Thomas White Global Investing
Green Reports

January 8, 2010

The Green Report


Denmark Leads the Way for a Greener World
Renewable energy propels Denmark's economy

To discourage energy wastefulness, Danish citizens pay some of the highest electricity prices in the world, roughly four times more than the average U.S. household. And a Ford Focus in Denmark costs $17,000, but the taxes for this automobile amount to a whopping $34,000. The Ministry of Climate and Energy of Denmark calls it “The Danish Example.”i This diminutive Nordic country has managed to maintain aggressive economic growth while at the same time promote energy efficiency and pare down carbon emissions. So it was to no one’s surprise that Denmark played host to the 15th high profile 2009 United Nations Climate Change Conference in Copenhagen, simply known as Conference of the Parties (COP15).

Like so many other countries, Denmark’s environmental change of heart occurred in the early 1970s when sky-rocketing oil prices created an energy crisis worldwide. At the time, Denmark met 90% of its energy requirements through imports. But in 1979, the government introduced a bouquet of subsidies, taxes, and loan guarantees that released the country from its slavery to foreign oil, a feat many countries today have still to realize. Since 1997, Denmark has been relying completely on indigenous energy.

Years ago, Denmark drew the route map to achieving a zen-like balance between vertically galloping economic growth charts and carbon emission reduction. Between 1990 and 2007, Denmark slashed its carbon emissions by 14% compared to the overall European Union record, where emissions fell 9.3% in the same period. The country’s hair-raising tax rates including energy and carbon taxes, as well as stringent building codes, have made Denmark one of the most energy efficient members of the European Union (EU). The country is known for its district heating system, where heat generated by the activities of power plants is used to provide hot water to commercial buildings and homes. And the country’s energy intensity, which is the ratio of energy production to real GDP, is the lowest in the EU. Yet notably, during this same period, Denmark also managed to record a 45% jump in economic progress.

Renewable energy has been a key to Denmark’s success. Today, around 30% of the country’s total electric generation comes from renewable sources. A large portion of this energy, roughly 20%, is harnessed from wind power, with biomass energy providing the remaining 10%. Boasting 5,300 wind turbines that dot its landscape, Denmark generates 3,150 megawatts (MW) of installed wind energy capacity. With this, some of the leading wind and biofuel companies in the world hail from this scantily populated nation of 5.4 million, whose energy exports mark 11% of the overall total.

But the country’s green tint sparkles the brightest in Samso, a small island located in the Kattegat Strait. Samso, with a current population of 4,300, was once totally dependent on coal and oil, but today has become the only island in the world that completely runs on renewable energy.

With such a star-studded report card, not many eyebrows were raised when Denmark was given the honor of hosting the COP15 in December 2009. Sizzling with hope, the COP15 conference fell short of expectations, ending with the Copenhagen Accord being signed. The Accord specified a non-binding pact to limit global warming temperatures to two degrees Celsius and also set aside $30 billion in aid for developing countries for climate related challenges. While the vague outcome of the conference disappointed many, it forged Denmark as a household name in energy circles.

Although Denmark’s green efforts may have won admiring words from UN Secretary General Ban Ki-Moon, and even the World Bank, its track record is still not quite perfect. Critics are quick to point out that in 2008 coal still generated 48% of the electrical voltage in the country, with domestic oil and gas accounting for 22% of the total electricity generated.

Yet, Denmark’s green efforts cannot be denied. Denmark’s economy has leapt up by 78% since 1980, while energy consumption and carbon emissions have remained consistent. And remarkably, Denmark has become one of the leaders in efficient energy use without hydropower resources. The country stands as one of the best examples of a blissful marriage between technology and alternative energy, a sector that employs 32,000 people and earns annual revenues of $10 billion. And while Denmark still has some areas yet to be turned totally green, hosting the COP15 was Denmark’s trump card, a highly sought after green badge of honor for the country to display.

 

 

 


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