the energy strategy 2050

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1 Summary the energy strategy 25 from coal, oil and gas to green energy Energy Strategy 25 from coal, oil and gas to green energy Summary February 211:8 For information about this publication, please contact: The Danish Ministry of Climate and Energy Stormgade Copenhagen K Denmark Telephone: ISBN printed publication ISBN electronic publication Cover: BGRAPHIC Layout/illustrations: Solid Media Solutions Print: Litotryk København A/S Number printed: 5 copies This publication can be downloaded and ordered on and via the danish government February 211

2 Preface A new era for energy policy The 2th century was largely driven by access to cheap and plentiful coal, oil and gas. However, in the 21st century we will have to find other means of satisfying our energy needs. Energy Strategy 25 is a huge step towards realising the Danish government s vision of becoming independent of coal, oil and gas. In 21 the Danish Commission on Climate Change Policy concluded that transition to a fossil fuel independent society is a real possibility. Energy Strategy 25 builds on this work. This strategy is the first of its kind; in Denmark and in the rest of the world. The strategy outlines the energy policy instruments to transform Denmark into a green sustainable society with stable energy supply. The strategy is also fully financed, taking full account of Danish competitiveness. The strategy presents a wide spectrum of new energy policy initiatives. These initiatives will already in the short term considerably reduce fossil fuel dependence. Just in the period up to 22, the strategy will reduce the use of fossil fuels in the energy sector by 33% compared with 29. In addition, the strategy will increase the share of renewable energy to 33% by 22 and it will reduce primary energy consumption by 6% by 22 compared with 26 due to a strong focus on energy efficiency improvements. The government s goal of making Denmark independent of fossil fuels by 25 is based on the realization that the world is facing a new era for energy policy. The 2th century was largely driven by access to cheap and plentiful coal, oil and gas. In the 21st century we will have to find other means of satisfying our energy needs. Within the next 25 years, the world s total energy consumption is expected to increase by one-third. At global level, the increasing pressure on fossil energy resources has contributed to an energy race, in which the influence and growth opportunities of regions largely depend on their access to fossil fuels, with increasing prices and uncertainty as a consequence. The Danish government does not wish to be part of this race. The government s resolve is only strengthened by the fact that much of the world s fossil energy reserves are concentrated in just a few, often politically unstable, countries. This combination can have negative consequences, with increased dependence on producing countries. Therefore, the transition to green energy is also a foreign policy requirement. In addition to addressing the challenges in a new era of energy policy, Energy Strategy 25 is also Denmark s contribution to curbing global warming. The international community has committed to drastic reductions in greenhouse gas emissions at international climate change conferences in Copenhagen and Cancún. The world - and Denmark - can only do this by becoming less dependent on fossil fuels. Finally, the strategy will bolster Danish growth and wealth. The transition will strengthen companies opportunities for innovation and demonstration of new green solutions. This will improve the opportunities of Danish companies in a rapidly growing global market for energy solutions. The transition to fossil fuel independence is a huge task that will fundamentally change Danish society. Fortunately, Denmark can draw on many years of solid experience. Denmark has a successful track record of securing economic growth without energy consumption growth. Since 198, the Danish economy has grown by 78%, while energy consumption has remained more or less constant, and greenhouse gas emissions have been reduced. It is important to emphasise that the Danish transition cannot be realised in isolation, independent of the world around us. Denmark is not an island not geographically and not in the field of energy policy. We need other countries and our European neighbours in particular to move in the same direction. Therefore, the Danish government will continue to work for ambitious global reduction targets. strive for an EU commitment of 3% carbon emission reductions by 22. Furthermore, the Danish government is committed to working against green protectionism. The Danish government s strategy ensures responsible transition to a new era of energy policy. A transition that safeguards affordable, stable energy supply, is gentle on the public purse, supports the growth potential of Danish companies, and protects the leeway in our foreign policy. The Danish government, February The Energy Strategy 25 from coal, oil and gas to green energy. Summary. The Energy Strategy 25 from coal, oil and gas to green energy. Summary. 3

3 coal, oil and gas to green energy From coal, oil and gas to green energy The goal of the Danish government is independence from coal, oil and gas by 25. With this move to fossil fuel independence, Denmark will also satisfy two other important ambitions: Denmark will maintain a high security of supply and ensure stable, affordable energy supply. Security of supply will be a key challenge in a future, where the global demand for energy is growing in line with population growth and economic growth, and where the remaining oil and gas resources will be concentrated in few, and often politically unstable, countries. Denmark will contribute to limiting global climate change as agreed in Copenhagen 29 and in Cancún 21. Therefore, Denmark must contribute to meeting the EU objective to reduce greenhouse gas emissions in 25 by 8-95% compared with 199 levels. This requires the transition to an economy with low greenhouse gas emissions. In addition, the government s strategy for fossil fuel independence will help secure and develop the strength of Danish companies within the fields of energy, climate and environmental technology. A stronger coupling between innovation, production and deployment will improve companies opportunities to take advantage of the increasing global demand for green technologies in order to create growth and employment. Energy Strategy 25 fulfils the government s pledge as set forth in its work plan Denmark 22, that it would present a target for when Denmark is to become independent of fossil fuels, as well as a strategy to meet this target. Energy Strategy 25 is also a step towards meeting the government s vision of Denmark as a green and sustainable society. At the same time, Energy Strategy 25 supports and meets a number of Denmark s other ambitious targets in the climate and energy area. These include the targets arising from the EU climate and energy package from 28, the national energy agreement for and the targets in the government work plan. These include that Denmark is be among the top three countries in the world to raise its renewable energy share most by 22, and to be among the three most energy-efficient countries in the OECD by 22. Independence of fossil fuel Denmark will maintain a high level of energy security of supply Denmark will contribute its share to curbing global warming Denmark will maintain a high security of supply and ensure stable, affordable energy Demark will harvest opportunities for green growth and employment Figure.1 Effects of independence of fossil fuel supply. 4 Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 5

4 Principles for transition to independence An economically responsible transition to fossil fuel independence is extremely important for the Danish government. This means that the transition must meet the following principles: Cost effectiveness The transition must be cost effective, with initiatives providing maximum security of supply and the highest reduction in the use of fossil fuels for every DKK of expenditure. This means that focus is not on large-scale use of technologies which require high subsidies. Instead for these technologies focus is on research, development and demonstration, which in the long term can make them competitive, at lower levels of subsidy. Minimal impact on public finances The distribution of benefits and costs in connection with the transition must not burden public finances. Therefore, the transition is fully financed, with expenditures primarily covered by consumers of energy (companies as well as households). A wide range of energy policy initiatives The government s strategy includes a wide range of ambitious new energy policy initiatives. These include: initiatives with an immediate effect on the Danish energy system (track 1), initiatives that plan and prepare the transition to fossil fuel independence (track 2) and initiatives directed towards the development and improvement of energy technologies (track 3). Retaining competitiveness The transition needs to take the competitiveness of Danish businesses into account. This requires that companies know the long-term framework, within which they must operate, and that energy costs do not increase significantly. Full utilisation of international frameworks The transition must make full use of the opportunities of a globalised world and of ever closer EU cooperation. The goal is not a self-sufficient Denmark. On the contrary, Denmark must continue to exploit all the advantages of being part of an international energy market. The strategy must also ensure that the transition does not undermine nature or environmental assets. This implies for instance, that the infrastructure must take account of nature and people s opportunities to enjoy it. It also entails a sustainable use of biomass resources. The government s proposed initiatives are in line with the approach taken by the Danish Commission on Climate Change Policy, focusing on both energy efficiency improvements and renewable energy expansion. The strategy moreover contains a series of initiatives concerning an efficient and environmentally sound exploitation of Danish North Sea resources. Track 1 The most important initiatives in the conversion track Renewable energy Call for tenders on 6MW offshore wind farm at Kriegers Flak Call for tenders on 4MW smaller near shore offshore wind turbine installations Initiatives for more onshore wind power, aiming at an additional 5MW Fuel shift from coal to biomass at large-scale heat and power plants via revised rules on prcing of heat supllies Track 2 The most important initiatives in the planning and preparation track Renewable energy Funds for strategic energy planning in municipalities with a view to better utilisation of local resources, including district heating Analysis of the use and utilisation of biomass for energy More efficient tendering of offshore wind turbines Analysis of possibilities to locate turbines closer to roads and railways. Efficiency improvements Tighter energy efficiency standards for new buildings in 215 and 22 Establishing a model for the phase out of natural gas in individual heating Further tightening of EU efficiency standards on the energy Track 3 The most important initiatives in the technology development track Research, development and demonstration Enhanced prioritisation and coherence in research, development and demonstration in the climate and energy area Fund for demonstration of large heat pumps in the district heating sector Allowing small-scale CHP-plants based on natural gas to shift to biomass Improved framework conditions for biogas production A 1% biofuel obligationin the transport sector by 22 Continuation of the Wind Turbine Secretariat Efficiency improvements Energy saving obligations by energy companies to target private homes and businesses efficiency of appliances, products and existing buildings. Intelligent energy system New international transmission grid in connection with offshore wind farm at Kriegers Flak Analysis of the need to expand international transmission grid Roll-out of intelligent electricity meters Strategy for the promotion of smart grids Analysis of the regulation of the future gas structure. Transport Technology assessment in order to support the right framework conditions for new transport technologies Fund to promote establishment of recharging stations for electric cars Fund for feasibility studies regarding geothermal projects Continued support for small electricity-producing RE technologies Fund for demonstration projects involving solar heating Establishment of larger test schemes Strengthening of energy saving obligations by energy companies Future-proof efficiency standards for building components to ensure houses which are more energy efficient No new oil boilers in new buildings from 212 and in the existing building stock from 217 Market promotion of RE-based alternatives to oil and gas heating Promotion of new buildings with very low energy consumption Enhanced energy saving efforts in the public sector. Further efforts to tighten EU standards on vehicle energy efficiency and CO 2 emissions Push for EU harmonisation and standardisation of technologies for electric cars. Cross-sectoral and international Strategic review of existing regulations of the Danish electricity supply sector Analysis of the existing subsidy and tax system Push for an ambitious international climate and energy agenda Push for a long-term vision of an EU independent of fossil fuels Work to raise the 22 EU greenhouse gas reduction target to 3% Work to double EU energy research funding. Partnerships with enterprises and research institutions on the development of cleantech solutions Analysis of future demand for researchers and university graduates within the green area Technology assessments in a wide range of areas. 6 Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 7

5 Economically responsible transition to fossil fuel independence. From coal, oil and gas to green energy A strategy with considerable effects and benefits The government s strategy means, that Denmark within this decade will come a long way towards fossil fuel independence. Furthermore, the government s new initiatives will achieve lower energy consumption, a higher share of renewable energy, retention of a high security of supply, reduction of greenhouse gas emissions and good opportunities for Danish companies working with energy and climate solutions. The government s goals Energy Strategy 25 Fossil fuel independence by 25 The share of renewable energy must be increased to 3% of final energy consumption by 22 as part of an overall EU target of 2% renewable energy by 22. The share of renewable energy in the transport sector must be 1% by 22 In 22, primary energy consumption must be 4% less than in 26. Emissions in the non-ets sectors must be reduced gradually in and by 2% by 22 relative to 25 as part of an overall EU target to reduce emissions by 2% by 22 relative to 199. The Danish government s initiatives for increased use of renewable energy and energy efficiency improvements will reduce fossil fuel use in the energy sector by 33% by 22 compared with 29. Government initiatives for increased use of biomass, wind and biogas will ensure a renewable energy share of 33% by 22, and thus exceed compliance with the EU target. Government initiative for 1% biofuels by 22 in addition to the government s initiatives to promote electric cars etc. will ensure compliance with the EU target by 22. Government initiatives for energy efficiency improvements in private homes, businesses, the state and municipalities will ensure a reduction of 6% by 22 compared with 29, and thus exceed compliance with the national target. Government initiatives to reduce fossil fuels will reduce non-ets emissions by 4-5 million tonnes CO 2 in the period follow up on efforts regularly to ensure compliance with the 22 climate commitment, and launch new initiatives as required. Box.1 Goals and results 8 Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 9

6 25 2 Less fossil fuels New government initiatives for increased use of biomass, wind, biogas and biofuels, and to improve energy efficiency will lead to an 18% reduction in the use of fossil fuels by 22 compared with 29, while consumption of renewable energy is expected to increase, see figure step towards phasing out fossil fuels by 25, see figure.3. However, realising this target by 25, will require a continuation of existing efforts and implementation of new initiatives after PJ/year Historical Without new initiatives With new initiatives More renewable energy Government initiatives to expand wind power and the use of biomass are expected to increase the share of renewable energy to 33 % by 22 as against 19 % in 29. Thus, Denmark will more than meet the EU target of 3% renewable energy by % by Other Wind Biogas Biofuel Biomass Figure.6 Renewable energy in primary energy consumption Source: Danish Energy Agency PJ 5 Lower energy consumption PJ Oil Gas Coal Other RE Wind Biogas Biofuel Biomass Figure.2 Consumption of fossil fuels and RE in 29 and 22 (excluding extraction and refining) Source: Danish Energy Agency Considerable reductions in the use of fossil fuels by 22 and a framework for future efforts will provide a huge Figure.3 Consumption of coal, oil and natural gas Source: Danish Energy Agency The energy sector in particular will achieve a considerable reduction in the use of fossil fuels in the short term. Fossil fuel use will decrease by 33 % in 22 compared to 29. Moreover, the share of fossil fuels in the electricity sector is expected to fall from 71% of electricity consumption in 29 to below 4% in 22. PJ Without initiatives With new initiatives Figure.4 Fossil fuel use in the energy sector (excluding transport, extraction and refining). Source: Danish Energy Agency 33% reduction % Without initiatives With new initiatives EU target Figure.5 Share of renewable energy in final energy consumption Source: Danish Energy Agency This will also help Denmark maintain its position in the absolute world elite of renewable energy. With these new initiatives, Denmark is expected to rank as one of the three countries in the world to raise its renewable energy share most by 22. By 22, biomass, wind, biogas and biofuels will increase significantly, see figure.6. With a significant increase in solid biomass, biogas as well as biofuels, bioenergy will continue to make up the majority of total renewable energy consumption in 22. Looking at the electricity sector separately, renewable energy will constitute more than 6% of total electricity production in 22, against 29% in 29. Wind power will provide more than 4% of electricity consumption compared against 19% in 29. With the initiatives proposed, this strategy will help reduce primary energy consumption by 6% by 22, relative to 26. Thus, the government target of a 4 % lower primary energy consumption by 22 as compared to 26 will be superseeded. At the same time, Denmark is expected to maintain its top-ranking in energy efficiency. As such the government s target of being among the three most energy-efficient countries in the OECD by 22 will be met PJ Primary energy consumption With new initiatives Without new initiatives 22 target for primary energy consumption Figure.7 Primary energy consumption Source: Danish Energy Agency 1 Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 11

7 The wide range of initiatives in Energy Strategy 25 will support Denmark s strong position. From coal, oil and gas to green energy High security of supply The government s strategy will uphold a high level of energy supply security in the short term as well as in the long term. An ever lower primary energy consumption and gradual reductions in the use of fossil fuels will result in a greater robustness with regard to unstable energy prices and supply crises. Thereby, a higher degree of security of supply will be achieved than in a system with larger energy consumption and continued fossil fuel dependence. On the other hand, changing to an energy supply based on renewable energy also have security of supply challenges. All indications are, however, that Denmark can handle these challenges via electricity trade with neighbouring countries, a stronger infrastructure, back-up electricity production based on biomass or biogas, as well as with a flexible electricity consumption. Lower greenhouse gas emissions in 22 and in 25 As a part of the EU climate and energy package, Denmark will gradually reduce greenhouse gas emissions in the non-ets sectors (transport, agriculture, households, waste and parts of industry and the energy sector) in the period The reduction target in 22 is 2% compared with the 25 level. Reduction efforts till now have laid the foundation for full compliance with the reduction commitment. New government initiatives to reduce fossil fuel use will also reduce non-ets emissions by 4-5 million tonnes CO 2 equivalents in the period This will allow for a flexible and dynamic choice of further climate initiatives in sectors such as agriculture, waste and transport. follow up regularly to ensure compliance with the climate commitment in 22 and launch new initiatives as required. Total greenhouse gas emissions will be further reduced in line with the phasing-out of fossil fuels. Therefore, this strategy will put Denmark on track for greenhouse gas reductions of 8-95% by 25 relative to 199 levels, which is the overall EU objective. mill tonnes CO2 eq Other Agricultural CO 2 from fossil fuels Figure.8 Denmark s greenhouse gas emissions in 199, 28, 22 and 25 (adj. emissions, excluding carbon storage). Source: Danish Energy Agency/Danish Commission on Climate Change Policy (25-scenario) Danish greenhouse gas emissions will be reduced by about 75% when the Danish energy and transport system no longer uses fossil fuels. With long-term reductions of this size, Denmark will be able to contribute to meeting the EU objective, as well as the objective to limit the average temperature rise to 2 C, as agreed in Copenhagen in 29 and in Cancún in 21. However, in the future it will still be necessary to work with reductions in other sectors than energy and transport. A transition creating green growth Many other countries are facing the same challenge; to move their economies away from dependence on fossil fuels. This will result in a growing global market for renewable energy technologies and solutions for energy efficiency. The government has already launched a number of initiatives to support Denmark becoming an attractive place for research, development, demonstration and testing of energy technologies; for Danish as well as foreign companies. With the Erhvervsklimastrategien (climate strategy for companies), the government presented its vision to create new green growth economy in Denmark. As a follow-up, the conditions for cleantech enterprises were improved, e.g. through the establishment of Green Labs DK and the Innovation Foundation. In overall terms in 21, the government ensured more than DKK 1.5 billion for research, development, demonstration and market preparation of new green solutions. In addition, the government has taken initiatives to establish a national wind turbine test centre at Østerild in the north-west of Denmark. This test centre will meet the requirements of the wind turbine industry and research institutions for full-scale test facilities of the highest international standard. New initiatives with green growth potential The wide range of initiatives in Energy Strategy 25 will support Denmark s strong position as a laboratory for green technology research, development and demonstration, notably for energy technology. These initiatives include: Wind power. Enhanced conditions for developing, testing and demonstrating wind turbines in Denmark, enabling full advantage of the global expansion of wind power in the future Biomass and biofuels. Increased biomass use in combined heat and power production and transport will improve Danish companies opportunities for development and innovation Biogas. Improved conditions will enhance Danish skills and strengthen the role of agriculture as a green energy supplier Smart grid expansion, electricity transmission and integration of renewable energy in the electricity system, where companies in Denmark already have a strong position Energy savings. New initiatives place Danish companies at the forefront of developments within energy efficiency solutions. These solutions which will be in high demand by other countries. In addition, jobs will be created in the building and construction sector. Energy technology research, development, demonstration and preparation for market will also play a central role in the future. It will be necessary to further focus and coordinate allocations. Moreover, the Danish government will enter into partnerships with the business community to strengthen coordination of private and public efforts in e.g. the areas above. also increase its focus on providing Danish and foreign cleantech enterprises in Denmark with access to highly qualified labour and research communities with skills in green energy. The government initiatives will strengthen cohesion between development, testing, production and sale of new technology, and thereby strengthen companies opportunities for innovation and demonstration of new green solutions. In this way, this strategy provides companies in Denmark with a good foundation to export to the rapidly growing global market. 12 Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 13

8 A number of the technologies, which currently are relatively expensive, may play an important From coal, oil and gas to green energy role in the long term. A flexible strategy Achieving fossil fuel independence requires greater efficiency in overall energy consumption, so that an increasing demand for energy services (lighting, heating, transport, industry etc.) can be satisfied with renewable energy, while continuing exchange of energy (electricity, biomass etc) with the rest of the world. The long-term challenge is outlined in figure.9. 8 ensure a robust and cost-effective transition. On the basis of current knowledge, the following elements are expected to be pivotal for a costeffective transition: Improving energy efficiency Electrification of energy consumption Expansion of wind power and other sources of renewable energy This emphasises the need for a flexible strategy open to all technological possibilities. For instance, the Danish government would not rule out a future use of coal with CCS (carbon capture and storage), if this proves to be a cost-effective and environmentally responsible solution in the future energy system. Moreover, should it prove to be technically and financially unsustainable to convert the entire transport sector to non-fossil alternatives, issues relating to security of supply and the climate impacts from this sector will have to be dealt with in other ways PJ/year Households Trade and service Production Transport Efficiency improvements RE (possibly also CCS) Waste Other RE Biogas Wood Straw Wind Energy consumption 29 Renewable energy consumption 29 Figure.9 Energy consumption and renewable energy 29 Source: Danish Energy Agency Efficient use of biomass resources, including biogas, for CHP and parts of the transport sector Increased district heating and individual RE-based heating Increased electricity exchange and a more intelligent energy system. These robust focus areas are illustrated in the centre of figure.1. However, no one can predict economic growth, technological development or fuel and carbon prices 4 years ahead, so it is impossible to determine precisely the best energy system for 25. This depends on technological developments and developments in the relative prices of energy and greenhouse gas emissions. A number of the technologies, which currently are relatively expensive, may play an important role in the long term. These technologies include electric cars, solar energy, wave power and CCS (carbon capture and storage). Similarly, the relationship between wind and biomass will depend on a number of factors unknown today. If biomass continues to be a plentiful and cheap renewable energy resource, it could reduce the need for wind expansion. These variations are illustrated in the periphery of figure.1. Fewer savings realised Need for more wind and biomass Figure.1 Key elements in the future energy system and variations Less need for wind Cheap wood/straw for electricity production Less exchange of electricity due to high electricity prices Coal with CCS commercially attractive Less need for wind Efficient energy consumption Increased use of district heating and individual heating based on renewable energy Wind power for electricity production supplemented by other RE technologies Efficient use of biomass (including biogas) for CHP and parts of the transport sector Electrification of the energy system Intelligent electricity consumption and increased storage and exchange of energy with other countries More controllable domestic production Commercial breakthrough for new RE Less need for wind and biomass Need for greater imports of biofuels Limited electrification of transport 14 Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 15

9 Track 1 Initiatives in three tracks With this strategy the government is concentrating its efforts on the elements that appear most promising with regard to establishing a cost-effective energy and transport system without fossil fuels. The transition cannot happen at the same pace in all parts of the Track 1 Track 2 Immediate initiatives transport and energy system, primarily because of price differences and differences in technological maturity. This strategy therefore includes three parallel tracks for the transition to fossil fuel independence, with initiatives in all three tracks, though of different type. Transition to more efficient energy consumption and energy supply based on renewable energy Preparation and planning of the next phase of the transition More utilisation and integration of new solutions in the energy and transport system More renewable energy with onshore and offshore wind power A large part of Denmark s consumption of fossil fuels, in the form of coal and gas, is used to produce electricity and district heating. Extensive conversion of the electricity and heating sector to renewable energy is an essential step towards independence of fossil fuels. Since supply technologies and infrastructure in electricity and heat production generally have very long life spans, in many cases there will be only one opportunity to convert before 25. Furthermore, it is expected that electricity consumption will increase as an ever greater share of energy consumption is electrified. Finally, new capacity will help meet the Danish goal of a 3% share of renewables by 22. Onshore wind turbines are one of the cheapest renewable technologies, however the number of suitable locations for placing new turbines is limited. Therefore, future wind turbines will increasingly be placed offshore, where wind resources are also better. In order to promote technological development of offshore wind turbines, it is necessary to be able to erect and gain operational experience from newly developed turbines on a continuous basis, preferably turbines located closer to the coast than previously. Call for tender on 6MW offshore wind farm at Kriegers Flak. Kriegers Flak can be realised as a joint project between Denmark and Germany (and possibly also Sweden) Call for tenders on the smaller offshore wind turbine installations totalling 4MW closer to the coast than the actual wind farms. This will enable testing and demonstration of new turbines, foundations etc., as well as providing production turbines, up to 22. Suitable locations will be found through a screening process Support continued municipal planning for new onshore wind turbines and at the same time look more closely at planning tools for onshore wind turbines. Up to 22, in combination with other framework conditions, this is expected to contribute to new turbines totalling a capacity of 18MW. This is 5MW more than previously expected Analyse the opportunities for reducing the distance requirements for wind turbines placed along motor roads and railways with a view to better use of location possibilities in such areas In cooperation with industry, continue the wind turbine secretariat, including the mobile wind turbine task force, which assists municipalities with wind turbine planning. Track 3 Research, development and demonstration Large-scale demonstration and preparation for market Utilisation and integration in the transport and energy system Figure.11 The three tracks 16 Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 17

10 Track 1 Track 1 Increased use of biomass and biogas A more efficient energy consumption Requiring only limited subsidies, biomass has the potential to replace large amounts of coal and natural gas in the short term. The largest Danish cities have ambitious climate plans and have expressed the wish for the heating from large-scale plants to become carbon-neutral within the next 2 years. therefore allow for a greater degree of freedom of contract between producers and buyers of district heating in the larger cities. Furthermore, the government will remove the restrictions on the free choice of fuel for smaller plants outside the ETS sector, so that these plants can replace natural gas with biomass. Agriculture plays an important role as a green energy supplier. In accordance with the Green Growth agreement, the government aims for up to 5% of livestock manure being used for energy purposes in 22. There are large unexploited biogas resources, especially in the form of livestock manure in agriculture. These can replace natural gas, oil and coal for energy purposes. Greater utilisation of livestock manure will benefit the aquatic environment and will contribute to reducing emissions of methane from agriculture. This initiative will contribute significantly to meeting Denmark s climate commitments. The government is monitoring closely the expansion of biogas and has agreed with the Danish People s Party to take stock of these developments at the end of 212, cf. the Green Growth agreement. However, the government is already presenting a package of initiatives to support realisation of a 5% utilisation of livestock manure in 22, whilst taking into account the effects of introducing the free choice of fuel. Udbyde Promote en conversion havmøllepark to biomass på 6 MW at large-scale på Kriegers Flak. plants Kriegers through Flak amendment kan realiseres of the som provisions et fælles of projekt the Danish med Heat Tyskland Supply (og evt. Act. Sverige). Heat prices Det when giver mulighed using biomass for at at indhente large-scale driftserfaringer CHP will no i stor longer skala be med limited en by ny non-profit type jævnstrømsteknologi regulation. In this og way, mulighed producers for at and anvende buyers ilandføringskabler of CHP can agree som on a transmissionsledninger they share et the projekt, benefits som of også the transition støttes økonomisk to biomass af price by which EU med ca. 1,1 mia. kr Allow small-scale plants a free choice of fuel, Udbyde which will opførelse enable a af number i alt 4 of MW natural mindre gas havmølleanlæg to convert tættere to biomass på kysten end de egentlige hav- fired plants vindmølleparker, herunder bl.a. til forsøg og demonstration Ensure the right af nye framework møller, fundamenter conditions mv. for samt biogas til produktionsmøller production by frem mod 22 Understøtte Extending den subsidies fortsatte for planlægning biogas to cover i kommunerne other for opstilling uses other af than landvindmøller CHP, for example og samtidig biogas se in nærmere natural på redskaber gas grid, til biogas planlægning enterprises for vindmøller and biogas på the land. in Dette the transport forventes sector frem mod 22 i samspil med de øvrige rammevilkår at bidrage til opførelsen af nye møller Increasing med en subsidies samlet kapacitet for biogas på based 18 MW. on livestock Det er 5 manure. MW mere The end subsidies hidtil forventet will be reduced in line with increases in natural gas prices Analysere mulighederne for at mindske afstandskravene Increasing for opstilling aid from af vindmøller a start-up langs construction veje og jernbane med from henblik 2% to på 3% udnyttelse af det fulde fund potentiale. Setting aside funds of DKK 25 million in 212 to safeguard the required expansion of the biogas infrastructure with a view to alleviating any negative consequences for existing biogas plants in connection with the introduction of a free choice of fuel Allowing, on a voluntary basis, to change from fixed electricity settlement to an electricity price supplement for 1% biogas-based plants. Introduce a 1% biofuels obligation in the transport sector by 22. A cost-effective realisation of the goal of Danish fossil-fuel independence requires considerable energy efficiency improvements in the various sectors. At the same time, heating must be converted away from oil and natural gas. In many cases, energy efficiency improvements are cheaper than renewable energy expansion, both in the short, medium and long term. Buildings have long life spans; up to 1 years or more. In addition, buildings are typically only renovated at 3-4 year intervals, and perhaps only once before 25. Therefore, it is essential to choose future-proof solutions when constructing new buildings and when renovating old ones. Today, Denmark has the strictest energy standards for new buildings. In 29 the government agreed that the standards for new buildings are to be further tightened by at least 75% no later than in 22. But new buildings on a yearly basis only account for 1% of the total existing building stock. Accordingly, increased efforts will be directed towards existing buildings. Existing technologies and solutions provide great opportunities to reduce the energy consumption of existing buildings through improved insulation, replacement of inefficient windows etc. If the improvements are implemented in connection with ongoing maintenance, heating consumption in existing buildings can be reduced by approximately 5% of consumption levels today at a reasonable cost. Realising these opportunities calls for a combination of ambitious standards which must be met in connection with renovation, replacement, etc. and assistance to carry out these projects. Along with a reduction in energy consumption in buildings, the buildings which today are heated by oil and natural gas must undergo a fuel shift. This conversion should take place as existing heating installations wear down. In densely populated areas, the existing district heating system can be expanded. For a large number of existing oil and gas boilers, a heat pump, possibly in combination with solar heating, will however be the most cost-effective alternative. Traget the energy-saving obligations of energy companies towards renovation of buildings, conversion of oil and natural gas heating, and companies Increase the energy-saving obligations of energy companies by 5% from 213 and by 75% in Future-proof minimum efficiency standards for building components (windows, insulation, etc.). The standards must be met when renovating buildings, whether new components are to be included will be examined. The standards will be determined by taking into account the financial situation of home owners, a healthy indoor climate and freedom of architectural expression. Initiatives which can ensure greater compliance with the standards will be considered. Convert heating by oil, and eventually also natural gas heating, to district heating, heat pumps and other renewable forms of energy. For instance, this will happen through a ban on installing oil boilers in existing buildings from 217, and a ban on installing oil and natural gas boilers in new buildings from 212. Derogations may be allowed in cases where no suitable alternatives are available. Launch market-promotion of energy-efficient heat pumps and solar heating to replace oil boilers, including labelling schemes, certification schemes, package solutions and ESCO models Incorporate a low-energy rating 22 in the building regulations with a view to promoting the establishment of new buildings with very low energy consumption Enhance energy-saving efforts by the public sector, and therefore, before the end of 211, present a proposal to replace the existing requirements for a 1% reduction in energy consumption by the state by 211 relative to Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 19

11 Track 2 Track 2 A green transport sector An intelligent energy system The transport sector accounts for approximately one third of the total use of fossil fuels and is today almost fully dependent on fossil fuels. The transport sector will therefore have to go through a radical transition before 25. However, currently there are no alternatives to fossil fuels, which are competitive in terms of technology and price. When and how the transition in the transport sector will take place, will to a great extent depend on international technological development. Several promising technologies are emerging, for example with biomass and electricity. At the same time, alternative transport technologies are showing a clear tendency towards falling costs. The first phase is about establishing the required framework conditions and an infrastructure in Denmark and in the EU to ensure the initial transition and a basis for building experience. When the technologies have achieved sufficient technological and price maturity, a broader roll-out and large-scale transition to these technologies can become relevant. The work to establish the required framework conditions is already well under way in Denmark, e.g. the government has agreed on a tax exemption for electric cars up to and including 215. Carry out a technology assessment in 211 and subsequently every three years in order to ensure the right framework conditions for new technologies which will be able to reduce the transport sector s greenhouse gas emissions and its consumption of fossil fuels, up to both 22 and 25 Establish a fund of DKK 25 million to support the establishment of recharging stations for electric cars as well as designing appropriate regulation in order to kick start development in the area Push in the EU for tightened standards for the energy-efficiency and CO 2 emissions of vehicles and promote the spread of electric cars in the EU, e.g. by strengthening harmonisation and standardisation of technologies for electric cars Ppush in the EU for the establishment of a car recharging infrastructure throughout the EU, which is coordinated with the regulation of intelligent infrastructure. In the long term, electricity will probably be the dominant energy carrier. This will require an intelligent system with ongoing temporal adjustments between production and consumption of electricity. In this context, increased use of heat pumps for individual or collective supply, the flexible electricity consumption in industry, and flexible recharging of electric cars will be key. Similarly, sufficient transmission capacity with neighbouring countries for large scale electricity exchanges have to be in place. The gas infrastructure will continue to play an important role in a future energy system independent of fossil fuels. For example, biogas-fired CHP plants can serve to balance intermittent wind power production. Hence, an up-to-date gas infrastructure regarding the use of biogas and other renewable gasses will be ensured. Establish a new international electricity transmission capacity in connection with the future offshore wind park at Kriegers Flak. The new park will be connected to Germany and possibly also to Sweden. A new type of technology will be used providing new operational experience. Ultimately, this will achieve better connections between electricity markets. This project is supported financially by the EU with approximately DKK 1.1 billion Analyse the need to expand international transmission lines in order to achieve a socio-economically optimal expansion as well as ensure the necessary reserves/back-up in an electricity system with a large share of wind power Work for an agreement with the distribution companies to install intelligent electricity meters when electricity consumers install heat pumps or recharging stations for electric cars. Furthermore, the limit for installation of intelligent meters will be lowered from 1, kwh to 5, kwh annual consumption in 213. also ask the distribution companies to replace all electricity meters which are replaced after 215 by an intelligent electricity meter Prepare a strategy for the promotion of smart grids in Denmark, and in this connection determine investment needs and a financing model Analyse regulation of the future gas infrastructure in future years in order to ensure optimal utilisation and maintenance of the existing gas infrastructure; both in the transitional phase, whileen natural gas will continue tostill have plays a role, and in the future, when biogas and other renewable gasses have taken over. 2 Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 21

12 Track 2 Track 2 Regulation in a new era of energy policy It is vital for a successful transition process that the frameworks established underpin investments in the right technologies; technologies that support the 25 target. As a consequence, the existing energy regulation and planning, which is extensively based on an energy system dominated by fossil fuels, must be scrutinised. A cost-effective transition to fossil fuel independence requires financial incentives which as far as possible are to be uniform across different sectors of society. This will ensure the expansion of renewable energy technologies that are the most competitive under current world market prices for fossil fuels, CO 2 emissions and renewable energy. therefore analyse the existing subsidy and tax system in the energy and transport sectors and closely examine the potential for, and the consequences of, gradually increasing the taxes on fossil fuels. In the long term, the double purpose is to ensure government revenues, and thus the basis for continued welfare, and at the same time reduce the use of fossil fuels with cost-effective incentives. Launch an in-depth review of the electricity supply regulation in order to ensure that incentives and rules support the transition to fossil fuel independence Set aside DKK 2 million for the promotion of strategic energy planning partnerships constituted by municipalities, local enterprises and energy companies. The funds are to promote the integrated development of energy demand and energy supply which underpins the transition to fossil fuel independence. This is to take place e.g. through the expansion of district heating Carry out an analysis of the use of biomass for energy-related purposes in Denmark. The analysis will focus on whether the right framework conditions for efficient and sustainable use of biomass resources are in place. The analysis will prepare a long-term strategy for the use of biomass resources for energy purposes Carry out an examination of the subsidy and tax system in order to assess the need for adjustments of the existing system. This should be seen in the context of Denmark s international climate and energy commitments as well as the objectives in the strategy for fossil fuel independence, and the public budget A global and regional transition to fossil fuel independence Security of energy supply is best achieved when all countries cooperate to minimise and make the consumption of scarce resources more efficient. Similarly, only global action can solve the climate challenge. At the same time, such a transition to a global green economy will create a significant international economic growth potential. A potential from which Denmark can also benefit through exports of Danish green solutions. In addition, if other countries also implement stricter requirements for their industry and businesses, the risk of impairing the competitiveness of the most ambitious countries will be reduced. Therefore, Denmark will push for a global green transition in international fora. It would be an efficient step if the entire EU moves towards fossil fuel independence. The Danish government believes that the energy agenda must be incorporated in all relevant EU policy areas: research, development, transport, agriculture, foreign affairs and the EU budget; and that the EU energy policy and energy research should be rendered higher priority financially. Work in international fora for ambitious, global actions for the climate, the promotion of a green growth agenda as well as for the phase-out of subsidies etc. for fossil fuels. Such fora include the UN, the OECD, the Rio+2 Conference, the International Energy Agency, and the Clean Energy Ministerial Promote a long-term vision for an EU independent of fossil fuels as a starting point for a strengthened European energy policy, including time perspectives and possible milestones within a socioeconomic sustainable framework Endeavour to raise the common EU greenhouse gas emissions 22 target from 2% to 3% compared with the 199 level in a way that ensures employment, competitiveness and fair burden sharing Prioritise a doubling of the funds for research, development and demonstration in the energy area by 22 compared with the level today, including a significant increase in the EU s future budget, particularly for renewable energy, smart grids and energy efficiency. Improve tendering procedures for offshore wind parks in order to reduce the costs of expansion and prepare the basis for offshore wind turbine expansion decisions in the period after Energy Strategy 25 from coal, oil and gas to green energy. Summary. Energy Strategy 25 from coal, oil and gas to green energy. Summary. 23

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