO₂ taxes mentioned above are among the subjects to be dealt with by a committee set up by the Minister for Taxation. The objective of the committee is to analyse the CO₂ taxes in relation to the CO₂ allowance scheme, which entered into force on 1 January 2005, as well as to investigate whether the energy taxation system can be designed more appropriately. The committee is expected to end its work in spring 2007.

4.3 OTHER MEASURES AND EFFECTS IN DENMARK'S ECONOMIC SECTORS

4.3.1 – 4.3.6, describe the other measures of importance to greenhouse gas emissions and removals in the following 6 economic sectors: energy, transport, business, agriculture/forestry, the domestic sector, and waste. Table 4.16 shows how the allocation, which is to be used in connection with the annual emission inventories (the CRF/IPCC format), is aggregated into the 6 economic sectors.

Table 4.17 and Figure 4.2 show the main result of this aggregation for 1990/95⁹, 2003, 2008-12, and 2013-17, as well as 2020, 2025, and 2030 without emissions and removals in connection with land use, land-use change and forestry (LULUCF), however the effect of removals by afforestation since 1990 is included¹⁰.

• Simpler CO₂ taxes
The rules on CO₂ taxes have been simplified. This means that the administrative burden has been eased for all VAT-registered companies paying CO₂ taxes for the use of electricity for lighting, production plant, computer equipment, and ventilation plant. The change means that the 10 percent refund of the CO₂ tax on light processes has ceased and the tax in itself has been reduced correspondingly. A total of 55,000 enterprises will thereby have easier administration.

• Simpler tax legislation
Several tax acts have been simplified; e.g. the tax on hard PVC has been annulled and a minimum limit has been introduced for registration and payment of tax on incandescent lamps.
The reduction in taxes on products made of hard PVC and on incandescent lamps could lead to an increase in consumption of these products and thus, possibly, to more emissions of CO₂ from waste incineration due to increased amounts of plastic in the waste, and to greater energy consumption due to the use of incandescent lamps rather than energy saving bulbs.

• New Danish-Swedish tax agreement
The Danish and the Swedish governments have entered into a new tax agreement that will ease the lives of cross-border commuters and enterprises and thus contribute to the integration in the Øresund Region. The rules concerning work-place taxation have been simplified and in the future cross-border commuters will receive allowances for their pension investments as well as for their travelling expenses.
Lower transport costs enhance mobility, however they may also lead to more CO₂ emissions in terms of increased energy consumption for transport.

• More cars approved for yellow low-tax number plates for commercial vehicles
The so-called 50/50 rule, which previously determined whether certain types of cars could be approved as vans, has been repealed. The rule required that the platform was not shorter than the driver's cab. The simplification means that more types of cars can now be approved for yellow number plates and, thus, for a lower registration tax.
Lower registration tax on the car types mentioned could increase the total number of private cars in Denmark, whereby also the total transport activity could rise and with it the emission of CO₂.

Source: The National Environmental Research Institute (NERI) and the Danish Environmental Protection Agency

4.3.1 Energy

The energy sector's extraction, conversion and distribution of energy led to greenhouse gas emissions which in 2003 made up 44% of Denmark's total emissions, of which CO₂ was the primary emission. 97.5% of the emissions from the energy sector are CO₂. 1.5% is methane (CH₄), and the remaining 1% is (N₂O).

Energy production and energy-consuming activities in the transport sector, industry and the other sectors are the main contributors to the total emissions of CO₂ due to use of large quantities of coal, oil and natural gas. The energy sector is therefore centrally placed in the efforts to reduce the emissions of CO₂.

Many initiatives have been taken over the years to reduce the emissions, and work is still going on to find the best and most cost-effective measures with a view to fulfilling Denmark's international climate obligations.

TABLE 4.16 AGGREGATION OF SOURCES/SECTORS IN THE CRF/IPCC FORMAT INTO THE SIX MAIN ECONOMIC SECTORS IN DENMARK

The framework for the Danish energy sector has, however, changed significantly over a few years. The energy sector is now fully liberalised. Today, electricity production from Danish power plants is controlled by market forces. Danish electricity generation is traded freely across national borders on the Nordic and the north-German electricity markets. There is thus a significant extent of integration in the Northern European electricity market on an arm's length basis. This entails, for example, that increased use of renewable energy in the Danish electricity system or enhanced efforts to save electricity do not automatically mean that generation at coal-fired power plants is reduced correspondingly during the first commitment period of the Kyoto Protocol 2008-2012.

The introduction of the CO₂ allowance regulations as a common EU instrument has thus been pivotal for Denmark's possibilities to comply with the climate commitments. The allowance regulations constitute a central instrument in ensuring that the Danish energy sector is enabled to provide the reductions required if Denmark is to comply with the climate commitments. At the same time, the allowance scheme permits significant improvements to the cost-effectiveness of Denmark's climate effort.

TABLE 4.17 DENMARK'S GREENHOUSE GAS EMISSIONS IN 1990/95, 2003 AND THE MAY 2005 “WITH MEASURES” PROJECTIONS UNTIL 2030 BY ECONOMIC SECTOR AND BY GAS¹

Source: The National Environmental Research Institute (NERI) and the Danish Environmental Protection Agency

The goal of the energy policy today is to create well-functioning energy markets within frameworks that secure cost-effectiveness, security of supply, environmental concerns and efficient use of energy. The best initiatives are often those that meet more than one of the purposes mentioned at the same time. Efforts concerning energy should thus be seen in a broader context than CO₂ alone, not least when it comes to purpose and calculation of effects. Within allowance-relevant areas, allowances will ensure that Danish climate commitments are met. Other tools may ease the burden of meeting targets, or they may have a more long-term foundation in technological development. In contrast to development of sustainable energy and electricity saving, the allowances provide security for CO₂ reductions in the Kyoto Protocol commitment period 2008–2012. Renewable energy can, however, contribute to meeting energy-policy objectives and also underpin climate policy because in this way energy supply is enhanced without increasing emissions of greenhouse gases.

For example, it is very important that wind power is now so well developed that it is close to being competitive with coal-fired electricity generation.

The costs to Denmark of meeting climate commitments are less than they would have been if Denmark did not have competitive technology to secure energy supplies while at the same time reducing emissions of greenhouse gases. Renewable energy is an important element in the long-term development of the Danish energy sector. Wind power is an environmentally friendly electricity-production technology with considerable perspectives in relation to meeting climate commitments, and continued development of wind power and other RE technologies is an important contribution to the necessary technological development and sustainable development at global level.

The focus of this section is energy production and energy supply. The energy-consuming activities and the possibilities for energy savings in the different sectors of society are dealt with in greater detail in the subsequent sections.

A large number of policies and measures have been implemented over the years to meet the various energy-policy objectives cf. Table 4.18 and Annex B1.

Denmark has implemented the directive on a common European CO₂ allowance scheme for energy production and energy-intensive industries (the EU ETS). The allowance scheme entered into force on 1 January 2005.

The allowance scheme will be the most important measure in Denmark's fulfilment of its climate obligations under the Kyoto Protocol. The scheme aligns well with the liberalisation of the energy markets and management of environment efforts by the market being implemented by the government for the energy area. The allowance scheme permits significant improvements to the cost-effectiveness of Denmark's climate policies and measures and forms a main element of the Danish government's Climate Strategy.

In Denmark, as previously mentioned, 377 production units are covered by the allowance scheme. The largest group of enterprises subject to allowances is electricity and heat producers. In this sector, there is a total of 244 production units, in 138 enterprises. There are 126 production units in industry in 96 enterprises subject to the allowance regulations. Finally, 7 production units in the offshore sector are covered. Annex D contains overviews of the production units covered and their allowances for 2005-2007. The 377 production units would, without the allowance regulations, account for about half of Danish emissions of greenhouse gases.

Both the statutory and the administrative basis for the scheme have been established. The necessary legal basis was adopted by the Folketing in June 2004 and the national allocation plan was approved by the Commission in July 2004.

According to the national allocationplan for the period 2005-2007 an average annual allowance of 33.5 mill. tonnes CO₂ has been allocated.

This corresponds to a drop in emissions of about 6 mill. tonnes per year in 2005-2007, or a reduction of about 15% compared with expected emissions for the period. This level was set by balancing environmental considerations against competitiveness and jobs:

Allowance allocation for 2008-12 will be set in the national allocation plan, which is to be sent to the Commission no later than 1 July 2006. It is expected that this plan will include significant tightening of the number of allowances to ensure that Denmark meets its international climate commitments.

Source: Danish Energy Authority and Danish CO₂ emissions -the effort in the period 1990-2001 and the associated costs

For electricity producers, the European CO₂ allowance scheme replaces the previous Danish CO₂ allowance regulation. The national allowance scheme applied from 15 June 2000 to 31 December 2004, and it put Denmark at the front in establishing a CO₂ allowance system. The original allowance Act applied up to and including 2003, but with the approaching adoption of the common European allowance scheme the national scheme was extended up to entry into force of the EU scheme.

Under the national CO₂ allowance scheme, the individual electricity producers were allocated annual CO₂ emissions approvals for the period 2000-2004. Total emissions approvals for electricity producers in the first year amounted to 23 mill. tonnes CO₂. The emissions level was reduced to 20 mill. tonnes in 2003 and 2004. Approvals were transferable and could be saved-up. If an allowance was exceeded, a charge of DKK 40 per tonne of CO₂ was made. The revenues from these charges were spent on energy savings and research and development.

Taxes have also been used for many years as an instrument for reducing the CO₂ emissions from the energy sector, since fuels used for heat production are subject to energy and CO₂ taxes. Taxes have also been used for a number of years as measures to reduce the CO₂ emissions from the energy sector - partly with a view to a general reduction and partly to promote the use of fuels with lower CO₂ emissions, mainly biomass. Energy and CO₂ taxes are described in detail in section 4.2.3.

R&D activities include energy savings, more efficient energy conversion and renewable energy technologies. Research in the energy area is described in more detail in section 8.2.6.

Increased use of CHP and enlarging the areas receiving district heat have been main elements of the Danish strategy to promote efficient use of energy resources ever since the end of the 1970s. More than half of Denmark's domestic electricity consumption is co-generated with heat at CHP plants, and the potential for further use of CHP is limited. For this reason, only a small increase in CHP production is expected in the future. CHP has been promoted partly by the tax system, partly by electricity production grants for small-scale CHP plants and, lastly, by prioritising electricity from small-scale CHP plants.

Use of renewable energy sources can reduce the emissions of CO₂ from fossil fuels. The proportion of Den-mark's gross energy consumption that is covered by renewable energy increased from 6.7% in 1990 to 14.3% in 2003.

Renewable energy sources are promoted with economic measures, including the tax system and through direct production grants. Agreements and orders for the electricity and heat sector used to play a role, but use of these instruments has largely ended. Lastly, financing R&D activities is contributing to the continued growth in the proportion of renewable energy.

Substitution of natural gas for coal or oil reduces the emissions of CO₂. The first Danish natural gas was landed from the Danish sector of the North Sea in 1984, and since then consumption of natural gas has increased to 191 PJ in 2003, covering 23.1% of gross energy consumption. In future years it is expected that use of natural gas will not increase significantly in that the natural gas market has been more-or-less fully developed. In the longer term it is expected that use of natural gas will increase as a result of increased use of natural gas in electricity generation. Natural gas is favoured by a lower CO₂ tax because of its lower emissions and will be promoted by the EU CO₂ allowances scheme.

Energy-saving efforts in Denmark are implemented by a number of actors. The most important are:

The Danish Energy Authority is responsible for authority tasks throughout the energy-savings area. In addition to legislation and regulation, the area includes the further negotiations within the EU on implementation and control of EU Directives, for example on labelling and standards, as well as a number of operational tasks such as energy labelling of buildings. Authority tasks include setting the framework and controlling the activities of supply companies and the Electricity Saving Trust, and the Authority manages tasks in connection with the agreement scheme with business.

The National Agency for Enterprise and Construction carries out a number of energy-related authority tasks in the building area. Tasks include energy provisions in building regulations, rules on individual metering of electricity, gas, water and heating, as well as rules on the efficiency of heating plant.

The Electricity Saving Trust was established in 1996 with the primary tasks of conversion to CHP and promotion of efficient appliances etc. in households and the public sector. For conversion to CHP the Trust grants subsidies and negotiates pricing agreements etc. In connection with promoting efficient electrical appliances the Trust carries out campaigns, influences markets, and encourages voluntary agreements as well as making electricity consumption more visible. The Trust has established an A club, where public institutions etc. are obliged to buy energy-efficient products. The annual budget of the Trust is about DKK 90 mill., which comes from a special electricity savings contribution of DKK 0.006 per kWh paid by households and the public sector as part of their electricity bills.

Grid and distribution companies (electricity, gas, and heating) are required to encourage consumers to save energy. Initiatives have so far been defined as non-commercial, and subsidies have usually not been available for investments etc. A primary activity for grid companies and partly for gas companies is individual consultancy on savings opportunities with larger customers. Furthermore, campaigns and information activities etc. are carried out. Electricity companies have worked with energy savings since the early 1990s. Natural gas and district heating companies' activities have only been formalised in the past couple of years. The costs are financed through energy prices and amount to almost DKK 240 mill. per year. With the political agreement on future energy-saving efforts the framework for the actors' energy-saving efforts will become more market-based.

The amendment of the Electricity Supply Act entered into force on 1 January 2005 and it means that all environmentally friendly electricity, i.e. electricity from wind turbines and other renewable energy (RE) plant, decentralised cogeneration of heating and power etc, is now sold on market conditions. The previous support for environmentally friendly electricity, where consumers had an obligation to take the electricity at a fixed settlement price, has now been converted to financial support in the form of a price supplement on the electricity market price.

In order to reduce the environmental impact of electricity production, support has been granted in the form of a price supplement for environmentally friendly electricity from wind turbines and other RE plant (straw, woodchips, biogas, solar energy, hydro power etc.) and decentralised cogeneration of heating and power.

The most recent figures are for 2003, and they show that the proportion of Danish electricity consumption from RE was 23.9% in 2003, of which wind turbines accounted for 15.8% of total consumption. The proportion of decentralised cogeneration of heating and power from natural gas and waste was 25% in 2003. Preliminary figures for 2004 show that the RE proportion of Danish electricity consumption was 28.5% in 2004, of which wind turbines accounted for 18.8% of consumption. (If the non-biodegradable part of waste is included in the figures, the proportion was about 1 percentage point higher).

Support for environmentally friendly electricity is set by the Electricity Supply Act and paid in part by electricity consumers through electricity bills as a public obligation (PSO).

The total net costs of RE electricity in 2003, collected through PSO in addition to the market value of the electricity produced was about DKK

2.3 bn., while the corresponding support for decentralised cogeneration of heating and power from natural gas and waste amounted to DKK 0.8 bn. Overall, PSO costs for the price supplement will drop in future years as there is an in-built time limit and a decreasing level of support compared with the previous rules.

In June 2005 the government presented a new long-term energy strategy – Energy Strategy 2025. The strategy is an overall and coherent presentation of the government's long-term energy policy. At the core of the strategy is a clear market-based energy-political objective, in which public authorities provide the framework for the market actors. Thus, the Energy Strategy is based on:

In line with this, the strategy does not propose quantitative objectives for the extension of renewable energy, however it sets the stage for and envisages a market-based increase in the use of renewable energy.

It also underlines the importance of strengthened research and development of new energy technologies.

Finally, it focuses on the transport sector – a committee will be set up to discuss the overall perspectives for alternative propellants in the transport sector, including biofuels.

The Energy Strategy also assesses the need for extending the overall electricity transmission network The government recommends that a power line be established below the Great Belt, and that Energinet. dk, cooperating with Statnett, makes a detailed study of the financial aspects of strengthening the Skagerakpower cable.

The government platform states that the government will promote energy-savings initiatives so that Denmark can continue to lead efficiency energy use. The government will present an action plan for increased energy savings based on economically justifiable investments, environmental consideration and advancement of Danish energy and building technology¹¹.

As a follow-up to the agreement of 29 March 2004, the Danish government presented a draft action plan for a renewed energy-saving effort on 29 December 2004.

On 10 June 2005 the government made a broad political agreement to significantly strengthen energy-saving efforts. The agreement is ambitious, and sets the framework for efficient and increased energy-saving efforts in the coming years.

The parties to the agreement agree that overall energy consumption (excluding transport) shall be reduced. Strengthened efforts will be made to reach specific and verifiable energy savings corresponding to 7.5 PJ per year on average in the period 2006-2013.

Important parts of the energy savings will be achieved by better energy-saving results in grid and distribution companies within electricity, natural gas, district heating and oil.

Moreover, energy savings will be achieved through stricter rules on energy in building regulations, new and better energy labelling, better inspection of boilers and ventilation equipment, special efforts within the public sector, and reorganisation of energy companies' energy-saving efforts.

Together, the government's action plan and the political agreement entail a significant strengthening of the overall energy-saving efforts.

The government programme states that development and use of new technology can be one of the ways to solve environmental problems, while at the same time having positive commercial effects. The Danish government aims to boost the development of green technology, for example in the areas of energy and fuel.

In June 2005, three new research and development strategies were published: one for hydrogen technologies, one for liquid biofuels, and one for wave energy. The strategies supplement Energy Strategy 2025, and can be seen as a realisation of overall considerations concerning prioritising and focusing future technology-development efforts.

The strategy for liquid biofuels stresses the need for maintaining current Danish strengths especially within the development of new technologies for production of bioethanol based on straw and other low-value raw materials.

Both the strategy for hydrogen technology and the strategy for liquid biofuels will be important building blocks for the interdepartmental working group which is to establish a total overview of the possibilities for development and use of different alternative propellants in transport.

The overall objective of the wave energy strategy is to enable Danish wave energy plants to contribute to cost-effective, sustainable electricity supply in Denmark, and to enable Danish enterprises to supply competitive wave energy products etc. in Denmark and abroad.

Many small sources contribute to the energy sector's methane emissions. The biggest single contribution comes from gas-fired CHP plants, which emit unburnt natural gas. With a view to minimising the emissions, a statutory order now limits the emissions from new plants, corresponding to about 3% of fuel consumption. The emissions limit value for existing plants will be reduced by 5% from 2006 pursuant to Statutory Order no. 720 on limitations of emissions of nitrogen oxides, unburnt carbon hydrides and carbon monoxide etc. of 1998. All else being equal, it is expected that total emissions from these plants will be reduced by 5% from 2006.

4.3.1.3 Measures no longer in place and measures increasing greenhouse gas emissions

Since Denmark's Third National Communication to the Climate Convention in 2003, the national CO₂ allowance scheme has been discontinued, as mentioned above. It was replaced by implementation of the common European CO₂ allowance scheme. The common European scheme will in future be the primary instrument to ensure that Denmark meets its climate commitments.

Table 4.19 and Annex B1 contains an overwiev of discontinued and replaced measures including the national CO₂ allowance scheme. Please note that the EU CO₂ allowance scheme will be the key instrument to ensure that Denmark meets its climate commitments. As can be seen, a number of the measures stated below have been replaced by new ones. In a quota system, initiatives within quota-regulated areas have no or only a modest effect on CO₂, and are therefore implemented in order to achieve other effects.

As mentioned in section 4.2.3, from 1 January 2005 tax differentiation has been introduced which will encourage the use of sulphur-free diesel. Increased demand will increase energy consumption in desulphurisation at refineries, and CO₂ emissions will also increase.

However, this should be related to the environmental benefits of limiting emissions of sulphur dioxide cf. the supplementary information on this initiatives in section 4.3.2. Two Danish refineries are covered by allowance regulations of 1 January 2005 and have been allocated allowances for 2005-2008 on the basis of historical emissions of CO₂ in 1998-2002. One has also been allocated further allowances as a result of the statutory requirement in EU Community law.

4.3.2 Transport

In 2003, the transport sector was responsible for 22% of Denmark's CO₂ emissions and 18% of total greenhouse gas emissions. The emissions from the transport sector are primarily CO₂. 13 mill. tonnes of CO₂ corresponded to 96.3% of emissions in 2003. Nitrous oxide made up 3.2% or 0.4 mill. tonnes CO₂ equivalents, and methane about 0.5% or 0.07 mill. tonnes CO₂ equivalents.

In 2003, the transport sector's energy consumption - primarily oil products - made up 31.5% of total energy consumption in Denmark. Traffic, especially passenger transport, has risen uniformly in recent years. In step with the increase, energy consumption and greenhouse gas emissions have also increased. In 2003 total greenhouse gas emissions from the transport sector were 24% higher than in 1990. The most recent prognosis from 2002 predicts continued growth in the sector's CO₂ emissions, in spite of the fact that technological development has led to a reduction in energy consumption per km. Thus, the expected growth in traffic is expected to be approx. 17% from 2003 to 2012, whereas the growth in the transport sector's energy consumption is expected to be approx. 9% during the same period.

Efforts to turn the upward trend in emissions of greenhouse gases in the transport sector have so far failed, partly because of a large growth in traffic intensity and partly due to limitations on CO₂ emissions in Denmark are extremely difficult without international initiatives.

As shown in Table 4.16, the greenhouse gas emissions from fuel for vehicles, ships and aircraft are included under transport. The contribution from the armed forces consists mainly of CO₂ and accounts for just less than 1% of the inventory for the transport sector. The proportion of fuel consumption for multilateral military operations, which is therefore kept out of the total national inventory, is at present regarded as minimal.

In 2002, working on the basis of the previous trends in passenger and freight traffic, the Danish Road Directorate carried out a projection of road traffic up to 2016 and extrapolation up to 2030. The projection indicates that road traffic will continue to grow. With the chosen assumptions it is estimated that road traffic will grow by more than 25% from 1997 to 2016. In the period 2000 to 2010, growth is expected to lie at about 13%.

A large part of total freight and passenger transport is by road and is expected to increase. The trend in freight and passenger transport by road will therefore determine the transport sector's energy consumption and thus its CO₂ emissions.

Table 4.20 and Annex B1 shows the existing policies and measures within the transport sector. In the last few years a number of important steps have been taken at international level, and these - supported by targeted and effective Danish action may help to turn the trend for the transport sector's CO₂ emissions.

TABLE 4.19 REPLACED AND DISCONTINUED INITIATIVES AND MEASURES IN THE ENERGY AREA

Source: Danish Energy Authority and Danish CO₂ emissions - the effort in the period 1990-2001 and the associated costs

Thus, the EU has set up an overall target of attaining a mean CO₂ emission from new passenger cars of 120 g of CO₂ per km before 2010. With the aim of fulfilling this target, agreements have been made with the automobile industry in Europe, Japan, and most recently Korea, which commit the industry to reducing the mean CO₂ emission per km. This measure is assessed to have had, and will in the future have, considerable effect and has been implemented with the reduction of CO₂ emissions as one of the primary targets.

The national environmentally-motivated measures for the transport sector, which have also influenced CO₂ emissions, are usually characterised by aiming at limiting environmental impacts in general. “Changing the registration tax to a green owner tax” and “increased fuel taxes” are both assessed to have had considerable effects and were, furthermore, implemented with reduction of CO₂ emissions as one of the primary targets.

A great number of additional initiatives aiming directly or indirectly at reducing CO₂ emissions have been implemented within various areas. Characteristic for all these initiatives are information campaigns or subsidy schemes, while no initiatives have been established using direct regulation such as requirements or bans. The effects of these initiatives is hard to quantify and in themself they are not considered to have contributed significantly to CO₂ reductions

As transport in itself has a number of side-effects in addition to contributing to the greenhouse effect through higher CO₂ emissions, for example air pollution causing poor air quality or acidification, noise, accidents and congestion, it is important to note that the various initiatives implemented in the transport area typically address many of these aspects and can thus not only be considered in relation to CO₂ emissions. In general the increasing traffic intensity has caused increased CO₂ emissions, while other air pollution has fallen significantly. Other negative effects of transport have also been reduced, e.g. the number of injuries and fatalities in accidents fell by 22% and 47% respectively from 1990 to 2002.

Compared with Denmark's Third National Communication Table 4.20 has been expanded to include information on the effects estimated for selected initiatives in the Effort Analysis mentioned in section 4.1.3 and Annex B2.

Calculations of possible national measures for reduction of Denmark's CO₂ emissions show that the cost-effectiveness of the measures depends entirely on the side effects. The decision to implement the different measures within the transport sector must therefore to a great extent be evaluated on the basis of the measure's other effects and not simply from the point of view of reduction of CO₂ emissions. The generally high economic shadow prices without side-effects are primarily a consequence of the already high level of taxation in the transport sector. It is thus a common feature of most of the measures that they are directed towards parts of the transport sector that, taken together, already pay the full economic cost of transport, since there is a considerable fiscal element in the fixed car taxes. As can be seen in its platform from February 2005, the Danish government will appoint a committee to investigate the options for reorganising the total motor vehicle tax system over several years in a way that promotes the environment and retains existing revenue levels.

An EU directive of May 2003 aims at promoting the use of biofuels in transport. The directive contains reference values for indicative targets that consumption of biofuels in 2005 should comprise 2% of all petrol and diesel sold to transport, and that this percentage should grow to 5.75% in 2010. EU countries can set their own indicative targets, and these can be differentiated compare to the Commission's proposal. Denmark's indicative target of 0% in 2005 was reported to the Commission in 2004 with a note that Danish consumption of biofuels in other sectors was high.

Biofuels are currently more expensive to manufacture than fossil fuels. However, the cost effectiveness can be improved through more intensive research and development. As stated in the new government platform of February 2005, the government will enhance development of green technology, including biofuels.

Therefore, in the summer of 2005 the government set up an interministerial working group to prepare proposals for realisation of the government's objectives relating to fuels. The proposals from the working group will focus on measures to strengthen the development of technologies for alternative road transport propellants, for instance biofuels, natural gas, and, in the longer term, hydrogen.

An updated overall analysis of possible new measures in the transport area and their cost-effectiveness is planned for finalisation in 2006 as part of the Policies and Measures Project described in section 4.1.3.

The transport sector's emissions of methane account for about 0.5% of the sector's greenhouse gas emissions, corresponding to about 0.07 mill. tonnes CO₂ equivalents.

Nitrous oxide accounts for just over 3%, or 0.4 mill. tonnes CO₂ equivalents, of the transport sector's total greenhouse gas emissions. Emissions of nitrous oxide have increased considerably since the introduction of new cars with catalytic converters in 1990. As the half-life of cars from that time is approaching, it is expected that the rate of increase will fall until all cars have catalytic converters. This saturation point is expected to be reached around 2010-2012, with annual emissions of around 0.8 mill. tonnes CO₂ equivalents.

Source: Ministry of Transport and Energy and Denmark's CO₂ emissions - the effort in the period 1990-2001 and the associated costs

4.3.2.4 Measures no longer in place and measures increasing greenhouse gas emissions

Since Denmark's Third National Communication to the Climate Convention in 2003, there have been no great changes in measures for transport.

Compared with the measures listed in Denmark's Third National Communication, however, it should be noted that the information campaign on fuel consumption of new cars has ended and that the measure to promote enterprise plans for traffic safety and the environment as well as transport plans has been discontinued as funds are no longer being made available.

With regard to the in-depth review of Denmark's Third National Communication it should also be noted that in October 2004 the government decided to allocate about DKK 135 mill. to a reduction in taxes of about DKK 0.04 per litre sulphur-free petrol and DKK

0.02 per litre sulphur-free diesel. The purpose is to promote use of sulphurfree petrol and diesel four years before it will be mandatory under EU regulations. On the one hand, encouraging phase out of sulphur in petrol and diesel will in principle also cause an increase in energy consumption and thus CO₂ emissions, because of desulphurisation at refineries. Emissions of CO₂ from Danish refineries, which are solely due to requirements for desulphurised petrol and diesel, have not been quantified. At EU level it has been assessed previously that phase 1 of the EU requirements on limiting sulphur in fuel in 2000 would increase total annual CO₂ emissions from refineries in the EU12 by about 6 mill. tonnes. The effect of phase 2 of the EU regulation has not been assessed. On the other hand, sulphur-free petrol means that catalytic converters on existing cars will be more effective. Therefore the emissions of pollutants will be reduced by about 10%. Sulphur-free diesel means that emissions of soot particles from diesel cars will fall by about 5%.

4.3.3 Business sector

The business sector covers industry, building and construction and public and private service.

In 2003, this sector was responsible for approx. 13% of Denmark's total greenhouse gas emissions. 82% of these emissions were CO₂. The sector is also the only source of emissions of industrial gases. Climate measures within the business sector are in Table 4.21 and Annex B1.

The ongoing initiatives to reduce the emissions from the business sector include both promotion of energy savings and energy efficiency improvements, conversion of energy production to cleaner fuels and initiatives to reduce the emissions of industrial gases. Certain energy-intensive businesses are also subject to allowance regulation as a consequence of the EU allowance directive.

Earlier analyses have shown that there is a big potential for profitable energy efficiency improvements within the business sector, so improving energy efficiency is a vital area of action.

Industry is responsible for most of the sectors' emissions of CO₂. The emissions come mainly from energy-consuming activities in industry. Cement and brick production also contributes especially high levels of CO₂, which comes from the raw materials used.

The main measure used to reduce energy consumption by the business sector is a green tax package for the business sector, which was introduced in 1995. The package contained a combination of taxes and rebates to enterprises through, among other measures, government grants to promote energy savings by enterprises. The package led to a higher CO₂ tax and the introduction of a space-heating tax for businesses. At the same time, a scheme was introduced in which companies with high energy consumption have the possibility of gaining a discount on the taxes in return for entering into an agreement on energy efficiency improvements. The combination of taxes and return of the proceeds was intended to ensure a marked reduction of businesses' CO₂ emissions without affecting their international competitiveness.

Subsidies to promote energy savings in business enterprises were discontinued at the end of 2001.

The objective with the green tax package was to get the business sector to contribute to a reduction of Denmark's total CO₂ emissions. The target contribution was about 4% in 2005 in relation to the emissions in 1988.

The green package's overall effect was evaluated in 1999. The main conclusion is that the package has functioned as intended. Considerable environmental gains have been achieved in an economically effective way that takes account of businesses' international competitiveness. The energy package's environmental effects largely live up to the original expectations and the package is thus an important element of the efforts to reduce Denmark's CO₂ emissions.

The agreement scheme was evaluated in 2005. The main conclusion is that, with agreements in 1996-1999, businesses saved approx. 5.5% in energy, 2.5% of which is directly attributable to the agreements. For the period 2000-2003 the corresponding figures are approx. 4.5% and 2% respectively.

In the Climate Strategy from February 2003 it was evaluated whether there was still a potential for relatively cheap emission reductions in the energy-intensive part of industry, which had hitherto paid lower CO₂ taxes than the rest of the business sector and the domestic sector for reasons of competitiveness.

Certain energy-intensive businesses are subject to allowance regulation as a consequence of the EU allowance directive. With the common EU allowance scheme, CO₂ regulations without too serious effects on competitiveness could be imposed on energy-intensive industry. Allowance regulation is the main measure to be used with regard to these businesses.

Denmark wants CO₂ taxes on the allowance-regulated fuel consumption for industrial production processes to be repaid as far as possible, and preferably in full. Therefore Denmark will change the CO₂ Taxes Act within the scope defined in the directive on energy taxation. The European Commission must approve the amendment, for instance under the rules on state subsidies, before it can take effect. Process emissions not originating from energy consumption can also be covered by the EU allowance directive. In Denmark's case, this primarily involves the CO₂ emissions from cement production. These emissions have not previously been subject to regulation through taxes.

Business and industry have introduced major energy efficiencies over the past 10 years. Therefore, energy consumption in this sector has remained unchanged, despite considerable economic growth.

Projections of energy consumption show, however, a significant increase in energy consumption by business in the years to come. The potential for better energy efficiency is still great. The draft action plan for a renewed energy-saving effort proposes a number of activities, including:

Following the political agreement of 10 June 2005 to considerably strengthen energy-saving efforts, new initiatives will be launched during 2005 and 2006.

Cement production results in big emissions of CO₂. The production process itself is very energy-intensive, and a large quantity of CO₂ is emitted in connection with the production process.

Cement production in Denmark is concentrated in a single company. In 2001 the total annual emissions of CO₂ from cement production were about 2.6 mill. tonnes. About half comes from energy consumption and the other half from chalk, which is one of the raw materials used in the process. A lot has been done within the cement industry. For example, in the last 20 years the Danish cement producer has significantly reduced its CO₂ emissions per tonne cement produced.

Up to now, efforts with regard to the cement industry's energy consumption have been based on the green business sector tax package with a combination of taxes and agreements on energy efficiency. From 1 January 2005, all CO₂ emissions from cement production in Denmark are subject to the European CO₂ quota system.

Work to improve energy efficiency in the public sector has been going on for more than 10 years, and considerable savings have been achieved. However, there are still economically viable possibilities for savings. This is illustrated by the fact that there is a very big difference in consumption (per m²) between comparable institutions.

Data on energy consumption in the public sector have been collected for some years as a means of rendering the sector's energy consumption visible. There are now complete inventories of energy consumption in county and state institutions, but more limited inventories of the individual municipalities' energy consumption.

In connection with the Finance Act for the fiscal year 2005, a political agreement on several areas including energy-saving measures was made. The agreement focuses particularly on energy saving in state institutions as a consequence of the efforts of the Electricity Saving Trust (Electricity Saving Trust), on new energy demands for state buildings, and on a new circular on energy-efficiency in state institutions.

Following the political agreement of 10 June 2005 to considerably strengthen energy-saving efforts, new initiatives will be launched during 2005 and 2006.

One of the issues to be discussed is how similar demands as those applying to the state can be introduced in municipalities and regions.

The emission of nitrous oxide (N₂O) from the production of nitric acid in connection with the production of fertilizer in Denmark has only been included in Danish emissions inventories in recent years, even though production from the single plant in Denmark, with associated emissions, has taken place for many years, including 1990, Denmark's basis year for emissions of nitrous oxide.

In summer 2004, however, the owner decided to stop production of fertilizer and so production of nitric acid in Denmark. Emissions of nitrous oxide from production of nitric acid in 2003 corresponded to

0.9 mill. tonnes CO₂ equivalents. In 2004 emissions will be about one-half of this, and from 2005 they will cease entirely, and probably also in 2008-2012 cf. market conditions for production of fertilizer in Europe.

The industrial sector is the only sector which in practice emits the industrial gases HFCs, PFCs, and SF₆ according to the emission inventories. These gases are used for several purposes including as cooling and foaming agents, etc. (HFCs), cooling agents (PFCs), and insulator gas in high-tension contacts (SF₆).

The Danish regulation of emissions of the industrial greenhouse gases (HFCs, PFCs, and SF₆) is 2-phased, since there is a consumer tax on the use of the substances and also a statutory order on the phasing out of use of the gases in new facilities and products.

Taxes corresponding to their GWP have been imposed on each of the greenhouse gases from March 2001 in combination with the Danish CO₂ tax of DKK 0.1 per kg CO₂. This means that HFC-134a is subject to a tax of DKK 130/kg, as it has a GWP of 1,300. There is a ceiling of DKK 400/kg so although SF₆ has a GWP of 23,900, the tax is only DKK 400/kg and not DKK 2,390/ kg.

The tax is imposed on the substances on importation because none of them is produced in Denmark. The tax is payable whether the substances are imported as pure substances or are part of imported products. If the content in the products is not known, the tax is based on a fixed tariff.

On 15 July 2002, a statutory order on the regulation of certain industrial greenhouse gases came into force.

This order includes a general ban on the use of industrial greenhouse gases in a great number of new facilities and products from 1 January 2006, including household cooling and freezing appliances, PUR foam, etc. There are, however, certain exceptions to the general phase-out date. For example, the ban will only apply to new commercial cooling plants, air-conditioning plants, etc. from 1 January 2007. Other exceptions are new sound-insulating windows, in which SF₆ has been banned since 1 January 2003, and PFCs, on which there has been a general ban since September 2002. However, some products and applications are exempted from the ban. This applies, for example, to service on existing plants, mobile cooling plants, including mobile air conditioning plants, the use of HFCs in cooling and air conditioning plants with fillings between 0.150 and 10 kg HFC, SF₆ in high voltage plants, etc.

To ensure the best possible implementation of the phase-out dates for the refrigeration sector, which is the most important area, a total of DKK 12 mill. have been reserved for the next couple of years for development of alternatives and for subsidies for implementation of alternatives that have been developed already. A knowledge centre for HFC-free cooling has been established. The centre will disseminate knowledge and to a certain extent also offer technical assistance.

Table 4.19 presents the national CO₂ allowance scheme, and other measures that have been discontinued and changed.

Apart from the above changes, no significant changes in the measures for the business and industry sector have taken place since Denmark's Third National Communication to the Climate Convention in 2003.

4.3.4 Agriculture, forestry and fisheries

The primary occupational sectors agriculture, forestry and fisheries are generally considered as one single economic sector in Denmark. However, the importance of the individual sectors differs greatly with respect to Denmark's emissions and uptake of greenhouse gases. Agricultural farms have emissions of methane and nitrous oxide. The net uptake of CO₂ in Denmark's forests is included under Forestry. However, CO₂ emissions from energy use in all three sectors are considered under one heading because there is no breakdown of these in the annual energy statistics. Table 4.22 and Annex B1 shows measures for emission reductions within agriculture and forestry.

In 2003, agriculture was responsible for 17% of Denmark's total greenhouse gas emissions. Approx. 80% consisted of methane and nitrous oxide and 20% of CO₂ from the burning of fuel.

Measures that are used in the agricultural sector and that have affected or will affect the sector's greenhouse gas emissions include:

Methane comes mainly from the agricultural sector. The emissions in 2003 were 176,000 tonnes, corresponding to 3.7 mill. tonnes CO₂ equivalents. The methane is formed through enteric fermentation in farm animals and from conversion of carbohydrates in manure.

Agriculture's biggest contribution to the methane emissions comes from dairy cows.

In the digestion process, methane is a by-product of the fermentation of feed in the rumen, primarily from grass and green fodder. In addition, methane is formed during conversion of manure under anaerobic conditions if the temperature is sufficiently high. These conditions normally occur in manure stores and housing systems with liquid manure or deep litter.

The emission of methane from agriculture is expected to be reduced in 2003-2012, corresponding to approx. 0.1 mill. tonnes of CO₂ equiv-alents, primarily due to improved efficiency in cattle farming.

Agriculture is the biggest source of nitrous oxide emissions in Denmark. Of the total emissions of 26,000 tonnes in 2003, 77% or 20,000 tonnes, corresponding to more than 6.2 mill. tonnes of CO₂ equivalents came from agriculture.

Nitrous oxide may be emitted during microbial decomposition of organic matter. The process occurs in some types of manure stores and during conversion of minerally and organically bound nitrogen (e.g. manure and applied wastewater sludge) in the soil. Some of the leached nitrogen is also converted into nitrous oxide. Nitrogen entering the soil with fertiliser and manure and in plant residues is the main cause of nitrous gas emissions. In 2003 agriculture's main contribution to emissions of nitrous oxide consisted of a contribution of 43% from manure and a contribution of 31% from run-off¹² .

Ammonia volatilisation contributes to the greenhouse effect because some of the ammonia nitrate ends up as nitrous oxide in the atmosphere. Ammonia volatilisation into the atmosphere comes almost exclusively from agriculture. In 2002 the NH3-N emissions from agriculture were slightly more than 80,800 tonnes, with a nitrous oxide contribution corresponding to 6% of agriculture's nitrous oxide emissions. Ammonia volatilises from manure, fertiliser, sludge, crops and treatment of straw with ammonia. The emissions particularly occur during handling of manure in animal housing, during storage of manure, during transport of manure, and from grazing animals¹³.

The emissions of nitrous oxide from agriculture are expected to be reduced, corresponding to about 3 mill. tonnes of CO₂ equivalents or 32% during the period from 1990 to 2008-2012. Implementation of the Action Plan for the Aquatic Environment II and III will contribute the most to this reduction^14,15.

Action Plans for the Aquatic Environment I and II and Action Plan for Sustainable Agriculture

One of the main purposes of the Action Plans for the Aquatic Environment and the Action Plan for Sustainable Agriculture was to reduce agriculture's emissions of nitrogen to the aquatic environment.

The action plans have been implemented as regulation of farmers' behaviour. The Action Plan for the Aquatic Environment I was initiated in 1987 and the Action Plan for Sustainable Agriculture in 1991. These action plans included particularly requirements concerning winter green fields and better utilisation of manure. The Action Plan for the Aquatic Environment II from 1998 contained a number of additional measures, including re-establishment of wetlands, afforestation, agreements on environment friendly agricultural measures, organic farming on an additional 170,000 ha, improved use of fodder, reduced animal density, use of catch crops, reduced fertilisation norms and stricter requirements concerning the use of nitrogen in manure. The aim, which has now been reached, was to reduce nitrogen leaching by 100,000 tonnes N/year up to the year 2003¹⁶.

TABLE 4.22 MEASURES WITHIN AGRICULTURE, FORESTRY AND FISHERIES TO LIMIT EMISSIONS OF GREENHOUSE GASES

Source: Ministry of Food, Agriculture and Fisheries, Danish Institute of Agricutural Sciences, Danish Forest and Nature Agency, Forest and Landscape Denmark and Denmark's CO₂ emissions - the effort in the period 1990-2001 and the associated costs

These action plans have, in particular, reduced the emissions of nitrous oxide. There have presumably also been small effects on methane emissions from manure stores, particularly as a consequence of increased use of anaerobic fermentation of manure in biogas plants. The increased use of catch crops, larger areas with organic farming and reestablishment of wetlands must also be expected to lead to increased storage of carbon in the soil.

Most of the changes in nitrous oxide emissions from agriculture in the period since 1990 can be attributed to these action plans. However, it has been calculated that even without the action plans there would have been a reduction in emissions, although to a much lesser extent. The effect of these action plans on emissions of nitrous oxide has been calculated at about 2.2 mill. tonnes CO₂ equivalents/year¹⁹. There are no estimates of the effect on carbon storage in the soil.

With the political agreement on the Action Plan for the Aquatic Environment III of 2 April 2004, a number of measures were implemented to follow up on the results attained via the previous plans. This third action plan contains targets with respect to nitrogen, phosphorus, sensitive natural areas, and slurry odour. This is a 10-year agreement, and in evaluations in 2008 and 2011 initiatives will also be combined with the Water Framework Directive and the Habitats Directive. Special emphasis is on the use of catch crops, stricter requirements for use of manure as well as afforestation and agro-environmental measures. In addition, the agreement includes research initiatives aimed at slurry odours and reduction of emissions of nutrients, e.g. research into technology to manage slurry, ammonia etc. The effect of the action plan in 2008-12 is estimated at 0.2 mill. tonnes CO₂ equivalents/year¹⁷.

Ammonia emitted from agriculture will stimulate emissions of nitrous oxide when it is deposited in other ecosystems. Reducing ammonia evaporation will therefore also result in a reduction of nitrous oxide emissions. An Ammonia Action Plan which was adopted in 2001 will, together with the Action Plan for the Aquatic Environment I and II, reduce ammonia emissions by 1520,000 tonnes of nitrogen annually. Hereby ammonia evaporation from agriculture should be reduced from 90,000 tonnes of nitrogen in the mid 1990s to approx. 60,000 tonnes of nitrogen in 2004.

These measures are estimated to lead to a reduction in emissions of nitrous oxide corresponding to 34,000 tonnes of CO₂ equivalents annually by 2010. A shorter period of exposure for spread manure has the greatest effect of 13,000 tonnes of CO₂ equivalents annually²⁰.

The ban has resulted in greater return of carbon to the soil and increased use of straw as a fuel. Both uses will result in a net reduction in CO₂ emissions. Not burning straw prevents the methane and nitrous oxide emissions associated with the burning. On the other hand, there are some emissions of nitrous oxide in connection with the return of nitrogen to the soil when the straw is mulched.

The measure works by regulating behaviour, and the ban was introduced in 1989. The measure was implemented in the form of a statutory order under the Environmental Protection Act, and compliance is monitored by the local authorities.

The initiative has also caused increased carbon storage in the soil, but this has not been quantified so far.

The green tax package and the grant scheme for energy savings in the business sector are resulting in energy savings and thus a reduction in CO₂ emissions from use of energy in agriculture.

Biogas from conversion of manure and organic waste has a number of advantages when used to substitute fossil energy – reductions in emissions of greenhouse gases, better exploitation of manure and management of waste¹⁸. The politically fixed supplement on the price of power production based on biogas has been adjusted several times during the last five years – most recently by the Energy Policy Agreement of 29 March 2004, which provides for support to biogas through a supplement on the price of electricity for biogas plants established before the end of 2008. It was estimated that this would lead to the establishment of 40 additional joint biogas plants. However, there are a number of barriers to building biogas plants that make it doubtful this goal can be reached. Therefore, the baseline projection only includes expansion of half this size – corresponding to increased production of approx. 2 PJ biogas up to 2010. The increase will result in annual emissions being reduced by about 0.25 mill. tonnes CO₂ equivalents/ year. The reduction in methane and nitrous oxide emissions comprises about half of these effects. The other half is due to reduced CO₂ emissions from substitution of fossil fuels in energy supply.

The objective of planting windbreaks is to reduce wind erosion and ensure greater biodiversity. Planting of windbreaks is supported under conditions described in the Statutory Order on subsidies for planting windbreaks and biotope-improving measures (Statutory Order no. 1101 of 12/12/2002). Support is granted under the EU Rural Districts Programme. Since the end of the 1960s about 1,000 km of tree-lined windbreaks have been planted with government subsidies. It is also estimated that about 30% more has been planted without subsidies. Estimates indicate that planting of windbreaks leads to CO₂ sequestration in woody biomass of about 130,000 tonnes CO₂/year¹⁹.

Forestry is important due to its CO₂ and emissions being a consequence of trees growing, respiring and decomposing. An average Danish forest contains a considerable store of CO₂ absorbed from the atmosphere. When new forests are established, new CO₂ stores are created. Afforestation is therefore a useful climate policy instrument.

Calculating the total CO₂ accumulation in forests is complicated. Almost all existing forests are established for wood production, e.g. logs and timber. Whether there are net emissions or net sequestration of CO₂ from an existing forest depends on many factors, including its age and species distribution, and the management regime applied.

Compared with other sectors, forestry has very low energy consumption. Green accounting and environmental management are being developed in the sector, partly with a view to determining whether the use of fossil fuels can be reduced.

The national forest programme includes evaluation of the possibilities offered by the Kyoto Protocol for economically viable CO₂ sequestration in forests. Such measures should be implemented without undermining the Protocol's environmental integrity or counteracting established measures in support of sustainable forest management. The same should also apply to forest projects in connection with CDM and JI. The forests are managed with a view to multiple-use and sustainability, and carbon sequestration is one of several objectives. The political goal with the most direct influence on increased carbon sequestration is the declaration of intent from 1989 to double the forested area in Denmark within 100 years.

Various measures have been taken towards achieving this goal. For instance, a government grant scheme has been establish that supports private afforestation on private agricultural land. Also, the state itself establishes new forests, and some private individuals choose to establish forests on agricultural land without a government grant.

Primarily the CO₂ balance is affected by these measures. Forests raised on agricultural land accumulate far more biomass than the previous agricultural land-use. The forest biomass contains about 50% carbon, which is absorbed as CO₂ through photosynthesis. Probably, additional carbon is stored in the organic matter in the soil due to a larger supply of dead organic matter and the absence of soil preparation. The effect of afforestation on other greenhouse gases, such as nitrous oxide and methane has not been properly clarified. However, the acidification of nitrogen-rich former agricultural land may stimulate the formation of nitrous oxide, and blocking of drains after afforestation and the resulting water stagnation could increase methane emissions. Increased methane and nitrous oxide emissions could counteract the positive effect of afforestation on CO₂ sequestration. However, since sufficient information is still unavailable on changes in the methane and nitrous oxide emissions, analyses of the consequences are only carried out for CO₂.

The Danish Forest and Nature Agency is responsible for policies on afforestation on private agricultural land and on state-owned land.

Afforestation on 12,000 hectares of privately owned farmland, corresponding to additional binding of 131,000 tonnes of CO₂, was subsidised in 1990-2004.

The state, counties, and municipalities have contributed approx. 6,400 hectares of new forest since 1990. Only little is known about private afforestation without subsidies. It is assumed that about 600 ha are planted annually.

Both the subsidised private afforestation and afforestation by public authorities will be less in the next 6-8 years, since the funds for this period have been allocated to international obligations in the nature area²⁰.

The annual quantities of CO₂ sequestrated as a consequence of subsidised private afforestation, public afforestation and the total afforestation are summed up in Table 4.23.

Carbon sequestration in trees after afforestation is calculated by a simple model. Sequestration is obtained as the planted area multiplied by the carbon absorption for the age class of the trees. The absorption is calculated by using Danish increment Tables for Norway spruce, as representative of conifers, and oak, as representative of deciduous trees²¹.

The areas in Table 4.23 for the period 1990-2001 are based on the evaluation of the afforestation programme carried out in the period²² together with a national forest inventory carried out recently²³. The areas for 2005-2020 are based on a slightly revised projection²⁴. Afforested areas do not include plantations of Norman Christmas trees in short rotation on agricultural land.

The quantities of carbon are obtained by estimating the carbon content of the woody biomass using relevant conversion factors. The stem biomass for conifers and the total above-ground woody biomass for deciduous trees are converted into total above-ground and below-ground biomass by multiplying with an expansion factor. An expansion factor of 2 is used, which is somewhat higher than the expansion factors used for forests planted before 1990 - 1.8 for conifers and 1.2 for deciduous trees. The reason for this is that the expansion factor depends on age.

The stem biomass thus constitutes a very small part of the total biomass in entirely young trees. The expansion factor therefore decreases exponentially towards a value between 1 and 2 as the trees grow older²⁵.

Since there are neither Danish expansion factors nor age-dependent expansion functions, the expansion factor of 2 is being used until better methodologies are available. The total biomass is subsequently converted into tonnes dry matter using the conversion factors 0.38 tonnes dry matter m-3 for conifers and 0.56 tonnes dry matter m-3 for deciduous trees²⁶. The quantity of carbon is calculated by multiplying with the conversion factor 0.5 tonnes C/tonne dry matter. Carbon sequestration in products can be included in the calculations, but the figures presented represent only the quantity of carbon that is sequestered in the forest ecosystem. This quantity of carbon is stored in the total living biomass (incl. roots) of the trees and in slash. The quantity of sequestered carbon is summed by the model for the different year classes of afforested areas since 1990, providing the total carbon sequestration for the differently aged stands in specific years. Studies of soils in a time series of afforested stands have shown that, compared with the biomass carbon pool, there is no great change in the soil carbon pool during the first 30 years after afforestation²⁷. It is assumed in the models that the growth of the trees corresponds to site index 2 (on a scale decreasing from 1 to 4), and that there is a ratio of 1 to 3 between the area afforested with conifers and deciduous trees²⁸.

Afforestation offers many other benefits in addition to CO₂ sequestration. Besides being valuable for out-door recreation it provides valuable groundwater protection and protection of habitats for fauna and flora. Forest is also a highly valued type of nature in terms of cultural values and landscape amenity. In addition to carbon sequestration, afforestation thus contributes to a wide range of values. The continued growth of new forests will provide for carbon sequestration on a long-term basis. If the objective of doubling the Danish forested area within 100 years is achieved, the new forests will sequester about 250 mill. tonnes of CO₂ over the next approximately 120 years. Owing to the legal protection of forest land use, the sequestration is expected to be permanent. If the objective of doubling the forest area is to be achieved, however, an enhanced rate of planting will be needed.

Danish forest policy is moving towards more near-to-nature forest management. It is not certain what this change in management will mean for storage of carbon in the existing forested area in the future. Some near-to-nature forest management such as longer rotation and more permanent forest cover aid more CO₂ storage, while grazing and more open areas have the opposite effect. For state-owned forests (about. 25% of the forested area) it has been decided to introduce near-to-nature forest management. The Forestry Act of 2004 also provides for better opportunities for private forest owners to move in this direction. However, at the moment it is uncertain how far and how quickly this will happen.

The inventories of the total emissions and removals of greenhouse gases include the emissions of greenhouse gases from fuel sold for fishing vessels. The fishing vessels' contribution to greenhouse gas emissions consist primarily of CO₂. No special initiatives have been put in place concerning this, but the reduction in the number of fishing vessels in recent years has also resulted in a reduction in fuel consumption and thus also in emissions of CO₂.

Since Denmark's Third National Communication to the Climate Convention in 2003, no measures limiting greenhouse gases have been discontinued, nor have any measures increasing greenhouse gases been introduced within agriculture, forestry and fisheries. However, it should be noted that although it is positive to increase use of straw as a fuel for energy supplies in substitution for fossil energy, the amount of carbon returned and stored in the soil will be reduced at the same time. Removal of straw for energy purposes also seems to have negative effects for the fertility of soil²⁹. Use of straw for energy increased from 0.72 mill. tonnes in 1990 to 1.2 mill. tonnes in 2002.

4.3.5 The domestic sector

96% of greenhouse gas emissions from households in 2003, corresponding to 4.1 mill. tonnes of CO₂ equivalents, consisted of CO₂. There are also small emissions of methane and even smaller emissions of nitrous oxide. To this can be added emissions as a result of consumption of electricity and district heating. These emissions are included in the figures for producers and therefore they are also subject to quota regulation in the energy sector.

The consumption of energy by households, including electricity and district heating, is responsible for almost 30% of the total energy consumption in Denmark.

The largest part of the energy consumption is used for heating homes, where burning of oil and natural gas results in a CO₂ emissions. A large part of the space heating is in the form of district heating (about 43% in 2003), which results in CO₂ emissions in connection with the production of district heat. When district heat is produced at CHP plants or with CO₂-friendly fuels, such as natural gas and, particularly, renewable energy, there are big CO₂ savings overall from use of district heating instead of individual heating based on, for example, oil-fired boilers.

Danish households also have a substantial consumption of electricity. Most of the household consumption of electricity goes to household appliances and light sources, whereas less than 19% goes to electric heating. Consumption for electric heating has been decreasing in recent years as a consequence of the work of the Electricity Saving Trust, which has resulted in considerable conversion from electric heating to district heating and natural gas heating.

Households' disposal of waste also contributes to emissions of methane from landfill sites.

The action being taken on households' waste and transport consumption is described in the sections on waste and transport. This section therefore concentrates on the possibilities of reducing the CO₂ emissions through savings in electricity and heating in households and the possibilities for conversion to more environment-friendly forms of heating. The possibilities for reduction in the public energy supply system are described in the section on the energy sector.

In 2003, the domestic sector used 157 PJ of energy for heating (climate-corrected) and 32 PJ of electricity for appliances, etc. Consumption for heating has been quite constant for a number of years in spite of an increase in the number of households and in the area heated. The consumption of electricity for appliances, etc. has risen steadily since 1996. The increase in the consumption of electricity has, however, not been nearly as great as the increase in the number of appliances, since these have become steadily more energy efficient.

With a view to reducing energy consumption and environmental impacts from the domestic sector, a wide range of initiatives have been launched, as described in Table 4.24 and Annex B1 in order to promote:

All energy consumption for space heating as well as other energy consumption in households and the public sector, as well as non-VATregistered businesses are subject to energy taxes. Throughout the 1990s CO₂ and energy taxes have steadily increased. The increases have mainly affected households, helping to reduce their energy consumption.

Must be implemented on the sale of the building - primarily heating consumption. This applies in principle for all small buildings, apart from holiday homes etc.

Energy labels and an energy plan must be prepared regularly for all large buildings over 1,500 m². Includes heating, water, and common electricity

Energy labelling (A-G) of white goods, lighting etc. is compulsory. There are also voluntary labelling schemes (Energy Star, Energy Arrow, windows, boilers, electric motors, ventilators) for a number of products.

Sets up requirements for energy companies, negotiates and markets fixed-price agreements, advises customers, and grants subsidies.

Prepares market analyses and campaigns focusing on the price and efficiency of energy appliances. Makes it simple, safe, and cheap to trade in an energy-appropriate manner.

Organises campaigns and consumer-oriented activities. Particularly extensive regarding electricity.

In the report on energy saving (Energispareredegørelsen) from May 2003, the government submitted a number of proposals for new energy-saving measures. Table 4.25 contains an overview of these measures and a short progress report on implementation.

The draft action plan for a renewed energy-saving effort includes a proposal for implementation of a number of measures in the domestic sector, including:

TABLE 4.24 MEASURES WITHIN THE DOMESTIC SECTOR TO REDUCE EMISSIONS OF GREENHOUSE GASES

Source: Danish Energy Authority and Denmark's CO₂ emissions - the effort in the period 1990-2001 and the associated costs

These measures have formed part of the political discussions preceding the political agreement on future energy-saving measures.

Following the political agreement of 10 June 2005 to considerably strengthen energy-saving efforts, new initiatives will be launched during 2006.

Table 4.19 presents the national CO₂ allowance scheme, as well as other measures that have been discontinued and changed.

Other than the changes mentioned above, there have been no great changes in measures for the domestic sector since Denmark's Third National Communication to the Climate Convention in 2003.

4.3.6 Waste and sewage

The contribution of the waste sec-Source: Danish Energy Authority tor to greenhouse gas emissions consists primarily of methane from the decomposition of organic waste that takes place at landfill sites. Following Denmark's Third National Communication to the Climate Convention, statements of emissions of greenhouse gases from wastewater treatment have been prepared. Of total greenhouse gas emissions from the waste sector of just less than 1.5 mill. tonnes CO₂ equivalents in 2003 – corresponding to 2% of total Danish greenhouse gas emissions – the proportion from landfills was 79%, and the proportion from wastewater was 21%.

Please note that all incineration of waste in Denmark is associated with energy utilisation, which is why the emission of CO₂ from the incineration of plastic waste is included under the energy sector.

In previous years, efforts within the waste sector have been based on the Action plan for waste and recycling 1993-97, which included targets on waste treatment to the year 2000. The plan did not relate directly to the waste sector's contribution to methane emissions (CH₄), but included a number of initiatives that are of relevance to waste products contaiing industrial gases (HFCs and SF₆), besides an objective concerning stopping landfilling combustible waste.

The previous government's waste plan, Waste 21, which covers the period 1998-2004, does not relate directly either to the waste sector's possibilities for contributing to solution of the problem of greenhouse gas emissions. The plan aimed at stabilising the total quantities of waste in 2004, and increasing recycling and reducing the environmental burden from the environmentally harmful substances in waste, including the in-dustrial gases. With respect to waste incineration, the objective was to adjust incineration capacity to what was absolutely necessary, to ensure best possible energy utilisation, maximum CO₂ displacement and regional self-sufficiency. The plan thus contributed indirectly to reduction of greenhouse gas emissions.

TABLE 4.25 OVERVIEW OF NEW INITIATIVES IN THE REPORT ON ENERGY SAVING (ENERGISPAREREDEGØRELSEN) OF MAY 2003

The objective in Waste 21 was for 64% of all waste to be recycled, 24% to be incinerated and not more than 12% landfilled.

That objective was already reached in the year 2000, and according to the Danish Environmental Protection Agency's Waste Statistics 2000 (ISAG). Total waste in that year amounted to about 12.8 mill. tonnes.

The current government's waste plan, the Waste Strategy 2005-08, was issued in September 2003. The new Waste Strategy aims at decoupling growth in waste amounts from economic growth. The Strategy also aims at preventing the loss of resources in waste and environmental impacts from waste, as well as better quality waste treatment and an efficient waste sector. Finally, the government is aiming at reducing waste amounts sent to landfill to 9% in 2008 and increasing recycling to 65% of all waste.

The most important initiatives regarding greenhouse gases in the Strategy are improvement of landfills and increased collection of plastic packaging for recycling.

The latest figures for waste in Denmark are in the Danish EPA Waste Statistics 2003. Total waste in 2003 was 12,835,000 tonnes, of which 66% was recycled, 26% incinerated, and 8% landfilled.

The waste sector's contribution to reduction of greenhouse gas emissions consists mainly in:

An overview of the concrete measures implemented in the pursuance of these objectives is given in Table 4.26 and Annex B1.

The emission of methane from Danish landfills is calculated to have been 64,000 tonnes gross in 1990, increasing to a maximum of 68,800 tonnes in 1996, corresponding to 1.2 mill. tonnes of CO₂ equivalents.

As a consequence of the ban on land-filling waste suitable for combustion, from 1 January 1997, methane emissions from Danish landfill sites will fall in the years ahead. The emission of methane in 2012 is, thus, calculat-ed to be 55,400 tonnes, corresponding to approx. 20% of the maximum in 1996.

According to the Danish Energy Authority's inventory Biogas, Production, Forecast and Target Figures, there were in all 25 landfill gas plants in Denmark in the autumn of 2002. These installations produced 10,000 tonnes of methane annually, compared to approx. 1,700 tonnes in 1993. In 2004, methane recovery from landfills amounted to 7,700 tonnes methane³⁰. The same study shows that, through optimising existing plants, a further 1,800 tonnes methane per year could be recovered over the next five years. Furthermore, the establishment of new gas-collection equipment at five landfills could contribute an additional 1,300 tonnes methane per year over the next five years.

Optimisation of existing plant and establishment of new gas plants will, however, probably require subsidies. The previous subsidy scheme to promote gas collection at landfills was discontinued at the end of 2001.

As a consequence of the new landfilling strategy, only a few biogas plants are expected to be established in the period up to 2012. The maximum quantity of methane recovered peaked in 1998 at about 13,200 tonnes. The quantity of methane recovered will continue to fall gradually over many years.

On the basis of the above, net emissions of methane (methane produced less methane recovered) from Danish landfill sites have been calculated at 63,500 tonnes in 1990, rising to 65,700 tonnes in 1993, and then falling steadily to 50,700 tonnes in 2012. The average annual net methane emissions in 2008-2012 correspond to about 1.1 mill. tonnes CO₂ equivalents.

The total quantity of waste incinerated rose from 2,216,000 tonnes in 1994 to 3,287,000 tonnes in 2003, i.e. an approximately 48% increase. The energy produced from the incineration plants is included as part of the renewable energy production in the Danish energy statistics. The international greenhouse gas inventories include greenhouse gases from incineration of the content of oil-based products, such as plastics in waste.

In accordance with the targets in Energy 21 and Waste 21, waste incineration plants are designed so as to optimise energy utilisation.

Besides the direct effect of waste management on greenhouse gas emissions, the emissions are also affected indirectly through recycling paper, cardboard, etc. which means less energy consumption and thus less CO₂ emissions during production of new products. When organic material in domestic refuse is used in biogas plants and the methane produced is used in biogas motors, it is essential that emission of methane from these motors be reduced, either by use of new technologies or by afterburning exhaust fumes.

TABLE 4.26 MEASURES WITHIN THE WASTE SECTOR TO REDUCE EMSSIONS OF GREENHOUSE GASES.

Source: Danish EPA and Denmark's CO₂ emissions - the effort in the period 1990-2001 and the associated costs

The implementation of national waste plans and fulfilment of targets has necessitated the implementation of a wide range of measures.

In 1996 the Statutory Order on Waste was amended to introduce a municipal obligation to assign combustible waste to incineration (corresponding to a ban on deposition of combustible waste). As a result of this, large quantities of combustible waste that used to go to landfill sites are now either recycled or used as fuel in Denmark's incineration plants.

Besides the traditional regulation via legislation, statutory orders, and circulars, the waste sector is regulated by means of a range of policies and measures, including taxes and charges, grant schemes and agreements.

A tax on landfilling and incinerating waste was introduced in 1987. Since 1993 the tax has been differentiated to reflect the prioritisation of the different forms of treatment. It thus costs most to deposit waste, less to incinerate it and nothing in tax to recycle it. The waste tax has been increased several times and it is now DKK 375 per tonne waste for land-filling and DKK 330 per tonne waste for incineration. The size of the tax thus provides an incentive to recycle as much of the waste produced as possible and to use non-recyclable, combustible waste as fuel in energy production instead of depositing it at a landfill site.

Weight-and-volume-based taxes (e.g. on various packaging, carrier bags and PVC film) encourage a reduction in packaging consumption and thus the quantities of waste. The weight-based tax is based on an index that reflects the environmental burden of the materials used.

Besides the waste tax, which the local authorities collect to finance public waste treatment, increasing use is being made of fees to finance, for example, return agreements for special waste fractions, including tyres and lead batteries. The fees are used in this context to finance collection and recycling of waste.

Under the grant programme Programme for Cleaner Products etc., grants are made for projects that reduce the environmental burden in connection with development, production, sale and use of products or in connection with the management of the waste generated during the product's entire lifecycle. Furthermore, support can be granted to waste projects aiming at reducing the problems of waste disposal. A total of about DKK 100 mill. was allocated for the 5-year period 1999 to 2003 for the part of the Programme related to waste.

In 2005 the Programme for Cleaner Products etc. was replaced by the Enterprise Scheme which refunds CO₂ taxes to business. The waste part of the new programme is aimed exclusively at enterprises. A total of DKK 33 mill. for the four-year period from 2004 to 2007 has been earmarked for the waste part of the scheme. The subsidies are to be used to reduce the environmental impact of waste.

As a result of the EU Packaging Directive, collection of plastic packaging waste for recycling is to be increased to 22.5%, corresponding to an increase in recycling of about 11,000 tonnes plastic per year from 2008. This will be done through an amendment to the Statutory Order on Waste, which will require municipalities to improve the possibilities of people and enterprises to separate and deliver plastic packaging waste for recycling.

On the basis of the EU Landfill Directive, demands on the arrangement and running of landfills have been tightened with Statutory Order No. 650 of 29 June 2001 on landfills. According to the new regulations, waste-gas in landfills for mixed waste must be monitored. Gas from landfills where not insignificant amounts of biodegradable waste are landfilled must be managed in an environmentally-sound way or be used to produce electricity or for heating purposes.

According to the new regulations on landfilling, transitional plans must be prepared for all existing landfills, and the validating authority must re-assess the environmental conditions at the site and decide whether the facility is to comply with the new regulations or must close in 2009 at the latest.

An amendment to the Statutory Order on Waste in 2000 means that municipalities must now assign non-recyclable waste PVC and impregnated wood to landfill. The objective is to avoid adding PVC and impregnated wood to incineration with the consequential pollution of flue gas and slag. Moreover, landfills will receive more organic waste, and in the long term this will form methane during decomposition. Work is being carried out to develop new treatment methods in order to utilise the resources in waste. When these methods have been developed and new plants established, it is expected that the Statutory Order on Waste will be amended so that PVC and impregnated wood is assigned to these plants and landfilling is avoided.

It is not possible to make a quantitative estimate of the effects of the various measures for the waste area. The objectives in the national waste plans are related to waste amounts and their treatment. The developments are monitored through the annual waste statistics. However, changes in the treatment of waste cannot immediately be converted into changes in emissions of greenhouse gases.

The Danish EPA has supported initiation of a development project aiming at documenting the oxidation of methane in landfill coverings. By ensuring optimal oxidation, methane emissions from landfills can be reduced, and if this can be documented it can be credited to the CO₂ accounts. The project will be completed by the Technical University of Denmark, provided funding can be attained from the EU LIFE Programme. Improved oxidation of landfill gas in coverings will be of in-terest to landfills with relatively low gas production so that it is unprofitable to use the gas as well as landfills where not all gas production can be utilised.

As stated in Table 4.26 the subsidy programme for gas retrieval at landfill sites and the subsidy programme for cleaner products have been discontinued.

The requirement to assign impregnated wood to landfilling could lead to an increase in the amount of biodegradable waste and therefore increased emissions of methane. Additional contributions from this source will, however, be modest in relation to the overall amount of methane from landfills.

4.4 POLICIES AND POLITICAL MEASURES IN GREENLAND FOR THE ENERGY AREA

Greenland is facing new and great challenges, partly because of the country's increasing energy consumption and the increasing oil prices, and partly because global climate change is especially affecting the Arctic and threatens Greenland's way of life and hunting culture. Greenland has a global obligation to live up to the Climate Convention and the Kyoto Protocol. Greenland will work to promote use of renewable and environmentally friendly energy (water, wind power, solar energy, hydrogen) which in the long term will reduce CO₂ emissions and make Greenland less dependent on fossil fuels. The goal is to achieve the greatest financial and energy savings, to reduce the vulnerability of energy supply through utilisation of renewable energy and make the production and supply system more efficient. Work with environmentally friendly energy supply should be encouraged so that Greenland contributes to mitigating global climate change.

Until the publication of the Greenland Energy Plan 2010 in 1995, the requirement for security of supply and the energy policy guidelines from 1986 meant that the main focus of was to be hydropower as one of the all-important energy policy objectives in Greenland.

With Energy Plan 2010, for the first time the Home Rule presented a complete review of the energy sector and an action plan for its development and set up a more differentiated main energy policy objective of “establishing an energy supply that does not compromise security of supply and that ensures the least possible economic and environmental burden for society and the other energy players”.

Both before and since 1995, policies and measures have been adopted and implemented in the energy sector that have reduction of greenhouse gas emissions as one, although not in most cases the main, objective.

With adoption by the Landsting of the Act on Energy Supply in 1997, for the first time Greenland got legislation dealing with energy supply in a broad perspective, since it covers electricity, heat and fuel supply. At the same time, it is the first time that energy efficiency improvement and energy savings have been covered by legislation. This Act confirms Energy Plan 2010's main objective of promoting the most economic and environment-friendly energy supply. It is stated in the Act that energy supply must be planned with a view to economising and saving in energy consumption, the highest possible level of security of energy supply, efficient improvements in the production and supply system and cleaner energy production.

Since the 1970s the Home Rule has been interested in using hydropower for energy supply. Up through the 1970s and 1980s systematic studies of possible hydropower potentials were carried out. With the presentation of the energy policy guidelines in 1986, it was agreed that hydropower should be a bearing element of the future energy supply system. The first hydropower plant, taken into use in 1993, supplies Nuuk with electricity. Since it was commissioned, the plant has resulted in an annual saving of more than 20,000 m³ oil, which has resulted in a reduction in CO₂ emissions of around 55,000 tonnes, or about 10% of the total CO₂ emissions in Greenland.

A hydropower plant to supply Tasiilaq commenced operation in 2005, with an expected oil saving of 1,300 m³, corresponding to 3,446 tonnes CO₂ per year. A small hydropower plant in South Greenland is now under construction to supply Qaqortoq and Narsaq. When it starts operation in early 2008, it is expected to contribute with displacement of oil corresponding to 4,800 m³.

Waste incineration plant has been established at the six largest towns, and these together cover about 70% of the population. Moreover, a number of small waste incineration plants have been built in settlements with waste disposal as the main objective.

At all six incineration plants in settlements, some of the surplus heat from the incineration process is used for district heating.

Waste incineration to some extent replaces fuel oil for heating and reduces methane emissions that would otherwise occur if the waste were deposited at landfill sites.

Sector Programme for Renovation with an Environment and Energy Improving Effect in Greenland 2000-2003

In 1999 the Home Rule and the Danish State entered into an agreement on renovation of buildings and supply plants. The agreement covered renovation projects with a positive environmental and energy effect. The objective of the Sector Programme is to ensure that the extraordinary renovation efforts focus on environment and energy aspects, not only for the benefit of the local environment, but also for the benefit of the Arctic and global environment.

Projects carried out under the Programme include renovation of electricity and heat production plants, including supply grids, revision of the building regulations, renovation of buildings, preparation of a new energy plan and behaviour-regulating measures.

As much electricity in Greenland is still produced by diesel-powered generators, there will be a directly measurable environmental effect through a reduction in electricity consumption and thus in electricity generation. This reduction can be achieved partly through electricity saving measures in the production process, and the distribution grid, and at the consumer. Better energy exploitation of electricity production through renovation and establishing CHP plants will reduce fuel consumption in boiler plants.

The Sector Programme is being concluded. Outstanding points are primarily within aquatic issues. In 2003 an interim evaluation of the Programme was carried out in which a total reduction of more than 3,900 tonnes CO₂ was calculated as a result of less consumption of energy, as described in Table 4.27. The calculation was done on the basis of basic information from the Danish Energy Authority energy statistics and builds on a conversion of the reduction to Giga Joules. Gas oil and diesel have also been assumed.

4.5 MEASURES FOR THE FAROE ISLANDS

The Climate Convention was ratified by the Realm, and therefore it also applies for the Faroe Islands. The Faroese have not yet formulated an actual Climate Strategy or energy policy.

However, after the last general election on 20 January 2004 the home rule government agreed to a statement of intent on the energy area, which included the following:

It is also intended to set up a working group to prepare a proposal for an energy policy action plan by June 2006. The work should emphasise describing conditions such as future energy needs, security of supply, renewable energy, initiatives and tools for energy savings, structure and competition, nature and environmental considerations as well as economic reserves. At Energikonference 78 (energy conference 78) there was a proposal to reduce oil imports for onshore use by at least 25% per capita over a ten-year period and to adapt the fishing fleet to the least possible energy consumption in relation to catches.

Renewable energy was less than 5% of total energy supplies on the Faroe Islands in 2003. However, there is unexploited potential, especially in wind and wave power.

Oil consumption has increased from less than 4 to 5 MWh/capita, with a slight drop up to 1994. In 2002 hydropower was 40.1% of electricity production. Electricity supply on the Faroe Islands is carried out by the supply company SEV, which is owned by the Faroese municipalities jointly. It has recently been decided that a third party should have access to the SEV supply grid, and this will break the monopoly.

The Faroe Islands work with NERI on the annual inventory of greenhouse emissions for the Climate Convention. In the latest inventory of April 2005, total greenhouse gas emissions from the Faroe Islands were calculated at 0.843 mill. tonnes CO₂ equivalents. It is vital that the statistics are prepared and the cooperation on the annual emissions inventories and other information for the Climate Convention continues and grows so that the Realm can meet its commitments under the Climate Convention.

In connection with ratification of the Kyoto Protocol by the Realm, there was a territorial reservation for the Faroe Islands as the government did not accede to the Protocol entering into force for the Faroe Islands.

It is planned that the territorial reservation for the Faroe Islands regarding the Kyoto Protocol should be debated again by the Faroese parliament during autumn 2005³¹ .

4.6 SUPPLEMENTARY INFORMATION UNDER THE KYOTO PROTOCOL

4.6.1 The national registry

Denmark's national allowances registry and other EU Memberstates national allowances registers are part of the EU emissions trading scheme, which entered into force on 1 January 2005. From 1 January 2008 the EU ETS will be included in the international emissions trading system under the Kyoto Protocol. Danmark's national registry is therefore set up so that it can enter directly into the emissions trading system, under the Kyoto Protocol.

The national allowances registry was established pursuant to the CO₂ Allowances Act, no. 493 of 9 June 2004 issued by the Minister for Economic and Business Affairs. The Act implements EU Directive 2003/87/EC (allowance directive). In accordance with the Act, the Minister for the Environment is responsible for establishment and operation of the national CO₂ allowances registry. Statutory Order no. 1305 of 14 December 2004 delegates the task from the Minister for the Environment to the Danish EPA and sets the amount of the fee to be paid for using the registry.

The Allowances Act was revised in May 2005 to implement EU Directive 2004/101/EC of 27 October 2004 (Linking Directive) to change the Quotas Directive so that enterprises subject to allowances can apply CO₂ credits from JI and CDM projects under the EU Quotas Directive.

Design and operation of the register must be in accordance with Commission Regulation (EC) No 2216/2004 and decision of the European Parliament and Council 280/2004 EU.

A secretariat has been established in the Danish EPA to manage operation and administration of the registry. Users can contact the secretariat directly by phone or email for help in using the registry.

Enterprises and users of the registry are kept informed about regulations, news etc. through regular updates from the Danish EPA website, and a newsletter from the allowances registry. The newsletter will be issued quarterly or as required and will explain about new regulations and opportunities as well as any planned temporary closures (for updates etc.).

TABLE 4.27 EXPECTED ENERGY SAVINGS AND REDUCTIONS IN CO₂ EMISSIONS AS A RESULT OF THE SECTOR PROGRAMME FOR RENOVATION WITH ENVIRONMENTAL AND ENERGY IMPROVEMENTS IN GREENLAND 2000-2003

Source: Data from the Project secretariat, Energy Statistics 2001, Danish Energy Authority, and calculations from Direktorat for Miljø og Natur in Greenland (Department for Environment and Nature)

The Danish EPA has entered into a licensing agreement with the UK Department for Environment, Food and Rural Affairs, DEFRA on purchasing registry software. The Centre for Corporate Management under the Danish Ministry of the Environment is responsible for technical operation of the registry software.

Further information on the Danish national CO₂ allowances registry is in Annex D.

4.6.2 Supplementarity

According to the Kyoto Protocol, the use of the mechanisms in Articles 6 (JI), 12 (CDM) and 17 (IET) of the Protocol must serve as a supplement to domestic action to reduce greenhouse gas emissions. The reason for this is that action in the Annex I countries drives technological development and is also consistent with the agreement that Annex I countries must lead the way in efforts to reduce global emissions.

The formulation used in the Protocol (“..supplemental to domestic action..”) is not further qualified and no specific requirements are laid down regarding how large a proportion of the total national reduction objective may be fulfilled using flexible mechanisms. The Marrakech Accord stipulated that “...the use of mechanisms shall be supplemental to domestic action and that domestic action shall thus constitute a significant element of the efforts made by each Party...”.

As indicated in section 4.1.4, Denmark has in 2005 completed an analysis of the impact of selected implemented measures on greenhouse gas emissions in the period 1990-2001. According to this Effort Analysis, the total effect of the measures under consideration is approx.

20.6 mill. tonnes annually in the period 2008-2012. But since Danish electricity production is integrated into the Northern European electricity market, this effect is expected to be partially offset by 5 mill. tonnes annually between 2008-12 due to increased electricity exports. Emissions on Danish soil are therefore expected to be approx. 15.6 mill. tonnes CO₂ lower than if the measures considered had not been implemented.

Compared to the emissions in Denmark in 2008-2012 that were expected previously in the 2003 baseline projection, if no policies or measures had been implemented, Denmark would have fallen short by 40.7 mill. tonnes CO₂ annually in 2008-2012.

However, the total climate effect of the calculated measures is approx. 21 mill. tonnes.

Since 2001, the last year covered by the Effort Analysis, other significant climate measures have been implemented, and in particular the EU's common CO₂ quota scheme.

4.6.3 Denmark's climate efforts – a step on the way to sustainable development

As mentioned above, the government's National Strategy for Sustainable Development in Denmark, A SHARED FUTURE - balanced development was adopted by the Folketing in June 2002.

In this strategy, the government lists eight objectives and principles for creating sustainable development:

The strategy is built up with a number of sectors: food production, forestry, industry, transport, energy, urban and housing development, and intersectoral action: climate change, biodiversity, environment and health, resources and resource efficiency, knowledge and policies and measures, the global dimension and public participation.

In order to follow developments in relation to the strategy, regular indicator reports are prepared. The indicator reports contain 14 key indicators - including indicators for economic growth, greenhouse gas emissions, air pollution, employment and discharge of nutrients to the marine environment. In addition, the trend in a wide range of more specific indicators is being monitored. Examples of these indicators are the incidence of asthma, the thickness of the ozone layer, by-catches of porpoises, the amount of PCB in cod liver and the number of organic farms.

The conclusion in the most recent indicator report of April 2005 is that in a number of areas, Denmark is on the right course in work for more sustainable development, as amongst other things the indicators show de-coupling between economic growth and energy consumption, and the number of ecolabelled products is increasing. In other areas there remain challenges. For example it is still important to reduce emissions of greenhouse gases from transport work and business to classify chemicals still needs to be intensified.

4.6.4 Efforts for international air transport and shipping

Denmark is fully aware of importance of reducing greenhouse gas emissions from both aviation and shipping. Denmark will therefore continue to promote the issue in international organisations through Danish support to the EU work on the subject in the ICAO and IMO. Denmark also supports internal EU strategies, to secure progress. For example there is the EU's Sixth Environment Action Programme, the EU strategy for reduction of emissions of air pollutants from ships at sea etc.

In addition, Denmark has an overall wish to secure knowledge-building on aircraft and shipping emissions of greenhouse gases. In this connection Denmark used its EU Presidency in 2002 to initiate a study of EU Member States on emissions of greenhouse gases from aviation, and to support streamlining of the cooperation structure amongst EU countries in the area.

4.6.5 Efforts to limit adverse effects in other countries

In connection with Denmark's contribution to international climate efforts, in accordance with the Kyoto Protocol Denmark will endeavour to implement policies and measures under article 3 of the Protocol in such a way that adverse effects in other countries are minimised. However, Denmark does not consider that its contributions to international climate efforts have adverse effects in other countries as, on the contrary, the reduction of emissions of greenhouse gases in Danish commitments under the Protocol will in fact contribute to limiting dangerous climate change in all countries.

If nothing is done to limit emissions of greenhouse gases, climate scenarios from the IPCC indicate that developing countries in particular will experience the greatest changes in climate.

In its international efforts, Denmark will therefore continue to take the greatest possible account of special needs and concerns of developing countries and especially least developed countries. This also applies to adverse effects which can already be ascertained from changes in the climate. The existing strong Danish focus on the special vulnerability of developing countries to climate change underlines this (see section 7.5).

4.6.6 Legislation, enforcement and administrative procedures for implementation of the Kyoto Protocol

Section 2.1.1 briefly describes the Danish system of government. The legal basis for the division of powers into the legislative, executive, and judicial power is the Danish Constitution, Danmarks Riges Grundlov³².

The Constitution includes the legal basis for how the Regent acts on behalf of the Realm in international affairs, and he cannot act without the consent of the Folketing in any way that increases or restricts the area of the Realm, or enter into obligations requiring cooperation of the Folketing or which in some other way are of great significance to the Realm. Neither can the Regent, without the consent of the Folketing, cancel an international agreement entered into with the consent of the Folketing.

On the motion of the government, the Folketing thus gave its consent in 2002, allowing Her Majesty Queen Margrethe the Second, on behalf of the Realm and with territorial reservations for the Faroe Islands, to ratify the Kyoto Protocol. This was on 31 May 2002.

Denmark's implementation of the Kyoto Protocol is on-going and is being effectuated by following up on the national Climate Strategy, sector-policy strategies with climate considerations, and concrete initiatives, which will contribute to limiting or reducing greenhouse gas emissions, and implementation of the other parts of the Kyoto Protocol. The legislation necessary to do this has been adopted in pursuance of the Constitution regulations concerning legislative powers.

Pursuant to the Constitution, the Regent is the ultimate authority, cf. paragraphs 12-14:

“12. Subject to the limitations laid down in this Constitutional Act, the King shall have supreme authority in all the affairs of the Realm, and shall exercise such supreme authority through the Ministers.

13. The King shall not be answerable for his actions; his person shall be sacrosanct. The Ministers shall be responsible for the conduct of government; their responsibility shall be defined by statute.

14. The King shall appoint and dismiss the Prime Minister and the other Ministers. He shall decide upon the number of Ministers and upon the distribution of the duties of government among them. The signature of the King to resolutions relating to legislation and government shall make such resolutions valid, provided that the signature of the King is accompanied by the signature or signatures of one or more Ministers. A Minister who has signed a resolution shall be responsible for the resolution.”

With this background, the Regent delegates responsibility for various functions to government ministers through Royal resolutions. This makes the various ministers for different areas responsible for, e.g. making proposals for new/amended legislation made necessary by the Kyoto Protocol, enforcement of legislation and initiation of necessary administrative procedures.

The total set of regulations can be accessed via Retsinformation³⁴ (on-line legal information system). Annex B1 contains, as far as possible, reference to the specific legal basis for each of the concrete measures dealt with in Chapter 4. Legislation concerning measures of importance to Denmark's commitments under the Kyoto Protocol will be enforced pursuant to the current legal basis, including pursuant to any penalty clause. Enforcement could also involve the judicial power.

As regards the institutional arrangements for the implementation the Kyoto Protocol concerning activities in connection with participation in the mechanisms under articles 6, 12, and 17 of the Kyoto Protocol and establishment and operation of a national allowance registry, the general delegation of tasks is as follows, although the Danish EPA also has activities concerning the CDM:

The Danish Energy Authority under the Ministry of Transport and Energy is responsible for legislation and administration concerning the EU Quotas Directive.

4.6.7 Strategies to mitigate climate change cf. article 10(b) of the Kyoto Protocol

Denmark's Climate Strategy and measures to mitigate climate change are described in sections 4.1-4.3.

1 Denmark's Greenhouse Gas Projection until 2012, an update including preliminary projection until 2017, December 2002, Jørgen Fenham, UNEP centre.

2 Difference between 20 and 25 mill. tonnes of CO₂ equivalents, depending on the outcome the EU's final setting of the individual EU countries' reductions, which is to take place in 2006, including consideration for Denmark's correction to the import of electric power in the base year 1990.

6 Energy taxation in Denmark is described in detail in the report Energy policies of IEA Countries – Denmark 2002 (pp. 27-33) published by the IEA ( International Energy Agency ) in 2002.

9 Under the Kyoto Protocol, Denmark's base year is 1990 for CO₂, methane and nitrous oxide, whereas 1995 will be chosen as base year for the industrial gases (HFCs, PFCs, and SF₆) cf. Article 3.8 of the Protocol.

10 Under the Kyoto Protocol, the LULUCF category is dealt with separately under Articles 3.3 and 3.4. Since effects of afforestation must be included as a contribution to fulfilling the reduction target, according to Article 3.3, these are also included here. Since it is optional to include effects of activities under Article 3.4 and Denmark has not yet made a decision on this, these effects are excluded here.

13 Mikkelsen et al., 2005: Mikkelsen, M.H., Gyldenkærne, S., Poulsen, H.D., Olesen, J.E. & Sommer, S.G. (2005). Opgørelse og beregningsmetode for landbrugets emissioner af ammoniak og drivhusgasser 1985-2002. Arbejdsrapport fra DMU Nr. 204. (in Danish).

14 Olesen et al., 2004: Olesen, J.E., Petersen, S.O., Gyldenkærne, S., Mikkelsen, M.H., Jacobsen, B.H., Vesterdal, L., Jørgensen, A.M.K., Christensen, B.T., Abildtrup, J., Heidmann, T. & Rubæk, G. (2004). Jordbrug og klimaændringer - samspil til vandmiljøplaner. DJF rapport Markbrug nr. 109. (in Danish).

15 Olesen, 2005: Olesen, J.E. (2005). Muligheder for reduktion af drivhusgasemissioner i jordbruget. I: Olesen, J.E. (red). Drivhusgasser fra jordbruget - reduktionsmuligheder. DJF rapport Markbrug nr. 113, s. 12-32. (in Danish).

16 Grant et al., 2000: Grant, R., Blicher-Mathiesen, G., Jørgensen, V., Kyllingsbæk, A., Poulsen, H.D., Børsting, C., Jørgensen, J.O., Schou, J.S., Kristensen, E.S., Waagepetersen, J. & Mikkelsen, H.E. (2000). Vandmiljøplan II -midtvejsevaluering. Miljø-og Energiministeriet, Danmarks Miljøundersøgelser, Silkeborg, Denmark. 65 pp (in Danish).

17 Olesen et al., 2001: Olesen, J.E., Andersen, J.M., Jacobsen, B.H., Hvelplund, T., Jørgensen, U., Schou, J.S., Graversen, J., Dalgaard, T. & Fenhann, J. (2001). Kvantificering af tre tiltag til reduktion af landbrugets udledning af drivhusgasser. DJF-rapport Markbrug 48. (in Danish).

18 Sommer et al., 2004: Sommer, S.G., Petersen, S.O. & Møller, H.B. (2004). Algorithms for calculating methane and nitrous oxide emissions from manure management. Nutrient Cycling in Agroecosystems 69, 143-154.

19 Gyldenkærne et al, 2005: Gyldenkærne, S., Münier, B., Olesen, J.E., Olesen, S.E., Petersen, B.M. & Christensen, B.T. (2005). Opgørelse af CO₂emissioner fra arealanvendelse og ændringer i arealanvendelse. Arbejdsrapport fra DMU (under preparation,, in Danish).

28 More information on the methods can be obtained from the Danish Energy Authority, 2001, and Vesterdal, 2000.

4. Policies and measures

4.1 CLIMATE POLICY AND THE DECISION-MAKING PROCESSES