Substantial GDP investment and tax hikes could spell a cleaner future for Denmark
Denmark could become fossil fuel-free by 2050 – at a net cost of just US$2.95 billion, according to the government’s climate commission. Its report makes the case for investing an amount equivalent to 0.5% of the country’s annual GDP in renewable energy to achieve the goal.
So why so cheap? Prices of fossil fuels will rise over the next four decades, the commission argues, while renewables become relatively cheaper – hence the small net total of investment required. In part, it is anticipating price rises through global supply crunches and international climate agreements. But it also proposes substantial tax hikes on fossil fuels phased in over two decades, rising from five Danish krone (US$ 0.90) per gigajoule in 2011 to DKK50 by 2030.
The Commission comprises independent academics and OECD experts. It was set up by the Danish government two years ago, charged with working out what it would take to create a zero fossil fuel economy, while reducing greenhouse emissions by up to 95% by 2050.
It concluded that ending the use of fossil fuels, and switching mainly to wind and biomass power, would reduce emissions by 75% compared with 1990 levels. (Further reductions would entail wide-ranging changes elsewhere in the economy, particularly agriculture.) Most of the technology to achieve this is already in existence, the commission said, and includes smart grids with electric cars feeding into as well as charging from them, and new international interconnectors. These will enable wind power to be exported when there is a surplus, with electricity imported when the wind drops. Efficiency improvements are also essential to achieve a net reduction of 25% in total energy consumed, the commission said. Denmark is already a world leader in wind power, with 3GW installed capacity. Under the commission’s plan, this would rise to between 10GW and 18.5GW – the vast majority offshore.
Responding to the report, Danish Prime Minister Lars Løkke Rasmussen promised that the government would shortly present a route map charting “how to become fully independent of fossil fuels. A plan for a transition like this will touch every part of society and every corner of politics: we are facing tough choices.” And he added: “This can’t be achieved today or tomorrow, but I know that we need to get started.”
- Martin Wright
Image credits: Maridav / istock