The Private Sector
"We need to strengthen the interplay between the public and private sectors on research, development, and dissemination of green technologies. [...] Environmental regulation will represent the required minimum basis for environmental behaviour and will determine the framework conditions capable of motivating enterprises to pay greater attention to developing and selling environmentally friendly products and to undertaking other voluntary green initiatives."
From "A shared future – balanced development",
Denmark's National Strategy on Sustainable Development (p. 73)
THE DANISH PRIVATE SECTOR
The Danish industrial structure is characterised by many small and medium-sized companies. Even though 65% of Denmark’s total area is utilised for agricultural purposes, Danish industrial exports are now four times as great as agricultural exports, and only 3.4% of the Danish workforce are employed in the agriculture sector. Yet, agriculture is a more important part of the economy than in the other Nordic countries.
Foreign trade is extremely important to Danish economy. Since 1970, private services as a whole have represented a gradually increasing proportion of all economic activity. Tourism is the third largest industry in Denmark, following manufacturing industry and agriculture. Denmark has almost no heavy industry, but processing of foodstuffs, engineering and pharmaceutical industries are important. From the engineering industry come motors, agricultural machines, pumps, thermostats, refrigerators, telecommunications equipment and shipping. Furniture, clothing and toys are also important exports. Denmark is the third largest oil producer in Western Europe, after Norway and Britain. Denmark’s GDP in 2006 amounted to 146, 6 billion €.
ENERGY USE BY DANISH INDUSTRIES
Denmark has no significant share of energy intensive industry, and energy use in the industry sector was only 127 PJ in 2005, or some 16 % of total final energy consumption. The service sector in Denmark consumed about 112 PJ the same year. That makes Denmark the only Nordic country where this sector consumes about the same amount of energy as industry. The energy use in Danish industry was reduced with 5 % from 1980-2005. The increase in the service sector was about 55% in the same time period.
Agriculture consumes about 4 % of all energy in Denmark.
Over the past three decades, the manufacturing industries in Denmark have managed to stabilise their energy consumption and maintain considerable growth at the same time.
EMISSIONS BY DANISH INDUSTRIES
Industry, construction and services directly account for about 10-11 % of Denmark's total emissions of greenhouse gases. The agriculture sector amounts for a large share (17-18 %) of GHG emissions in Denmark, mainly in the shape of methane and nitrous oxide. However, generation of electricity and heat from fossil-fuelled heat and power stations– much of which is consumed by businesses – accounts for 44 %. The energy sector is therefore pivotal in the efforts to reduce emissions of CO2. Most of the remaining emissions come from transport or households. From 1990 to 1996, emissions showed a rising trend, but they have fallen since 1997 because many power stations have changed their fuel mix from coal to natural gas and renewable energy.
Since the mid-80s, emissions of SO2 and NOx by large power stations have been regulated by allowances. This has been one of the main reasons for the reduction in emissions from 163.000 tonnes to 6.000 tonnes for SO2 and from 129.000 tonnes to 30.000 tonnes for NOx in the period 1987 to 2005.
The Danish offshore facilities in the North Sea have large emissions, amounting to about 4% of total CO2 emissions in Denmark.
THE ENERGY SECTOR IN DENMARK
In 2005, 41 % of Danish energy supply was covered by oil, 24 % by natural gas, 20 % by coal, and 15 % by renewables. Since 1980, renewable energy has accounted for a steadily growing share of total energy consumption. Although Denmark is most internationally renowned for its development of wind power, two-thirds of the renewable share was bioenergy, in the shape of wood, straw, wastes or biogas. Wind power covers about 20 % of electricity consumption. Nuclear power was long debated in Denmark, but is no longer an issue.
The electricity marked in Denmark has been deregulated since 2003, considerably later than Norway, Finland and Sweden, and the gas marked followed in 2004. Denmark joined the common Nordic power market NordPool in 2000.
In spite of the liberalisation of the Danish energy marked there is very little competition. By 2006 the mergers in the Danish energy sector had resulted in one dominant actor, the state owned DONG Energy. DONG (Dansk Olie og Naturgas) was originally established to exploit oil and gas resources and develop Denmark’s natural gas infrastructure. It has recently taken over the two main power producers, Elsam and Energi2, whose thermal plants also generate district heat. In addition, DONG Energy has taken over the electricity and district heat distribution companies in the Copenhagen region. DONG now controls 75% of Danish electricity production. Distribution networks in other parts of the country, and many smaller CHP (combined heat and power) or district heating plants as well as wind farms, are owned by local co-operatives or municipalities.
The energy industry has developed into a success story in Denmark, also in terms of exports of energy technology. Danish wind turbines have become a major export commodity with currency earnings of billions of €. In 2006, the export of energy technology reached 46 billion DKK( about 6 billion €), a figure that has tripled in only 10 years.
In 2006, total Danish energy production was 1240 PJ, which is 5.6 % less than in 2005. The degree of energy self-sufficiency in 2006 was 145 %. In other words Denmark produced 45 per cent more energy than it consumed. In 2006 Denmark was the only EU country to produce more energy than it consumed. Exports of gas, oil and electricity accounted for 76% of the Danish trade surplus in 2006.
GOVERNMENT MECHANISMS TOWARDS THE PRIVATE SECTOR
The Danish Energy Authority
The Danish Energy Authority is an Authority under the Ministry of Transport and Energy. The agency seeks to promote Denmark’s international position in the area of energy and to strengthen the business and export opportunities for Danish energy technology and know how.
The Danish Energy Authority carries out tasks, nationally and internationally, in relation to the production, supply and consumption of energy. This means that the Authority is responsible for the whole chain of tasks linked to the production of energy and its transportation through pipelines to the stage where oil, natural gas, heat, electricity etc. are utilised for energy services by the consumer.
The Danish Energy Authority administers the Energy Research Programme (ERP), which grants subsidies to R&D in the area of cleaner and more energy efficient technologies.
The Danish Environmental Protection Agency (DEPA)
The Danish Environmental Protection Agency (DEPA), is a part of the Ministry of Environment, and administers the environment legislation that aims to secure a good habitat for all living beings. DEPA also manages DanishCarbon.dk, an agency to help with buying and selling GHG quotas through Clean Development Mechanisms and Joint Implementation. The Agency is also responsible for coordination of national measures to follow up the Danish climate commitments, the fulfillment of Danish reduction commitments under the Kyoto Protocol and Danish implementation of the flexible mechanisms.
In 1993, the Danish Government introduced a CO2 tax on industrial enterprises. Energy-intensive companies can get part of the tax refunded by entering into an agreement with the Danish Energy Authority. The companies agree to carry out various energy measures that include an energy audit, certain energy savings, introduction of energy management, and taking energy aspects into consideration when purchasing new equipment and plants. The CO2 tax has been reduced after 2000.
Emissions trading scheme
The Danish allowance allocation scheme for the trial period 2005-07 covers electricity and heat production, as well as large energy-intensive industrial companies. Roughly 380 Danish production units are covered by the CO2 allowance trading scheme as from 1 January 2005. Most of these are generators of power and heat, the rest are industrial enterprises plus a few production units within the offshore sector.
Denmark’s reduction commitment (21 % from 1990 to 2008-12) under the Kyoto protocol and the EU burden-sharing agreement is one of the largest undertaken by any country.
The Danish government has proposed to distribute emission permits for 24.5 million tons of CO2 annually between 2008-2012, compared to a total of 100.5 million CO2 emission allowances during the first three years of the scheme (2005-2007). More information about the Danish quota allocation plan
Support schemes for renewable energy
Financial support is provided to promote the use of renewable energy. The support schemes are financially covered by the electricity consumers, through their bill.
In January 2007, the Danish Government presented a new energy strategy, with the aim of doubling the renewable share of primary energy use from 15 % to 30 % by 2025. Total energy use is to stay at its present level, so that fossil fuel consumption will be reduced correspondingly. To help achieve the new goal, government expenditure for RD&D relating to renewable energy will be doubled from 500 million to one billion Danish kroner (€ 130 million) per year. The new strategy will be evaluated and revised every four years.
Wind power producers receive a subsidy averaging 0.1 DKK (1.3 Eurocents) per kWh, although the actual sum fluctuates with the market price, and owners of older windmills – built when costs and subsidies were higher – continue to receive higher compensation. The Government has recently (June 2007) proposed an increase in the subsidy to 0.2 DKK for new windmills during their first years of operation. The support for renewable energy in Denmark is a complex system with several variables. More about the system
Energinet.dk administers the support scheme, and is responsible for calculating and paying the subsidiary to electricity produced by wind turbines. For more information on Energinet.dk, see below.
Energy companies are obliged to promote energy efficiency through offering general energy advice and information free of charge for all consumer groups.
Innovation for eco-technology
In May 2007, the Danish Ministry of Environment launched an action plan to promote eco-technology through partnerships and other measures to enhance innovation. Partnerships will for example be established between wind power investors, authorities, and scientists. The action plan is a part of Denmark’s follow up to the EU’s eco technology program ETAP. More information (Danish only)
SOME MEASURES AGAINST CLIMATE CHANGE TAKEN BY THE PRIVATE SECTOR
In August 2006 the Minister of Transport and Energy signed an agreement with representatives of electricity, natural gas and oil networks and distributing companies, committing these companies to achieve specific energy saving targets by initiating savings among their costumers. The Danish Energy Association has followed this up by creating a market for certificates for energy savings.
DONG Energy is joining forces with a large number of European partners to participate in a project aimed at developing technology that can absorb CO2 from flue gases. The project is called CASTOR and funded in part by the EU.
It is estimated that emissions from the agriculture sector were reduced by 26 % (3.6 million tons of CO2 equivalents) from 1985- 2005, mainly as a result of less use of fertilisers.
The private sector, as households, has reduced emissions substantially by replacing oil heating for district heat or gas.
PRIVATE SECTOR RESPONSE TO GOVERNMENT INITIATIVES
Due to the emission trading scheme from 2008, the energy producers will have to buy a lot more of their quotas. The organisation Danish Energy (DE) claims that these demands will make it more difficult for Danish energy producers to compete with foreign companies. DE believes the energy sector should take on a large share of the emission cut, and support the EU’s goals, yet the organisation’s opinion is that the Danish government is putting too large a burden on the energy sector.
Danish Industry (DI) also believes that the Danish industry already is doing much to increase energy efficiency because Denmark is the most energy efficient country in the EU. DI believes there should be higher amounts allocated for governmental JI and CDM credits, as Denmark has a heavy burden in fulfilling its Kyoto commitments, and also that businesses themselves should be able to buy and sell credits. The most cost effective measures must be taken to reduce climate change.
DI urges the EU to form the national allocation plans so that businesses in no country get a competitive advantage over others, and encourages the next climate agreement to have a truly global character.
In the 1970s and early 1980s Danish Industry was in favor of nuclear power, and showed little interest in renewable energy. Today, with the extensive export of Danish wind mills and eco-technology, the position has somewhat changed, as renewable energy now is important also for Danish workplaces.
Landbrugsrådet’s (Danish only), the organisation for agriculture, opinion is that the Danish private sector has to take on a large share of the burden of cutting Denmark’s Kyoto commitments. The organisation also points to the fact that CO2 is regulated twice, by the CO2 tax and the emission trading system.
IMPORTANT COMPANIES IN THE DANISH ENERGY SECTOR
Since 1984, DONG has explored for and produced oil and natural gas and, as a state-owned company, has established Denmark’s natural gas infrastructure. DONG Energy was founded in 2006 as the result of a merger involving six Danish energy companies – DONG, Elsam, ENERGI E2, Nesa, Copenhagen Energy’s power activities and Frederiksberg Forsyning.
Dong is also one of Europe’s leading companies within wind power, and is involved in large R&D projects of making windmills more efficient. 15% of Dong Energy’s energy production comes from wind and hydropower, and this share is expected to increase. Especially are offshore windmills a central part of the corporations plan in the coming years. R&D in technologies such as solar energy and wave energy are also performed.
Energinet.dk’s main responsibility is to maintain an efficient and secure supply of energy through the national transmission grid. Energinet.dk therefore secures the infrastructure in the energy field, and supervises the expansion of the grid. The state owned company intends to create equal conditions for actors in the marked, and support environmentally friendly electricity production.
Energinet.dk administers programmes for funding research and development into technologies for environmentally friendly electricity production. The funding comes from electricity consumers who pay DKK 0.004 towards such research for every kWh of electricity consumed.
For more information about energy R&D in Denmark see www.energiforskning.dk (in Danish)
Danish Solar Energy
Danish Solar Energy PLC (GmbH) was established in 1993 and is one of the pioneers in the photovoltaic business. The company is strong on product development, electricity supply and solar power know-how.
Mærsk Olie og Gas AS (Maersk Oil) is a company owned by A.P. Møller – Mærsk A/S, and was established in 1962, when Mr A. P. Møller was awarded the concession for oil and gas exploration and production in Denmark. Maersk Oil is not involved with renewable energy. The Møller group produces about 30% of the Danish oil and gas.
Vestas is the world's leading producer of high-tech wind power systems. Vestas’ core business comprises the development, manufacture, sale, marketing, and maintenance of wind power systems that use wind energy to generate electricity. In June 2007 Vestas was named the world’s greenest company.
Siemens Wind Power AS
Siemens Wind Power AS was created when the Danish company Bonus was purchased by Siemens. All Siemens' production of wind turbines still takes place in Denmark.
BUSINESS AND GOVERNMENT NETWORKS AND DIALOGUES
Danish Energy Association
The Danish Energy Association is a commercial and professional organisation for Danish energy companies. It is managed and financed by its member companies, mainly the electricity companies, and works to secure for them the freest and most favourable conditions for competition and development in order to ensure development, growth and well-being in Denmark. The organization also works to ensure energy production with minimum environmental impact and to reduce total energy consumption, to promote innovation as to increase energy technology and provide jobs.
Danish Wind Industry Association
The Danish Wind Industry Association (DWIA) is a non-profit association whose purpose is to promote wind energy at home and abroad. The association was founded in 1981. DWIA today represents 99.9 per cent of Danish wind turbine manufacturing measured in MW and more than 140 companies with activities in the Danish wind industry.
Danish Solar Energy Society
The Danish Solar Energy Society works to promote the use of solar energy in Denmark.
Danish District Heating Association
Danish District Heating Association is a member organisation representing 400 district heating companies. These companies account for 98% of the district heating sold in Denmark.
Danish Biogas Association
The aim of the association is to increase the production of biogas on an economically sound and environmentally sustainable basis in Denmark. The Biogas Association is lobbying for politicians to create sound economic conditions for the biogas production. The Danish Biogas Association is an organisation for public institutions, associations, enterprises and farmers.
Certification and consumer information
Environmental management systems (EMS), the European Union’s Eco-management and Audit Scheme (EMAS) and ISO 14001 (The International Organization for Standardization) have become more common. More indicators of environmental work are followed inside enterprises, certificates and programmes have solidified environmental matters in all activities. According to Federal Environmental Agency, Germany 837 Danish companies were ISO14001 certified by January 2006. According to the European Commission's EMAS register Denmark has 112 EMAS registered organisations by March 2007.
[Last updated: 05.07.2007]