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In-Depth Review of Energy Efficiency Policies and Programmes of Denmark

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In-Depth Review of Energy Efficiency Policies and Programmes of Denmark 09486/00_Cover EN 5/03/04 7:39 Page 1 Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA) In-depth Review of Energy Efficiency Policies and Programmes of Denmark Energy Charter Secretariat 2004 Boulevard de la Woluwe, 56 B-1200 Brussels Belgium Tel. +32-(0)2 775 98 00 Fax +32-(0)2 775 98 01 9 789059 480247 E-mail [email protected] http://www.encharter.org Energy Charter Secretariat ISBN 90-5948-024-4 D/2003/7850/13 09486/00_Danemark EN 2/03/04 8:03 Page 1 IN-DEPTH REVIEW OF ENERGY EFFICIENCY POLICIES AND PROGRAMMES OF DENMARK E NERGY C HARTER P ROTOCOL ON E NERGY E FFICIENCY AND R ELATED E NVIRONMENT A SPECTS (PEEREA) 09486/00_Danemark EN 2/03/04 8:03 Page 2 INTRODUCTION The Energy Charter Treaty was signed in December 1994 and entered into legal force in April 1998. To date the Treaty has been signed or acceded to by fifty-one states 1. The Treaty was developed on the basis of the European Energy Charter of 1991. Whereas the latter document was drawn up as a declaration of political intent to promote East-West energy co-operation, the Energy Charter Treaty is a legally- binding multilateral instrument covering investment protection, liberalisation of trade, freedom of transit, dispute settlement and environmental aspects in the energy sector. The Energy Charter Conference, the governing and decision-making body for the Energy Charter Treaty, meets on a regular basis - normally twice a year - to discuss policy issues affecting East-West energy co-operation, review implementation of the provisions of the Treaty, and consider possible new instruments and projects on energy issues. All states who have signed or acceded to the Treaty are members of the Conference. Regular meetings of the Conference’s subsidiary groups on transit, trade, investment and energy efficiency and environment are held in between Conference meetings. T HE E NERGY C HARTER P ROTOCOL O N E NERGY E FFICIENCY A ND R ELATED E NVIRONMENTAL A SPECTS 2 The Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA) is a legally-binding instrument that was signed together with the Energy Charter Treaty in December 1994 by the same 51 states that signed the Treaty itself. It requires its Signatories to formulate energy efficiency strategies and policy aims, to establish appropriate regulatory frameworks, and to develop specific programmes for the promotion of efficient energy usage and the reduction of harmful environmental practices in the energy sector. Implementation of PEEREA is kept under review and discussion by the Energy Charter Working Group on Energy Efficiency and Related Environmental Aspects. A 1 Albania, Armenia, Austria, Australia, Azerbaijan, Belarus, Belgium, Bosnia and Hercegovina, Bulgaria, Croatia, Czech Republic, Cyprus, Denmark, Estonia, European Communities, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Kazakhstan, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Mongolia, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, The Former Yugoslav Republic of Macedonia, Turkey, Turkmenistan, Ukraine, Uzbekistan, United Kingdom. 09486/00_Danemark EN 2/03/04 8:03 Page 3 key feature of the Working Group’s activities is the development of a series of in- depth reviews of individual states’ energy efficiency policies and programmes. Recommendations to the authorities of the states concerned resulting from these in- depth reviews are presented to the Energy Charter Conference for discussion and endorsement. For further information on PEEREA and the in-depth energy efficiency review series, contact Mr Tudorel Constantinescu at the Energy Charter Secretariat in Brussels (Tel: +322 775 9854) 3 09486/00_Danemark EN 2/03/04 8:03 Page 4 TABLE OF CONTENTS Executive Summary ................................................................................. 05 1. Introduction to the PEEREA Review ..................................................... 11 2. Overview ........................................................................................ 11 3. Main Energy Policy Highlights ............................................................ 17 4. Energy Pricing and Taxation ................................................................ 22 5. End-Use Sectors ............................................................................... 27 6. Combined Heat and Power (CHP), District Heating (DH) and Renewable Energy ............................................................................ 33 7. Energy Efficiency Policies and Programmes ........................................... 42 8. Organisation of Energy Efficiency Activities ........................................... 49 4 9. Energy Efficiency and the Environment ................................................. 53 10. Assessment of Progress ...................................................................... 57 11. Recommendations ............................................................................. 63 Glossary ................................................................................................ 76 09486/00_Danemark EN 2/03/04 8:03 Page 5 EXECUTIVE SUMMARY B ACKGROUND Denmark is a small Scandinavian kingdom with a population of 5.3 million, excluding Greenland and the Faeroe Islands, and a landmass of 43,000 square kilometres. It is a member of the European Union and has a robust, export-oriented economy. In November 2001 a new liberal-conservative coalition, led by the liberals, was elected, replacing a centre-left coalition, which, in various combinations, had been in power since 1993. The new liberal-conservative coalition has profoundly affected all aspects of economic policy. There is an overall emphasis on competitiveness and effectiveness, also in relation to energy efficiency programmes. Denmark is a producer of oil, natural gas and renewable energies. Domestic oil and gas started making significant contributions in the early 1980s and Denmark is now self-sufficient in energy. Because it is dependent on imports of coal for a large share of its electricity production, energy security is an important issue in energy policy, even with its sizeable domestic energy production. Denmark is part of the Nordic electricity market organised in the Nord Pool. There are relatively large swings in the trade balance for electricity, depending on price levels in the Nord Pool determined by 5 the hydro-dominated power production in the Norwegian and Swedish systems. Denmark has traditionally used a planned approach to the provision of energy services such as heat, electricity and gas. The country has one of the highest shares of district heating (DH) and combined heat and power (CHP) in Europe. The residential and services sectors represent over 46% of total final consumption. Transport is next at 32.4% and Industry at 21.5%. The largest end-use sector is the household sector. In the 1970s, industry was second but it has been replaced in the 1990s by the transport sector. The biggest decrease in energy consumption has been in the household sector since the 1970s, while the transport sector has shown steady growth until recently. The shares of all the energy sources in Total Primary Energy Supply (TPES) in 2000 were: coal 20.7%; oil 44.9%; gas 22.9%; and renewables 11.3%. Overall energy intensity (TPES/GDP) has continued to decrease since the mid-1990s and it is one of the lowest of the IEA countries. 09486/00_Danemark EN 2/03/04 8:03 Page 6 Denmark has been amongst the global leaders in promoting energy efficiency, both in terms of its success in improving energy efficiency nationally and in developing energy-efficient technologies and systems, many of which are exported. Denmark enjoys a strong reputation for energy efficiency, its commitment to both meeting climate change goals, and for striving towards sustainable development as well as its goal of having environmentally friendly energy systems. E NERGY POLICY SETTING Since the late 1970s, energy policy has been re-formulated several times to reflect changing priorities and approaches. Energy policy is the responsibility of the Ministry of Economic and Business Affairs and the Danish Energy Authority (DEA), which is part of the Ministry. The Ministry was created at the end of 2001, when economic and business affairs were merged. At the same time environmental policy was de-merged from energy, which was integrated into the broader economics ministry. Several other ministries and agencies have important and complementary roles to play in energy efficiency policy and programmes. Utilities, municipalities, industry associations and Non Governmental Organisation (NGOs) are also active in promoting energy efficiency. Energy policy is, in large part, being driven by EU energy policies. EU policies 6 include electricity and gas liberalisation, a renewable energy directive and several directives on energy efficiency. The EU is also playing a central role in the climate change response strategy and in the burden sharing arrangement to meeting commitments under the Kyoto Protocol. The Government has provided a more market-based orientation to energy policy and is committed to EU-wide energy policies and other international co-operation relevant for the energy sector. Today, the main energy policy objectives in Denmark are: the energy sector shall contribute to economic growth and welfare through low energy prices and energy costs and liberalisation
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