DENMARK 2006 Review INTERNATIONAL ENERGY AGENCY
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INTERNATIONAL ENERGY AGENCY Energy Policies of IEA Countries Warning: Please note that this PDF is subject to specific restrictions that limit its use and distribution. The terms and conditions are available online at www.iea.org/w/bookshop/pricing.html DENMARK 2006 Review INTERNATIONAL ENERGY AGENCY The International Energy Agency (IEA) is an autonomous body which was established in November 1974 within the framework of the Organisation for Economic Co-operation and Development (OECD) to implement an international energy programme. It carries out a comprehensive programme of energy co-operation among twenty-six of the OECD’s thirty member countries. The basic aims of the IEA are: • to maintain and improve systems for coping with oil supply disruptions; • to promote rational energy policies in a global context through co-operative relations with non-member countries, industry and international organisations; • to operate a permanent information system on the international oil market; • to improve the world’s energy supply and demand structure by developing alternative energy sources and increasing the efficiency of energy use; • to assist in the integration of environmental and energy policies. The IEA member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, the Republic of Korea, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States. The European Commission takes part in the work of the IEA. ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of thirty democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Commission takes part in the work of the OECD. © OECD/IEA, 2006 No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to: International Energy Agency (IEA), Head of Publications Service, 9 rue de la Fédération, 75739 Paris Cedex 15, France. TABLE OF CONTENTS 1 ORGANISATION OF THE REVIEW .......................... 7 2 SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS .... 9 3 GENERAL ENERGY POLICY ................................. 19 4 ENERGY AND CLIMATE CHANGE ............................ 47 5 ENERGY EFFICIENCY ...................................... 59 6 RENEWABLE ENERGY ..................................... 89 7 ELECTRICITY .............................................. 129 8 FOSSIL FUELS ............................................. 145 9 ENERGY RESEARCH, DEVELOPMENT AND DEMONSTRATION . 163 A ANNEX: ENERGY BALANCES AND KEY STATISTICAL DATA ...... 169 B ANNEX: INTERNATIONAL ENERGY AGENCY SHARED GOALS . 173 C ANNEX: GLOSSARY AND LIST OF ABBREVIATIONS ............ 175 3 Tables and Figures TABLES 1. Existing and Proposed Thermal Generation Ownership............. 32 2. Top 20 Energy and Technology Export Categories and Amounts, 2004 ................................................. 34 3. Forecast Assumptions for Prices in 2025 ........................... 38 4. Final Energy Demand in 2025 ...................................... 38 5. Upstream Oil and Gas Taxation ..................................... 39 6. Energy, CO2 and SO2 Taxes on Various Energy Products ............... 41 7. Historical and Projected GHG Emissions ............................ 49 8. Domestic Initiatives for Emissions Reduction, 2008-2012.......... 51 9. Key Figures for the Danish NAP, 2005-2007 ....................... 53 10. Decrease in Energy Intensity Measured as TPES/GDP ............. 60 11. Existing and Draft Savings by Sector................................ 62 12. Potential for Energy Savings in Various Sectors..................... 64 13. Important Recent Activities of the Electricity Savings Trust ........ 66 14. Demand Trends in Transport and Other Sectors .................... 79 15. Renewable Electricity Generation as Different Percentages, 2003 (2004)......................................................... 91 16. Use of Biomass Fuels in CHP Facilities, 2003 ...................... 92 17. Horns Rev and Nysted-Rødsand Offshore Wind Farms ............. 96 18. International Comparison of Renewables Support.................. 104 19. RE Component of PSO as a Percentage of Various Electricity Prices, 2005.......................................................... 105 20. Economic Council’s 2002 Assessment of Renewables Policies from1992to 1999.................................................. 106 21. Estimate of Effective Cost of GHG Reduction through Renewables Support............................................................... 115 22. DEA Figures on Cost of Emissions Reduction through Historical Support Schemes for Renewables.................................... 117 23. Summary of Estimates on Cost of Emissions Reduction through Historical Support Schemes for Renewables ........................ 117 24. Switching Rates for Eligible Electricity Customers .................. 141 25. Danish Historical Oil and Gas Production and Likely Reserves..... 148 26. Danish Gas Production and Trade, 2005 ........................... 149 FIGURES 1. Total Primary Energy Supply, 1973 to 2030 ........................ 20 2. Total Primary Energy Supply in IEA Countries, 2004 ............... 21 3. Energy Production by Source, 1973 to 2030 ....................... 22 4. Total Final Consumption by Source, 1973 to 2030................. 23 4 5. Total Final Consumption by Sector, 1973 to 2030 ................. 24 6. CO2 Emissions by Fuel, 1973 to 2003 .............................. 48 7. CO 2 Emissions by Sector, 1973 to 2003 ............................ 48 8. Energy Intensity in Denmark and in Other Selected IEA Countries, 1973 to 2010........................................................ 59 9. Energy Supplied for Space Heating, 1975 to 2001................. 72 10. Projection of Trends in Stock of Residential Buildings .............. 73 11. Building Code Requirements on Space Heating .................... 74 12. CHP Production as Share of Total Electricity and District Heating Supply, 1980 to 2003 ............................................... 81 13. Renewable Energy as a Percentage of TPES in IEA Countries, 2004................................................................. 90 14. Development of Wind Power Capacity and Production, 1980 to 2004.............................................................. 94 15. Map of Danish Offshore Wind Farms ............................... 95 16. PSO Payments to Support Renewable Energy, 2001 to 2020...... 105 17. Wind Power Generation in Western Denmark, 8 January 2005.... 110 18. Effective Cost of CO2 Emissions Reduction per Unit of Renewable Subsidy............................................................... 114 19. Capital and Full Generation Costs for Onshore Wind Turbines, 1983 to 2020 ....................................................... 118 20. Full Production Costs for Onshore Wind Turbines................... 120 21. Electricity Generation by Source, 1973 to 2030 .................... 129 22. Final Consumption of Electricity by Sector, 1973 to 2030 ......... 130 23. Map of Transmission Grid with International Connections ......... 134 24. Electricity Prices in Denmark and in Other Selected IEA Countries, 1980 to 2004 ....................................................... 138 25. Components in Retail Electricity Billing, 2005 ..................... 139 26. Gas Prices in Denmark and in Other Selected IEA Countries, 1984 to 2004....................................................... 152 27. Gas Prices in IEA Countries, 2004 .................................. 153 28. Final Consumption of Oil by Sector, 1973 to 2030................. 154 29. OECD Unleaded Gasoline Prices and Taxes, Third Quarter 2005 .... 155 30. OECD Automotive Diesel Prices and Taxes, Third Quarter 2005 . 156 31. Unleaded Gasoline and Automotive Diesel Prices, 1996 to 2004 . 157 32. Government RD&D Spending on Energy, 1990 to 2004 ........... 165 5 ORGANISATION OF THE REVIEW 01 REVIEW TEAM The 2006 IEA in-depth review of the energy policies of Denmark was undertaken by a team of energy specialists drawn from IEA member countries and the IEA Secretariat. The team was in Denmark from 13 to 18 November 2005. Meetings were held with government officials, energy suppliers, energy consumers and public interest groups. This report was drafted on the basis of those meetings and the government's official response to the IEA's policy questionnaire. The team greatly appreciates the openness and co-operation shown by everyone it met. The members of the team were: Hugo Brouwer Demus King (team leader) Department of Industry, Ministry of Economic