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Denmark's Climate Policy Objectives and Achievements

2. Policies and measures with effect on greenhouse gas emissions and removals

2.1 THE POLICY-MAKING PROCESS AND THE LEGAL BASIS FOR IMPLEMENTING AND ENFORCING THE KYOTO PROTOCOL

The legal basis for the division of powers into the legislative, executive, and judicial power is the Danish Constitution, Danmarks Riges Grundlov. On the motion of the Government, the Danish Parliament (Folketinget) gave its consent in 2002, allowing Her Majesty Queen Margrethe the Second, on behalf of the National Community and with territorial reservations for the Faroe Islands, to ratify the Kyoto Protocol. This happened 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 measures, 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.

The total set of regulations can be accessed via Retsinformation5. Furthermore, reference to the specific legal basis for each of the concrete measures dealt with is, as far as possible, included in the Fourth National Communication, just as it is mentioned whether it implements EU legislation.

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 can 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 Environmental Protection Agency (EPA) also has activities concerning the CDM:

JI and The National Allowance Registry :

The EPA under the Ministry of the Environment

CDM:

The Danish Ministry of Foreign Affairs

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

2.2 DENMARK'S CLIMATE POLICY, TARGETS AND STRATEGY

2.2.1 Denmark's climate policy

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 have been implemented that have led to reduced greenhouse gas emissions.

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 the total effect of these efforts on greenhouse gas emissions from Denmark's national energy consumption, the basis for and the follow-up on Denmark's reduction efforts has included emissions inventories corrected for annual temperature variations and variations in Denmark's imports of electricity.

2.2.2 International climate targets

Since 1990, Denmark has undertaken or committed itself to several targets aimed at reducing greenhouse gas emissions:

  • In accordance with the Climate Convention, to reduce total greenhouse gas emissions in Denmark, Greenland, and the Faroe Islands to the 1990 level by 2000. This target was achieved if only emissions are included. Updated figures for 2000 concerning emissions from and removals by forests (reduced removal due to windfalls are now included) and new data for land (not previously included) brings the Realm to within 1% of the target, when these emissions and removals are included in the inventory.
     
  • As a contribution to stabilization in the EU, Denmark committed itself to reducing CO2 emissions in 2000 by 5% compared to the corrected level for 1990. This target was fulfilled.
     
  • In relation to the Kyoto Protocol, for the period 2008-2012 the EU has committed itself to reducing emissions of greenhouse gases on average to 8% below the level in the so-called base year; 1990 for CO2, methane, and nitrous oxide and either 1990 or 1995 for the industrial greenhouse gases. Denmark has committed itself to a reduction of 21% as an element of the burden-sharing agreement within the EU. In the Council's decision on the EU ratification to the Kyoto Protocol, the commitments of the different Member States are thus given as percentages compared to the base year. In 2006 the respective emission levels must be given in tonnes of CO2 equivalents. In this connection, the Council (environment) and the Commission have, in a joint statement, agreed e.g. to show consideration for Denmark's remarks to the Council conclusions of 16-17 June 1998 concerning emissions in the base year.

2.2.3 Denmark's Climate Strategy

The Folketing approved Denmark's present climate strategy in March 2003. The Climate Strategy lays down a framework for Denmark's future efforts on climate. The point of departure in the Climate 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 substantial measures have already been taken in order to comply with the climate target, a considerable effort is still needed if Denmark is to fulfil 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 million tonnes of CO2 equivalents annually in 2008-2012 compared to Denmark's Kyoto commitment, if no additional measures were implemented6,7.

The Kyoto Protocol makes it possible to plan climate action that is more flexible. The Climate Strategy combines cost-effective domestic measures with the 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 and include implementation of concrete projects to reduce greenhouse gas emissions in foreign countries. They are JI projects (joint implementation of projects in other Annex I 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. In addition to this the value of other possible benefits of the implemented measure, e.g., other environmental benefits can be added.

The Government platform of February 2005 is based on the Climate Strategy. A number of elements with climate-policy aspects are also emphasized. These elements include:

  • that the Government will put forward a long-term energy strategy up to 2025,
     
  • that the Government will enhance energy-saving efforts and put forward an action plan,
     
  • that the Government will appoint a committee which is to investigate the possibilities for, over a number of years, rear-ranging the total automobile taxation scheme in a revenue-neutral and environmentally advantageous manner, and
     
  • that the Government, with regard to scientific research and development:
     
  • will put forward an action plan aimed at public authorities and private businesses together increasing their efforts regarding scientific research and development,
     
  • via a high technology fund will promote high-technological research and innovation, e.g. within the health-care and energy area, and
     
  • will strengthen the development of green technologies, e.g. within the energy and bio-fuel area.

In 2005, the Government took action on these elements. Some information on the Government's Energy Strategy 2025 and The Energy Saving Action Plan are included in this report. Further information on the Governments follow-up on these and all other elements mentioned above, is given in Denmark's Fourth National Communication on Climate Change.

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

2.2.1.1 The Climate Committee

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 measures across various social 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 of 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.

2.2.1.2 The Policies and Measures Project

In Denmark's Third National Communication to the Climate Convention, the main results of the analyses, which formed the basis for the Climate Strategy with respect to potentials and socio-economic reduction costs were presented. 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 should be viewed in light of the fact that Denmark already made a great national effort during the 1990s.

On this basis the Government's cost-effective strategy for the fulfilment of Denmark's reduction commitment emphasises the use of flexible mechanisms – Emissions 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. The actual composition of the efforts depends on the degree to which the businesses included choose to implement their own reduction measures or to purchase 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 a interdepartmental project, the Policies and Measures Project, which e.g. continues to investigate the potential of new domestic measures, where previous calculations have shown relatively low reduction costs. It also investigates more closely whether new information exists that could contribute to reducing previously calculated costs further. Finally, the project also investigates whether additional, new cost-effective domestic measures exist.

The project is expected to end in 2006, where the result are to be a part of the Climate Committee's status 2006 report as a basis for the allocation plan 2008-2012.

2.2.1.3 General progress on implementation of new measures

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 section 2.3.1.1.

As mentioned, using the flexible mechanisms under the Kyoto Protocol is also part of a cost-effective Danish Climate Strategy. Section 2.3.1.2 reports on progress with respect to allocation of funds and specific JI and CDM projects.

Section 2.3.1.3 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. Denmark's Fourth National Communication on Climate Change reports on progress with regard to the specific plans, the Action Plan for Strengthened Energy-saving Efforts, and the Energy Strategy 2025, both of which have been finalized in 2005.

The Policies and Measures Project also investigates possibilities in the transport sector. 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 3.2.4, this is, however, no longer an issue, since Denmark ceased to produce nitric acid in 2004. Denmark's important contribution to reducing the use and emission of fluorine-containing greenhouse gases is also described in greater detail in the Fourth National Communication.

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. the Fourth National Communication. Therefore, in continuation hereof, additional concrete measures are being studied at present as part of the Policies and Measures Project. The provisional results are expected to be presented and discussed at a project day in 2005 that will be open to the public.

Apart from the measures 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 utilization of energy from methane from landfills.

2.2.1.4 Denmark's efforts in 19902001 and associated costs

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 finalized and published in the report “Danmarks udledning af CO2 – indsatsen i perioden 1990-2001 og omkostninger herved” (Denmark's CO2 emissions – the effort in the period 1990-2001 and the associated costs)8, hereafter the Effort Analysis.

Prior to this analysis, quantitative estimates of the effect of separate measures on greenhouse gas emissions were often limited to exante 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 for only performing ex-post evaluations of a few measures is that in many cases it is difficult to ascribe unequivocally an observed reduction in greenhouse gas emissions to a certain measure, since many areas (sectors/sources) are affected by several measures simultaneously.

In the analysis of the importance of selected and 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 socalled 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 emission 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's Climate Strategy and described in Denmark's Third National Communication to the Climate Convention.

The outcome of the Effort Analysis is described in greater detail in section 4.1.1.

2.3 MEASURES LIMITING GREENHOUSE GAS EMISSIONS

2.3.1 Measures and effects across sectors

2.3.1.1 Allowance regulation

On 1 January 2005 the EU allowance scheme 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 2005-2007, and in Denmark it will include CO2 emissions from, e.g. a number of energy-producing facilities (over 20 MW), refineries, steel works, a number of mineral-processing facilities (cement, lime, glass, tiles) and facilities for the production of paper and cardboard (over 20 tonnes of paper or cardboard daily).

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 emissions9.

The Danish Allocation Plan entails a total allowance allotment of 15% below the baseline projection (with existing measures) 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 as a result of the Allocation Plan 2005-2007 constitutes approx. 7.4% of all 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 million 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, 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 ful?l Denmark's climate commitment will, therefore, primarily affect sectors subject to allowances.

Denmark's national allowance registry

In connection with the new allowance regulation that entered into force on 1 January 2005, Denmark's national allowance registry10 (DK ETR – Emission Trading Registry), 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 (”National Registry”), which is to be established pursuant to the Kyoto Protocol as a prerequisite for the application of the Kyoto mechanisms. Additional information on the national allowance registry is found in the Fourth National Communication.

2.3.1.2 The Kyoto mechanisms

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

The flexible mechanisms are, therefore, important elements of the Government's 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 million 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 million 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 million tonnes of CO2 lower than the baseline 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 Fourth National Communication.

2.3.1.3 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%.

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 placed 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 placed on mineral oil, tobacco, and alcohol in accordance with EU legislation.

Taxes influencing Denmark's greenhouse gas emissions include energy taxes and taxes on mineral oil, gas, coal, and electricity as well as CO2 taxes, and taxes on consumption of the potent greenhouse gases (HFCs, PFCs, and SF6). Registration taxes and annual taxes for cars are differentiated to promote development towards more energy-effective cars. These taxes are specified in the Fourth National Communication.

2.3.2 Policies and Measures and their effects in Denmark's economic sectors

Denmark's Fourth National Communication describes 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 2.1 shows how the sector categories, which is to be used in connection with the annual emission inventories, is aggregated into the 6 economic sectors.

The main results of this aggregation in 1990/9511, 2003, 2008-12, and 2013-17, as well as in 2020, 2025, and 2030 without emission and removal in connection with land use, land-use change and forestry (LULUCF) are shown in Table 2.2, however the effect of removal by afforestation since 1990 is included12. The data on which this table is based are shown graphically in the first figure in the Annex. Figure 2.1 illustrates the emissions by sector in 2003.

FIGURE 2.1 DENMARK'S GREENHOUSE GAS EMISSIONS IN 2003 BY ECONOMIC SECTOR.

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

FIGURE 2.1 DENMARK'S GREENHOUSE GAS EMISSIONS IN 2003 BY ECONOMIC SECTOR.

2.3.3 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% are methane (CH4), and the remaining 1% is nitrous oxide (N2O).

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:

TABLE 2.1 AGGREGATION OF SOURCES/SECTORS IN THE CRF/IPCC FORMAT INTO THE 6 MAIN ECONOMIC SECTORS IN DENMARK.

Economic sector Sources/Sectors in the CRF/IPCC format
Energy Includes extraction, conversion, and distribution. 1A1 Fuel combustion activities.
1B Fugetive emissions from fuels.
Transport Military included. 1A3 Transport (fuel combustion)
1A5 Others (fuel combustion in military transport).
Agriculture and forestry Fisheries included. 1A4c Fuel combustion in agriculture, forestry, and fisheries.
4 Agriculture
5 Land-use Changes and Forestry (LUCF).
Business Includes production, building and construction, service and trade, as well as industrial gases and the use of organic solvents. 1A2 Fuel combustion in production and building/ construction.
1A4a Fuel combustion in commerce and service.
2 Industrial processes
3 Use of organic solvents.
Domestic sector   1A4b Fuel combustion in households.
Waste Includes landfills and sewage treatment.Incineration of waste for energy recovery isincluded in the energy sector, cf. IPCC. 6 Waste

  • EU CO2 allowances for the production of electricity and heating (includes parts of the business sector's energy consumption and process emissions, cf. section 2.3.5, and parts of the domestic sector's energy consumption, cf. section 2.3.7)

New measures, which can have consequences for greenhouse gas emissions, are also being implemented within the framework of the energy policy:

  • Biomass agreement
     
  • Price supplement for environmentally-friendly electricity
     
  • Tenders for offshore wind turbines
     
  • Scrapping scheme for old wind turbines
     
  • Energy research

The measures are described in more detail in Denmark's Fourth National Communication.

The most recent progress includes a common CO2 allowance scheme that came into effect on 1 January 2005. Since this allowance scheme covers several sectors, it was dealt with above in the cross-sectoral section. Most of the activities and facilities included under this measure, however, belong in the energy sector. This also applies to where the anticipated effect with a reduction of approx. 6 million tonnes of CO2 annually in 2005-2007 is expected to occur.

As announced in the Government's platform in February 2005, a new long-term energy strategy – Energy Strategy 2025 was presented in June 200513.

TABLE 2.2 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 and the Danish Environmental Protection Agency

Click here to see Table 2.2

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 marketbased energy-political objective, in which public authorities provide the framework for the market actors.

Thus, the Energy Strategy is based on:

  • liberalised energy markets with common EU framework
     
  • market-based cost-effective instruments, and
     
  • public authorities providing the overall grid infrastructure and economic instruments, including the CO2 allowance scheme.

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. In this regard, the Government, also in June 2005, published three new research and development strategies: one for hydrogen technologies, one for liquid biofuels, and one for wave energy.

Finally, Energy Strategy 2005 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 Government will also promote energy-saving efforts, so Denmark can still be in the forefront concerning efficient energy use. In 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 energysaving 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 theoverall energy-saving efforts14.

2.3.4 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 million tonnes of CO2 corresponded to 96.3% of emissions in 2003. Nitrous oxide made up 3.2% or 0.4 million tonnes of CO2 equivalents and methane approx. 0.5% or 0.07 million tonnes of CO2equivalents.

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. Associated energy consumption and greenhouse gas emissions have risen correspondingly. 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.

One of the most important international measures yet is the EU 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 characterized 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 measures aiming directly or indirectly at reducing CO2 emissions have been implemented within various areas. Denmark's Fourth National Communication contains additional information on the following:

  • Higher fuel taxes
     
  • Green owner tax on motor vehicles
     
  • Information campaign on the fuel consumption of new cars
     
  • Energy-correct driving techniques
     
  • Initiative on enforcing speed limits
     
  • Establishment of intermodal installations
     
  • Promotion of environmentally friendly freight transport
     
  • Reduced travelling time for public transport
     
  • Spatial planning.

2.3.5 Business sector

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

In 2003, this sector was responsible for approx. 13% of Denmark's total greenhouse gas emissions. 82% of these emissions were CO2. This sector is, furthermore, the sole source of emissions of industrial gases. Climate measures within the business sector include:

  • EU CO2 allowances (parts of the business sector's energy consumption and process emissions are subject to the EU CO2 allowance regulation, cf. section 2.3.3 on ”Energy”)
     
  • Tax on HFCs, PFCs, and SF6
     
  • Regulation of use of HFCs, PFCs, and SF6

The following substantial energysaving measures which contribute to reducing domestic climate gas emissions (both outside and within areas subject to allowances), have also been implemented:

  • Agreements on energy-efficiency improvements in the business sector
     
  • Electricity grid, gas and district heating companies' energy-saving activities
     
  • Circular on energy-efficiency in state institutions
     
  • Electricity Saving Trust (Elsparefonden) – campaigns and A-club for institutions to promote efficient appliances (incl. electricity-heat conversion and efficient appliances in households)

The main efforts concerning the business sector's energy consumption have been based on the 1995 green business-sector tax package. This was a combination of duties and refunds of tax revenues to the business sector, e.g. as normal state subsidies to promote energy saving in businesses. Tax refunds could be obtained on the basis of agreements on energy-efficiency improvements.

The total effect of the green package was evaluated in 1999. The main conclusion is that the package had the intended effects. Considerable environmental gains were achieved in an economically efficient manner, taking account of international competitiveness. The environmental consequences of the energy package have largely satisfied the expectations at the outset, and thereby they constitute an important part of the efforts to reduce the Danish CO2 emissions.

The agreement scheme was evaluated in 2005. The main conclusion is that businesses with agreements in 1996-1999 saved approx. 5.5% in energy, 2.5% of which are due to the agreements. For the period 2000.2003 the corresponding figures are approx. 4.5% and 2% respectively.

In the Government's Climate Strategy from February 2003, it was estimated that there was still a potential for relatively inexpensive emission reductions in the energy-intensive part of the industry, which, until then, had paid lower CO2 taxes than other parts of the business sector and the domestic sector, out of regard for 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.

Energy efficiency in the public sector has been an issue for more than 10 years, and substantial savings have been achieved.

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 (Elsparefonden), on new energy demands for state buildings, and on a new circular on energy-efficiency in state institutions.

Furthermore, the action plan for a renewed energy-saving effort proposes a number of activities aimed at public institutions.

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 EU allowance directive.

The emission of nitrous oxide (N2O) from the production of nitric acid in connection with the production of fertilizer in Denmark ceased in 2004. From 2005 this corresponds to a reduction in the annual emissions amounting to approx. 0.9 million tonnes of CO2 equivalents.

The industrial sector is the only sector which in practice emits the industrial gases HFCs, PFCs, and SF6. 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 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.

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.

2.3.6 Agriculture, forestry, and ?sheries

The primary occupational sectors agriculture, forestry, and fisheries are mainly dealt with as one economic sector in Denmark. The measures concerning agriculture and forestry include:

  • Action Plan for the Aquatic Environment I+II and Action Plan for Sustainable Agriculture
     
  • Action Plan for the Aquatic Environment III
     
  • Ban on the burning of straw in fields
     
  • Ammonia action plan and new Statutory Order on Manure
     
  • Planting of windbreaks
     
  • Biogas installations
     
  • Grant scheme for private afforestation on agricultural land
     
  • Afforestation by public authorities (state, counties, and municipalities)

Agriculture

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.

In 2003, 176,000 tonnes of methane corresponding to 3.7 million tonnes of CO2 equivalents were emitted. The emissions from agriculture consist primarily of methane from enteric fermentation and decomposition of manure.

Dairy cattle are the major contributors of methane.

Methane is a by-product from the digestion process, especially coming from roughage. Methane is also produced when manure decomposes anaerobically, if the temperature is sufficiently high. These conditions usually exist in manure stores and in cow houses with slurry or deep bedding.

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

Agriculture is the primary 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 million tonnes of CO2 equivalents came from agriculture.

The main sources of nitrous oxide are nitrogen in commercial and natural fertilizers and plant residues. Of the contributions of nitrous oxide from agriculture in 2003, 43% came from fertilizer and 31% from runoff. Evaporated ammonia also contributes to the greenhouse effect, since some of the ammonia nitrogen ends up in the atmosphere as a component of nitrous oxide.

The emissions of nitrous oxide from agriculture are expected to be reduced, corresponding to about 3 million 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 reduction16,17.

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, phosphorous, sensitive natural areas, and manure odour. The effect of the plan is estimated to be a reduction in emissions corresponding to 0.2 million tonnes of CO2 equivalents annually18 in 2008-2012.

Emitted ammonia will, by deposition, stimulate the emission of nitrous oxide. A reduction in the evaporation of ammonia will, therefore, reduce emissions of nitrous oxide. An Ammonia Action Plan adopted in 2001 will, together with Action Plan for the Aquatic Environment I and II, reduce ammonia emissions by 15-20,000 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.

The measures included in the Ammonia Action Plan are:

  1. Optimisation of manure handling during housing for cattle, pigs, poultry and fur animals.
     
  2. Rules on covering storage facilities for solid manure and slurry tanks.
     
  3. Ban on surface spreading and reduction of the time from field application of manure to incorporation.
     
  4. Ban on ammonia treatment of straw.

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 annually215.

In 1987, an action plan on the expansion of common biogas installations was implemented. The Energy Policy Agreement of 29 March 2004 supports the production of biogas by raising the price of electricity from biogas installations from 2008. Expansions are, however, not being made as quickly as anticipated, but still to a degree allowing the baseline projection to be doubled in 2010 to approx. 0.5 million tonnes of CO2 equivalents annually. About half of this effect is due to expected reductions in methane and nitrous oxide emissions. The other half is due to reduced CO2 emissions from substitution of fossil fuels in energy supply.

Forestry

The influence from forestry stems from the removal and emission of CO2 through the photosynthesis and respiration of the trees and their decomposition. Danish forests contain considerable stores of CO2 retrieved from the atmosphere. Afforestation increases these stores.

The total CO2 balance for forests is complicated and depends on many factors. In Denmark, forests have several purposes including recreation, landscape values, the production of wood products, e.g. firewood and timber, as well as hunting and nature. The net CO2 budget for forests depends on many factors, including the age distribution of the trees, the species of trees planted, and the production considerations taken.

The political target that most directly influences an increased carbon binding is the declaration of intent from 1989, which states the Danish forested area is to be doubled within a 100-year period.

Several measures contribute to the fulfilment of this target. A state subsidy scheme supports afforestation on privately owned agricultural land. Afforestation is also carried out by the state and by private landowners without subsidisation.

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 the implementation of the policy on afforestation on privately owned farmland and state property.

Afforestation on 12,000 hectares

of privately owned farmland, corresponding to additional binding of 131,000 tonnes of CO2, was subsidized in 1990-2004.

The state, counties, and municipalities have contributed approx. 6,400 hectares of new forest since 1990. Our knowledge of unsubsidised private afforestation is limited, but it is estimated at approx. 600 hectares annually.

Both the subsidized private afforestation and afforestation by public authorities will be less in the next 6-8 years, since work in connection with the Natura 2000 Areas has been given high priority.

Additional information on subsidized

private afforestation, afforestation by public authorities, and total afforestation can be found in Denmark's Fourth National Communication.

Fisheries

The emission of greenhouse gases from fuels sold for use in fishing vessels are included in the figures on total greenhouse gas emissions and removals. The contribution from fishing vessels to total greenhouse gas emissions is primarily CO2. No special measures have been implemented in relation to fishing vessels. But the reduction in fisheries in recent years has also resulted in lowering fuel consumption rates and thereby also CO2 emissions.

2.3.7 The domestic sector

96% of greenhouse gas emissions from households in 2003, corresponding to 4.1 million tonnes of CO2 equivalents, consisted of CO2. The domestic sector also emits a small amount of methane and even less 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 allowance 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.

Most of this energy goes to heating, where combustion of oil and gas produces CO2. A large part of heating is covered by district heating (approx. 43% in 2003). District heating produced by cogeneration or with the use of CO2-friendly fuels such as natural gas end especially renewable energy entails great CO2 savings compared to the use of individual heating based on, e.g. oil boilers.

Households also use considerable amounts 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 of electricity for heating has gone down in recent years due to efforts by, e.g. the Electricity Saving Trust (Elsparefonden), which has led to considerable conversion from electric heating to district heating and heating with natural gas.

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 as great as the increase in the number of appliances, since these have become steadily more energy efficient.

A great number of measures aimed at promoting electricity saving, reducing energy consumption for heating, and fuel conversion (from electric heating and the use of oil to district heating and the use of renewable energy) have been implemented for the purpose of reducing energy consumption and environmental impacts from households:

  • EU CO2 allowances (some of the domestic energy consumption – electricity and heating – are subject to EU CO2 allowance regulation, cf. section 2.3.3 on ”Energy”)
     
  • Energy labelling of small and large buildings (incl. the public sector and businesses)
     
  • Energy labelling of electrical appliances

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

  • Tightening the energy-saving demands in building regulations by 25-30% from 2006.
     
  • Further tightening of energy demands by approx. 25% from 2010.
     
  • Abolishing mandatory linking and banning electric heating in new low-energy buildings.
     
  • Demands in building regulations for existing buildings in connection with major renovations, changes in heating systems, replacement of boilers, windows and roofing.
     
  • Maintaining and further developing an ambitious energy labelling scheme for buildings.
     
  • Giving higher priority to international efforts concerning energy labelling and standards.
     
  • Promoting visualisation of energy consumption and development of sophisticated energy meters.
     
  • Strengthening dissemination of information on energy saving.

These measures will be part of the political discussions on the implementation of the action plan on renewed energy-saving efforts.

2.3.8 Waste and wastewater

The contribution of the waste sector to greenhouse gas emissions consists primarily of methane from decomposition of organic waste at landfill sites. Smaller contributions of methane and nitrous oxide come from wastewater treatment. Of the waste sector's total greenhouse gas emissions of close to 1.5 million tonnes of CO2 equivalents in 2003 – corresponding to 2% of Denmark's total greenhouse gas emissions – landfill sites and wastewater treatment contributed 79% and 21% respectively.

Because all incineration of waste in Denmark is associated with energy utilization, the emission of CO2 from the incineration of plastic waste is included under the energy sector. In accordance with the targets in Energy 21 and Waste 21, waste incineration plants are designed so as to optimise energy utilization.

In previous years, efforts within the waste sector have been based on ”Action plan for waste and recycling 1993-97”, which included targets on waste treatment to the year 2000. In addition to an objective of stopping landfilling of combustible waste, the plan contained a number of measures of relevance to waste containing industrial gases (HFCs and SF6).

The waste sector's contribution to reducing greenhouse gas emissions consists primarily of:

  • limiting landfilling of organic waste,
     
  • utilising gas from closed/existing landfills,
     
  • promoting oxidation of gas in landfill coverings,
     
  • increasing recycling of plastics, and
     
  • utilising waste as an energy source.

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 million tonnes of CO2 equivalents.

As a consequence of stopping landfilling combustible waste on 1 January 1997, the emissions of methane from Danish landfills will decrease in the years to come. The emission of methane in 2012 is, thus, calculated to be 55,400 tonnes, corresponding to approx. 20% of the maximum in 1996.

According to the Danish Energy Authority's figures in ”Biogas: Production, prognosis and targets”, Denmark had 25 gas installations at landfills in the autumn of 2002. These installations produced 10,000 tonnes of methane annually, compared to approx. 1,700 tonnes in 1993.

In addition to the direct influence of waste management on greenhouse gas emissions, emissions are also influenced indirectly by recycling of, e.g., paper and cardboard, due to a reduction in energy consumption and, thus, in CO2 emissions. 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.

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

  • Obligation to send combustible waste to incineration (in practice a ban on landfilling)
     
  • Waste tax
     
  • Weight- and volume-based taxes
     
  • Subsidy programme – special scheme for businesses
     
  • Increased recycling of plastic packaging
     
  • Implementation of the EU landfill directive
     
  • Support for gas recovery at landfill sites
     
  • Subsidy programme for cleaner products

Denmark's Fourth National Communication contains additional information on these measures.

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.

The new regulations are expected to lead to:

  • a reduction in the number of landfills,
     
  • a not insignificant rise in the tax on landfilled waste,
     
  • a further reduction in amounts landfilled annually, and
     
  • requirements that waste is generally characterized before it is received at the landfill.

 

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Version 1.0 December 2005, © Danish Environmental Protection Agency