President Obama’s Climate Action Plan is promising. Curbing global warming will demand serious action from all of us. Needless to say, US leadership makes a great difference. Denmark is a mouse compared to the US elephant, but our experience proves that the President’s Plan is indeed possible and can be profitable. Over the past 30 years, the Danish economy has grown steadily, while energy efficiency has kept our energy consumption at the same level in absolute terms.
Lower Greenhouse Gases In The Coal Sector
The US will impose regulations for new and existing coal-fired power plants. That is good news and absolutely critical if the world is to stay below a 2 degree Celsius rise in global temperature, according to the International Energy Agency (IEA). IEA proposes limitations on inefficient coal-fired power plants. In Denmark we will phase out coal completely and move towards a fossil-free power and heating system by 2035. This means that no new coal plants will be built and existing capacity is being retrofitted to biomass and other sources.
More Renewable Energy In The Mix
The US will use federal lands for renewable energy aiming for an additional 10,000 MW by 2020. That is good news as well. Denmark has long had wind as a major part of the power mix and with the recent national Energy Agreement half of our electricity consumption will be supplied by wind in 2020 while we still have electricity prices – excl. VAT and energy tax but incl. Public Service Obligations (PSO) for supporting renewables – below the European average. Wind power is a good long term investment because the marginal price pr kWh is next to nothing once the turbines are up and the blades are spinning. With a free power market wind is actually driving down power prices. And renewable energy delivers local jobs and economic growth.
Create Green Infrastructure
The US will streamline electric grid transmission projects across the country. For a market-based solution to work, that is absolutely critical. In Denmark we have the Nordic Electricity Market, Nordpool. Nordpool has shown the importance of good interconnections to neighbouring countries by bringing our energy prices down. Recently we launched a Smart Grid strategy that will integrate renewable energy and consumption in a way that will recharge your batteries when the wind is blowing or the sun is shining bringing down consumer prices further. The European Union expects the market for such technology to grow from € 5 billion in 2011 to 56 billion in 2020. China and the US are also expected to invest three-figure billions in Smart Grid technology towards 2020.
Research In Bio Ethanol
The US will increase its research and development of bio ethanol as fuel. I believe biomass and ethanol are a part of the solution and belong in the green transition. Yet bio fuels and ethanol are many things. Not all are green and not all are sustainable in the broadest sense. For bio ethanol to belong in the green economy it has to deliver substantial greenhouse gas savings and avoid negative impact on food prices. Only then will it be good business for farmers and good for the climate. The technology is available and ready to be scaled up. Second generation bio ethanol is an emerging market with the potential to reduce 85 pct. of CO2 emission compared to regular fossil fuels in transportation. It is also a local resource increasing energy independence and creating local jobs in agriculture, factories and logistics.
Use Energy More Efficiently
The US will make stricter energy efficiency regulations for appliances and buildings. Again good news as energy efficiency can provide 75 pct. of carbon emission reductions needed to stay below a 2 degree Celsius rise in global temperature, according to IEA. In Denmark we have strengthened the Building Code for energy efficiency 25 pct. in 2010 and we will do it again in with 25 pct. in 2015 and another 25 pct. in 2020 totalling 75 pct. That has sparked innovation and put Danish companies on the cutting edge of a growing global market. A demand predicted to rise with increasing energy prices and a global middleclass growing 3 billion people over the next 25 years.
End Oil And Coal Tax Breaks And Subsidies
The US will end public financing of new coal-fired power plants abroad (with a few exceptions) and eliminate fossil fuel tax subsidies for big oil. Fossil fuels have long got the lion’s share of global public support — up to six times as much as is the case for renewable energy, according to IEA. IEA also urge a phase-out of fossil fuel subsidies currently in excess of $500 billion and to replace them with appropriate price signals, intelligent social transfers and green energy support programs. Both will be winning propositions for the economy. In Denmark we price energy to incorporate externalities and encourage efficiency while moving towards a fossil-fuel-free future.
Climate-friendly action can be business-friendly too. It is both possible and profitable to ‘go green’. In 2010 green production amounted to 9.2 pct. of the turnover in Danish companies, 10.4 pct. of Danish export and 8.6 pct. of private sector employment. Reports show that Danish green businesses are more productive than the Danish business average. In fact the green transition is strengthening our global competitiveness. Denmark tops the lists of Countries Best for Business and Best Performer on Climate Change.
That is our experience. I am so proud that the US has set sails to reap the same benefits as us — along with a greener planet for future generations.
Martin Lidegaard is the Danish Minister for Climate, Energy and Building