World Focus Producer John Larson reports from Copenhagen, Denmark on how changing lifestyles, taxing energy and subsidizing alternative technologies have reduced the country’s dependency on oil and created thousands of new job.
In just over 30 years, Denmark has gone from a net importer of energy to net exporter. Denmark had the political will to decide that it wanted to be a leader — and to follow through. Beginning in 1979, the government began a determined program of subsidies and loan guarantees to build up its nascent wind industry. The central government covered 30% of investment costs, and guaranteed loans for large turbine exporters such as Vestas, the world’s largest manufacturer of wind turbines. The Danish government also mandated that utilities purchase wind energy at a preferential rate. Energy taxes were channeled back into research and development.
The aim of the first energy strategy, Danish Energy Policy 1976, was to secure Denmark against crises in supply such as the energy crisis of 1973-74 by tightening demand through increased taxation on fuel. The second oil shocks in 1979-80 led Denmark to revise its energy policy again with Energy 81 emphasised socio-economic and environmental considerations. After a period of building up large projects for facilities and markets for natural gas and heat and power generation, Denmark updated its policies, Energy 1990, setting a goal of 10 percent national energy production from wind power by the year 2000. The country’s latest energy plan, Energy 2000 introduced the goal of a sustainable development of the energy sector that is carbon neutral. Today, Denmark meets 19 percent of its energy needs from wind.
This is how state planning can work:
An investment subsidy introduced in 1979 covered 30% of investment costs in wind turbines, subject to approval by the National Energy Research Centre. The investment subsidy was not only a stimulus for the construction of wind turbines but also a stimulus for market forces to better develop a wind turbine industry. Wind turbines became an attractive investment, and manufacturers enjoyed a customer base of 200 to 300 wind turbines per year. By 1989 government support was no longer necessary to make private investment in wind turbines attractive, and the subsidy was abolished. Small- and medium-sized wind turbines quickly became reliable and cost-effective. Technological problems associated with large wind turbines were more complicated than expected, however, and large wind turbines (1,000 kW or more) are still not commercially viable due to technical problems. Subsidies were only used to stimulate the development of privately owned wind turbines. No direct financial support was given for wind power investments to the larger power generating companies, though support was provided indirectly for research and development. At present, privately owned wind turbines represent about 80% of the installed capacity.
The Danish government provided the initial subsidies to the industry and then as the sector grew, it pulled back support. Today, Denmark is the world leader in wind energy technology. It should be noted that the Danish economy has grown 78 percent while maintaing its energy use level and cutting their carbon emissions in half. That’s the sort of miracle we need to replicate.