1. Denmark’s Energy Policy - From 99% imports of fossil fuel in 1973 to 100% renewable energy in 2050 Nicolai Zarganis Deputy Director General 14 February 2013 50by30 - Manitoba

2. Denmark 40 Years ago  1973-74 oil crisis: 2 countries were 99% dependent of imported energy: Japan + Denmark  Oil crisis caused a severe economic crisis, unemployment - and no driving on Sundays... Car free Sundays in Denmark as a result of the oil crisis in 1973

3. Since then - Responding to the crisis in 1973, Denmark today has:  Net export of oil and gas (only EU-country)  Lowest energy consumption per GDP-unit in EU.  Highest contribution to electricity from new renewables (non-hydro) world wide: 41% in 2011  Most efficient clean coal technology in the world.  Highest export share of energy technology in the EU: 10.5 % of total export in 2011. Leading nation of advanced energy solutions (district heating and CHP, wind turbines, biomass plants, energy saving technologies …)

4. De-linking Economic Growth from Energy Consumption and GHG Emission: 1990-2011 -25% Danish Kyoto Obligation: GHG reduced by 21 pct. from 1990 to 2008-12 = One of the Worlds most ambitious targets for GHG reduction 3 reasons: 1) CHP/DH, 2) Renew. Energy 3) Energy Savings -1% +38% GDP - fixed prices Gross Energy Consumption GHG emission

5. Key Policies to Promote A New Energy Model Historic perspective  Long term strategies based on broad political agreements in the Parliament prevent stop-go policies = Confidence building measures for businesses and investors  A suitable legislative and local planning framework, which supports the local initiative and creates predictability  Cost-effective subsidy schemes with evaluation on a regular basis, avoiding over-subsidising (of favourable electricity prices and investment grants in start-up phase)  Energy taxes on fossil fuels makes RE more competitive and use of fossil fuels more energy efficient  Dialogue with sector stakeholders ensuring ambitious and realistic targets, as well as well functioning regulation  In short: A combination of an effective state and the market!

6. Transparent procedures are just as important as financial subsidies. Municipalities: Land use planning and approval of wind turbines projects. Public hearing to ensure local acceptance. Local shareholder ownership (min. 20%) ensures public acceptance. Fixed procedure for cost sharing. Grid company finances grid extension, and wind turbine owner finances the transformer + local grid to connection. Turbine has priority access to the grid. Example: Confidence Building Measures for Investors in Land Turbines 2011: Wind power increased consumer price by 0.6 €-cent/kWh = 23 € for normal household/year

7. Affordable Danish Electricity Prices (EU-27, DKK per kWh, excl. VAT and taxes) For industrial consumer (2 GWh/year). Source: Eurostat Total electricity-subsidy to wind power, biomass and other RE = 8-10% of end-user price

8. Some Global Energy Trends and Uncertainties are (Still) Driving Us  The era of cheap oil is over: High & fluctuating prices.  Lots of natural gas, including shale gas, but uncertainties about long term price & delivery, as well as environmental impact.  Lots of coal, but prices are uncertain, CO 2 -emissions high, and development of CCS slow and costly.  Record high global CO2 emissions in 2010 & 2011.  Global energy demand will be 35% higher by 2035.  Uncertainty about nuclear power – safety?  Renewable energy is growing at fast rates: half of all new electricity capacity is renewable and RE becomes 2 nd largest electricity source in 2015.  Energy efficiency: Huge potentials at limited costs are often not harvested.

9. The Danish Government’s Vision for the Future Energy Mix in Denmark  Coal phased out from Danish power plants by 2030.  100% of Renewable Energy in electricity and heating by 2035.  100% RE by 2050 in all energy sectors and transport.

10. The short-term: Policy Targets for 2020 Agreed by 95% of Parliament members in March 2012

11. Wind Power: How to reach 50% of electricity by 2020 From 4,500 MW in 2013 to 6,500 MW in 2020 by adding:  500 MW wind turbines near the coast  500 MW onshore wind turbines (1,800 MW replace 1,300 MW old turbines)  1,000 MW offshore wind turbines  Comprehensive strategy for Smart Grids

12. Converting to Renewable Energy in Buildings  From coal to biomass in large scale CHP’s (will supply 1/10 of total electricity consumption by 2020)  New technologies e.g. geothermal energy and large heat pumps at CHP’s  Banning installation of oil-fired boilers:  In new buildings from 2013  In existing buildings where district heating and natural gas is available from 2016  Banning installation of natural gas- fired boilers in new buildings from 2013

13. Other Initiatives to Reach the RE Goals  Electricity and biomass in Transport  Subsidies for recharging stations (EV) and infrastructure (hydro and gas)  10% biofuels by 2020  New strategy for plug-in hybrids etc. by 2013  Better framework conditions for Biogas  Better and new funding schemes  Increased capital installation subsidies  More renewable energy in Industry  Increase of RE in process  Promote more industrial CHP TRANSPORT BIOGAS INDUSTRY

14. Energy Agreement (March 2012): Development of Renewable Energy Energy Agreement

15. De-linking Economic Growth, GHG and Energy Consumption: 2010-2020 New Energy Agreement (March 2012) Economic forecast Impact on energy consumption and GHG-emission

16. Affordable Costs of New Energy Strategy Additional costs are borne by consumers via tariffs, PSO on electricity and gas, and tax on space heating. The costs are:  for private companies: Average 32 € per employee in 2020  for an average household: 175 € in 2020 = 3½ Euro/week per household =

17. Challenging  Amounts to no less than a structural shift in the economy  The necessary investments are considerable.  There are several roads to take, but also ”safe bets” Affordable  The transition will - as a whole - have a limited economic impact.  For individual companies the transition will create winners as well as losers Technically feasible  Alternatives to fossil fuels are available and can deliver on a large scale  Alternatives to fossil fuels need supportive policy frameworks to be competitive in the short run A new business opportunity  Stable policy create demand for wind power and biomass plants etc.  Incentives for profitable energy renovations in industry and other business sectors  First mover advantages for green tech companies on merging markets Conclusions – the Transition is :

18. WWW.ENS.DK Energy Statistic - download data Themes - Heat supply - RE and Offshore Wind - Links to background reports Energy Data - print theme maps Facts and figures - Find the data you need

19. Additional slides

20. 20 High Oil Prices Have Reappeared: Oil prices and Danish energy policy 1972-2012  1976: First Danish Energy Plan  1981: Energy Plan 81 (EP81)  1990: Political agreement and ”Energy 2000 – action plan for sustainable development 1973:1979:1980s1995-200520072011 Supply JumpingEnvironmentalLiberalizationRising oilVery high crisisOil pricesproblems of the Europeanpricesoil prices Energy sector  1996 ”Energy 21” action plan and political agreements 1999, 2000, 2003 and 2004  2012 political agreement on Danish energy policy 2012- 2020  2008 political agreement on independence of fossil fuels

21. Straw Wood Waste Wind Other RE Conversion loss etc. Process (- electricity) Process (- electricity) Room heating Transport Electricity consumption Electricity consumption Energy Efficiency Renewable Energy PJ/Year What’s The Trick: 100% RE in 2050 …by improving energy efficiency …in order for more energy services to be satisfied with less energy …based on renewable energy sources

22. Danish Green Tech = Merging Business Sector  The energy technology industries increased the number of directly employed to 12.2 pct. of the total labour force in 2009 from 9.7 pct. in 2000. 25,000 are directly employed in the wind turbine industry.  The productivity per employee increased 49.7 pct. from 2000 to 2009 Annual turn-over of energy technology vis-a-vis total commodities Energy Technologies All commodities

23. Financial Support for RE-Electricity  Favourable prices for electricity shall double the share of RE-electricity in 10 years to about 70 pct. by 2020.  Wind power: Large-scale wind farms are promoted by public tenders – lowest sales price per kWh is main criteria. Local small-scale wind projects promoted by fixed premium on top of market price (3.4 €-cent/kWh for averagely half of the wind turbines production).  Biomass: Producers receive fixed premium on top of market price (2 €-cent/kWh).  Solar PV: Exempted from energy taxes, and can in popular terms let the electricity meter run in reverse. Fixed tariff for produced electricity, which exceeds consumption (per hour).

24. Role of Central and Local Governments Central authorities (State) responsible for  National RE-targets  Laws and regulations  Payment for electricity  Offshore wind farms: Selection of potential sites and approvals of tenders. Local authorities (Municipalities) responsible for:  Approvals of new land-based wind turbines  Land-use planning and provision of legal rights according to Act on Planning Adjustments to the Development Plan of the Municipality Detailed plan for the land plot after public hearing

25. Two Market Models for Wind Turbines Open door Application with flexible time schedule Typically land turbines, test farms and near shore offshore farms. Grid connection paid by project owner Premium (3.4 €-cent/kWh) on top of market price in 22,000 full-load hours (average 10 years). Then market price for the remaining lifetime. Tender Political agreement with fixed time schedule Typically large-scale offshore wind farms (pot. large land projects) Grid connection paid by electricity consumers Market based feed-in- tariff for 50,000 full-load hours (average 12 years). Then market price for the remaining app. 13 years.

26. Confidence Building Measures for Investors in Tendered Wind Farms  National screening appoints and matures sites (master plan).  One stop shop communication: One ministry only to approach.  Security: Grid connection is available in due time.  Financial compensation if the power is curtailed = Estimated loss from unrealised sale.  Grid connection/enforcement on sea and land paid by TSO (thus consumers via electricity bill).  Lesson: Streamlined planning reduces costs … if competition and attractive bidding terms!