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Denmark's Integrated National Energy and Climate Plan

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Denmark's Integrated National Energy and Climate Plan Denmark’s Integrated National Energy and Climate Plan under the REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the Governance of the Energy Union and Climate Action December 2019 1 Content SECTION A: NATIONAL PLAN ............................................................................................................ 4 1. OVERVIEW AND PROCESS FOR ESTABLISHING THE PLAN .............................................................. 5 1.1 EXECUTIVE SUMMARY ........................................................................................................................ 5 1.2 OVERVIEW OF CURRENT POLICY SITUATION ........................................................................................... 10 1.3 CONSULTATIONS AND INVOLVEMENT OF NATIONAL AND EU ENTITIES AND THEIR OUTCOME ........................... 14 1.4 REGIONAL COOPERATION IN PREPARING THE PLAN ................................................................................. 20 2. NATIONAL OBJECTIVES AND TARGETS ........................................................................................ 25 2.1 DIMENSION DECARBONISATION ......................................................................................................... 25 2.1.1 GHG EMISSIONS AND REMOVALS .................................................................................................... 25 2.1.2 RENEWABLE ENERGY ..................................................................................................................... 35 2.2 DIMENSION ENERGY EFFICIENCY ......................................................................................................... 51 2.3 DIMENSION ENERGY SECURITY ........................................................................................................... 56 2.4 DIMENSION INTERNAL ENERGY MARKET ............................................................................................... 65 2.5 DIMENSION RESEARCH, INNOVATION AND COMPETITIVENESS ................................................................... 74 3. POLICIES AND MEASURES ...................................................................................................... 78 3.1 DIMENSION DECARBONISATION ......................................................................................................... 78 3.2 DIMENSION ENERGY EFFICIENCY ....................................................................................................... 100 3.3 DIMENSION ENERGY SECURITY ......................................................................................................... 109 3.4 DIMENSION INTERNAL ENERGY MARKET ............................................................................................. 116 3.5 DIMENSION RESEARCH, INNOVATION AND COMPETITIVENESS ................................................................. 123 SECTION B: ANALYTICAL BASIS ..................................................................................................... 133 4. CURRENT SITUATION AND PROJECTIONS WITH EXISTING POLICIES AND MEASURES ............... 134 4.1. PROJECTED EVOLUTION OF MAIN EXOGENOUS FACTORS INFLUENCING ENERGY SYSTEM AND GHG EMISSION DEVELOPMENTS .................................................................................................................................. 134 4.2. DIMENSION DECARBONIZATION ....................................................................................................... 138 4.3. ENERGY EFFICIENCY....................................................................................................................... 152 4.4. ENERGY SECURITY ......................................................................................................................... 156 4.5. INTERNAL ENERGY MARKET ............................................................................................................. 159 4.6. RESEARCH, INNOVATION AND COMPETITIVENESS ................................................................................ 169 5. IMPACT ASSESSMENT OF PLANNED POLICIES AND MEASURES ................................................. 175 5.1 IMPACTS OF PLANNED POLICIES AND MEASURES DESCRIBED IN SECTION 3 ON ENERGY SYSTEM AND GREENHOUSE GAS EMISSIONS AND REMOVALS INCLUDING COMPARISON TO PROJECTIONS WITH EXISTING POLICIES AND MEASURES (AS DESCRIBED IN SECTION 4) ................................................................................................................ 175 5.2 MACROECONOMIC, AND TO THE EXTENT FEASIBLE, THE HEALTH, ENVIRONMENTAL, EMPLOYMENT AND EDUCATION, SKILLS AND SOCIAL IMPACTS INCLUDING JUST TRANSITION ASPECTS (IN TERMS OF COSTS AND BENEFITS AS WELL AS COST-EFFECTIVENESS) OF THE PLANNED POLICIES AND MEASURES DESCRIBED IN SECTION 3 AT LEAST UNTIL THE LAST YEAR OF THE PERIOD COVERED BY THE PLAN, INCLUDING COMPARISON TO PROJECTIONS WITH EXISTING POLICIES AND MEASURES .................................................................................................................................. 176 2 5.3 OVERVIEW OF INVESTMENT NEEDS .................................................................................................... 178 5.4 IMPACTS OF PLANNED POLICIES AND MEASURES DESCRIBED IN SECTION 3 ON OTHER MEMBER STATES AND REGIONAL COOPERATION AT LEAST UNTIL THE LAST YEAR OF THE PERIOD COVERED BY THE PLAN, INCLUDING COMPARISON TO PROJECTIONS WITH EXISTING POLICIES AND MEASURES ........................................................ 181 REFERENCES ................................................................................................................................. 183 Appendices Annex 1: Reporting of used parameters and variables Annex 2: Trends and projections in Danish GHG emissions and removals 1990-2040 Annex 3: Natural gas price projections Annex 4: Electricity and gas prices by energy, network and taxes/levies for businesses and households Annex 5: Description of existing measures and the modelling platform (Denmark’s energy and climate model) Annex 6: Carbon ETS price. Revised carbon ETS price in September 2019 Annex 7: Projections of air pollutants Annex 8: Additional information on policies and measures related to GHG emissions and removals Annex 9: Ækvivalensrapport for varmeproducerende anlæg til bygningsopvarmning (Directive 2010/31/EU - Documentation of equivalent measures - article 14) Annex 10: Ækvivalensrapport for køleproducerende anlæg til rumkøling (Directive 2010/31/EU - Documentation of equivalent measures - article 15) Annex 11: Measures and methodologies to implement article 7 of Directive 2012/27/EU 3 SECTION A: NATIONAL PLAN 4 1. OVERVIEW AND PROCESS FOR ESTABLISHING THE PLAN 1.1 Executive Summary (i) Political, economic, environmental, and social context of the plan On 27 June 2019 a new Danish Government was formed. The Social Democrats reached agreement with the Red-Green Alliance, the Social Liberal Party and the Socialist People’s Party to form a one-party minority Government led by the Social Democrats. The parties agreed to the document titled A fair direction for Denmark. The parties agreed that the Government will promote a sustainable policy under which Denmark resumes leadership of the green transition, significantly increases its ambitions concerning the climate, environment and nature, and ensures that Denmark is in compliance with the Paris Agreement. The Government has the ambition of being among the world governments that do most – both domestically and abroad – to combat climate change and the deterioration of our environment and nature. In order to reach those targets, a very significant effort will be required throughout the tenure of the Government, which must take place in a socially balanced way. On December 6, 2019 the Government reached an agreement on a new Climate Act with 8 out of the 10 parties in the Danish Parliament. The act will include a legally binding target to reduce greenhouse gases by 70% by 2030 (relative to 1990 level), to reach net zero emissions by 2050 at the latest, and to set milestone targets based on a five-year cycle. It is stated in A fair direction for Denmark that a reduction target by 70% by 2030 is a very ambitious goal, and it will be particularly difficult to realise the last part of the goal, i.e. from 65% to 70%. This will require currently unknown methods and, therefore, also a close collaboration with the Danish Council on Climate Change and other experts. The climate act will be followed by climate action plans, which will contribute to ensuring that national reduction targets are met. The Climate Action Plan in 2020 will include sector strategies and indicators as a minimum for central sectors as agriculture, transport, energy, construction and industry. Moreover, Denmark has already taken the first steps towards establishing a professional and efficient energy sector as the basis for the transition to a sustainable green society. In June 2018 all Parties of the Danish Parliament at the time reached a political Energy Agreement to further build Denmark’s international positions of strength with a focus on renewable energy, energy efficiency improvements, research and development and energy regulation. The measures and policies decided in the agreement are now in the process of being implemented. 5 (ii) Strategy relating to the five dimensions of the Energy Union Decarbonisation - GHG emissions and removals On December 6, 2019 the Government reached an agreement on a new Climate Act with 8 out of the 10 parties in the Danish Parliament. The act will include
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