The Danish government’s new energy plan: green realism & silo thinking

Helene Dyrhauge |

The Danish government published its long awaited energy plan for 2030 on 30th April. The plan reflects the government’s green realism (see previous blog post), where ‘more environment for less money’ translate into spending and tax cuts for the energy sector.

The plan aims to reduce energy taxes and charges, strengthen market regulations, support Danish energy technology export, and increase energy saving thereby achieve 50 per cent renewable energies in 2030 and a low carbon economy in 2050. There is no detailed strategy for how to achieve a low carbon economy and green transition in all areas of society, such as electrification of transport. The silo thinking is problematic from a climate perspective where everything is connected.

According to  the 2018 Energy Projection published by the Energy Agency in March 2018, Denmark will not achieve its 50 percent renewable energy target in 2030 instead it will only reach 39.8 per cent. Moreover, the report predicts an increase in energy consumption after 2020 due to new data centres, electrification of heating and transport, just as the energy companies’ energy efficiency scheme ends in 2021. According to the new energy plan, the government main energy investments is a new offshore Wind Park (2024-2027). Yet several green organisations (e.g. Ecological Council, Concito, Skovforeningen) argue this is not sufficient to ensure Denmark meet its long term climate and energy targets. It is, therefore, necessary with more and earlier investment in renewable energies, energy efficiency and emissions cuts for Denmark to achieve its climate goal in 2030.

Furthermore, the energy plan does not explain how the electrification of transport will influence the Danish energy system. The government’s transport policy favours private transport i.e. car ownership and investment in road infrastructure. Without any incentives, transport users are likely to continue to choose fossil fuel cars instead of public transport or electric/ hybrid cars. Indeed, the 2018 Energy projection states that fossil fuels in transport will fall from 95 per cent in 2017 to 93 per cent in 2030. Compared to other countries, such as Norway, the Danish government is not considering banning fossil fuel cars although transport is one of the main sources of pollution, especially air pollution in cities. Clearly, Denmark will not reach its 50 percent renewable energy or emissions reductions targets in 2030 without integrating transport into the energy plan.

One of the government’s central goals is to reduce taxes and charges for all areas of society. Indeed the energy plan wants to reduce energy taxes and charges for both private and corporate energy users, which is supported by several energy organisations (e.g.  Danish Energy, the Danish Chamber of Commerce and Danish Wind Industry Association), who want cheaper electricity. The energy plan wants to cut red tape to allow better use of surplus energy from especially smaller companies, this is clearly positive step towards better use of resources and the energy plan focuses on creating better business environments for business and industry. Moreover, the green think tank Concito acknowledges that reducing energy taxes can be positive, if these create a tipping point for renewable energies, nevertheless this is not the case in the energy plan. Instead, a general reduction in energy prices might lead to increased energy demand thereby jeopardising Denmark’s climate commitment vis-a-vis energy efficiency and reduction in emissions.

Overall, the energy plan is a clear example of green realism, which believes in bottom-up market driven innovation to energy transition. Crucially, the energy plan is likely to miss both the 2030 and 2050 climate targets. The energy measures are not ambitious enough for Denmark to achieve its climate goals, especially as the plan predominately focuses on renewable energies instead of incorporating energy efficiency targets and emission reduction targets for 2030 currently debated at EU level, where Denmark is not part of the climate coalition in the Council (Euractiv and Altinget). Significantly, the energy plan does not take into account all the different elements of green energy transition, e.g. transport decarbonisation. Indeed silo thinking does not lead to energy transition and a low carbon economy. Finally, the government plans to publish separate plans for transport and climate in the autumn, which begs the question of whether the government will coordinate the policy aims for these three policies to ensure Denmark will achieve its climate goals.