EnergyWatch

Danish council urges steep GHG tax and 3 GW more offshore wind

Denmark's independent Council on Climate Change has just presented its recommendations for how the country can achieve its 70 percent CO2 emission reduction target by 2030. These include the world's highest carbon-equivalent levy and 3 GW more offshore by the goal year.

One of the world's largest offshore wind farms, Krieger's Flak, will be installed roughly 20 kilometers from the coastline pictured here. Photo: Joachim Adrian/Politiken/Ritzau Scanpix

Denmark's Social Democratic government swiftly revealed an ambitious plan to cut CO2 emissions by 70 percent by 2030 after coming to power at a general election in June last year.

However, concrete policy steps for realizing this ambition have yet to materialize, and two of the government's parliamentary support parties have recently demanded that policy negotiations be settled before June.

To help expedite the government's ambition, the Danish Council on Climate Change (DCCC), Klimarådet, an independent advisory body established by an act of Parliament in 2014 to provide the country with strategic climate policy framework, released a new report on Monday morning.

The DCCC now presents its roadmap detailing how the country could successfully achieve the 70 percent carbon reduction target by 2030 and thereby comply with both EU regulation and fulfill commitments made under the Paris Climate Accord.

Simplified, higher greenhouse gas levy

Undoubtedly, the council's most noteworthy recommendation is nothing less than raising the price of emitting greenhouse gases (GHG). DCCC has urged higher carbon taxes before, but has not set concrete figures before now.

According to the Danish Ministry of Finance's current catalog of key figures, the internal emissions trading system (ETS) price of releasing CO2 would be DKK 192 (EUR 25.7) per ton in 2030. For the non-ETS sector, the cost would be DKK 332 per ton in the same year.

Such rates mean that well-suited technologies such as electric heating are not developed on an infrastructural level on account of of socio-economic inviability, as calculated by the finance ministry's present models.

However, the council suggests that these models don't reflect the true cost of emissions and thereby propose a gradual increase in price by using the metric of CO2 equivalent (CO2e), totaling around DKK 1,500 per ton in 2030.

This, the DCCC argues, would take potent greenhouse gases (GHG) into account and unify divergent and non-existing levy rates across sectors on, beyond CO2, GHGs such as methane and nitrous oxide and thereby replace the energy sector's present "mess of various fees and subsidies".

"This tax would in principal also encompass agriculture, land usage and forestry, categorized under a single land usage sector, and which currently pay nothing for emitting greenhouse gas emissions," the council writes in the report and continues:

"We propose several measures, but the greenhouse gas tax is a completely central part of our package. It's a supporting element, because it will help guide the transition away from technologies that emit greenhouse gases toward technologies that don't," DCCC Chair Peter Møllgaard, who also serves as the dean of Maastricht University's School of Business and Economics, tells EnergyWatch.

Green power and 3 GW more offshore wind

As would be expected, installing large quantities of renewable capacity play a central role in the report's recommendation, and whereas the nation could do well for itself by pursuing a diverse assortment of technologies, offshore wind is given a special place in the sun.

"Increased electrification of energy consumption requires that electricity generation based on renewable energy be developed in parallel. Offshore wind plays a particular key role role in this build-out and will demand active participation from authorities," the DCCC writes in the report, adding:

"Tendering and commissioning offshore wind farms, ratified pursuant of the energy policy from 2018, should be expedited, and further tenders for an initial offshore wind capacity of 3 GW should be approved and put into operation as soon as possible," the report writes.

Denmark's 2018 energy policy set out to install three offshore wind farms with per-facility effects between 800 and 1,000 MW. The first of these, Thor, located in the North Sea, will be auctioned next month with construction set for 2024-'27 with subsequent tenders planned for 2023.

The DCCC is now pushing for this latter element to be moved forward and, without specifying a time, insists that it should come online within the next ten years, like the other 3 GW.

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