by Robert Bryce
Green’s claim that Denmark doesn’t import any oil is true. Denmark is an oil exporter. But that reality has nothing to do with Denmark’s embrace of renewables. Instead, it’s a result of the country’s decades-old decision to pursue aggressive offshore oil development in the North Sea.11 Perhaps if the United States were as sensible about offshore drilling as the Danes, the United States wouldn’t need to import oil, either.
Alas, the hard facts about Denmark appear to matter little to America’s leading purveyors of energy happy-talk. But the facts, particularly when it comes to wind, provide plenty of reason to be skeptical about Denmark’s energy policy.
Once again, we must look at the numbers. Between 1999 and 2007, according to data from the Danish Energy Agency, the amount of electricity produced from the country’s wind turbines grew by about 136 percent, going from 3 billion kilowatt-hours to some 7.1 billion kilowatt-hours.12 By the beginning of 2007, wind power was accounting for about 13.4 percent of all the electricity generated in Denmark.13 And yet, over that same time period, coal consumption didn’t change at all. In 1999, Denmark’s daily coal consumption was the equivalent of about 94,400 barrels of oil per day.14 By 2007, Denmark’s coal consumption was exactly the same as it was back in 1999.15 In fact, Denmark’s coal consumption in both 2007 and 1999 was nearly the same as it was back in 1981.16
Denmark may be leading the world in wind-power installation and production, but the variability of wind assures that Denmark’s production of coal-generated electricity will continue to rise and fall depending on the weather. The gyrations in the country’s power sector can be seen by considering this fact: In 2006, the Danish grid consumed 50 percent more coal-fired electricity than it did in 2005.17 The basic problem with Denmark’s wind-power sector is the same as it is everywhere else: It must be backed up by conventional sources of generation. For Denmark, that means using coal as well as the hydropower resources of its neighbors. As much as two-thirds of Denmark’s total wind power production is exported to its neighbors in Germany, Sweden, and Norway.18 In 2003, 84 percent of the wind power generated in western Denmark was exported, much of it at below-market rates.19
As Hugh Sharman, a British-born energy analyst who lives in Denmark, put it, the Danes are providing an electricity subsidy to their neighbors. And they are doing so because Denmark cannot use all of the wind-generated electricity it produces. The intermittency of the wind resources in western Denmark—located far from the main population center in Copenhagen—means that the country must rely on its existing coal-fired power plants. When excess electricity comes onstream from the country’s wind turbines, the Danes ship it abroad, particularly to Sweden and Norway, because those countries have large amounts of hydropower resources that Denmark then uses to balance its own electric grid.
Put another way, Denmark’s wind turbines often produce surplus electricity that the country cannot use; thus, that power must be exported. Its neighbors’ hydropower resources “are effectively batteries for Danish wind energy,” said Sharman.20 (Norway utilizes more hydropower as a percentage of primary energy than any other country, getting some 68 percent of its total energy needs from water. Sweden ranks seventh in hydropower utilization, getting nearly 30 percent of its primary energy needs from water. For more on this, see Appendix D.)21
In September 2009, the Danish Center for Political Studies, known as CEPOS, a Copenhagen-based think tank, came to the same conclusion as Sharman, declaring that this “exported wind power, paid for by Danish householders, brings material benefits in the form of cheap electricity and delayed investment in new generation equipment for consumers in Sweden and Norway but nothing for Danish consumers.”22
None of this is aimed at belittling Denmark. The country has had remarkable success at keeping energy demand down. It is one of the few countries where energy demand growth is essentially flat. In 2007, the country’s total primary energy use, about 363,000 barrels of oil equivalent per day, was roughly the same as it was in 1981.23 Denmark’s ability to keep energy consumption growth flat over such a long period is anomalous. But let’s be clear: That near-zero growth in energy consumption has been achieved in part by imposing exorbitant energy taxes and by maintaining near-zero growth in population.
Thanks to their government’s exorbitant tax rates, the Danes pay some of the highest electricity rates in the world. In 2006, the Energy Information Administration looked at residential electricity rates in sixty-five countries and found that Denmark’s rates were the highest by far, amounting to some $0.32 per kilowatt-hour. That was about 25 percent higher than the electricity costs in the Netherlands, which had the nexthighest rates in the survey at $0.25 per kilowatt-hour. And that’s not a new phenomenon. From 1999 through 2006, Denmark had either the highest—or the next-highest—electricity rates of the countries surveyed by the EIA. (In 1999 and 2000, Japan’s electricity rates were slightly higher than those in Denmark.)24 Furthermore, Denmark’s electricity rates are the highest in Europe—and no other country comes close.25
In 2008, electricity rates were even higher, with Danish residential customers paying $0.38 per kilowatt-hour—or nearly four times as much as U.S. residential customers, who were paying about $0.10 per kilowatt-hour.26 And the Danes were paying more than twice as much as their counterparts in nuclear-heavy France, where residential electricity costs were $0.17 per kilowatt-hour.27
While Danish homeowners are getting spanked by expensive electricity, Danish motorists are getting absolutely mugged at the service station. In late 2008, Danish drivers were paying an average of $1.54 per liter for gasoline (the equivalent of $5.83 per gallon), while drivers in the United Kingdom were paying $1.44 per liter ($5.45 per gallon) and U.S. motorists were paying $0.56 per liter ($2.12 per gallon). According to German Technical Cooperation (GTZ), an agency of the German government, only a handful of countries have more expensive fuel than Denmark, a list that includes Italy, Norway, Turkey, and Germany.28
Although Friedman, Lovins, and Green want to hold up Denmark as a model to be emulated, the brutal facts show that Denmark is even more reliant on oil—as a percentage of primary energy—than the United States is. In fact, the Danes are among the most oil-reliant people on Earth. In 2007, Denmark got about 51 percent of its primary energy from oil. That’s far higher than the percentage in the United States (40 percent) and significantly higher than the world average of 35.6 percent. As stated above, Denmark is more coal dependent than the United States, getting about 26 percent of its primary energy from coal while America gets about 24 percent of its primary energy from the carbon-heavy fuel.29
FIGURE 14 What Price Wind? Denmark’s Residential Electricity Prices Compared to Those of Other Countries
Sources: International Energy Agency, “Key World Energy Statistics, 2008,” http://www.iea.org/textbase/nppdf/free/2008/key_stats_2008.pdf, 43; Energy Information Administration, “Electricity Prices for Households,” http://www.eia.doe.gov/emeu/international/elecprih.html.
But given the global worries about climate change and carbon dioxide, the key issue for Denmark is this: Has wind power made a difference in its carbon dioxide emissions? The answer, based on the country’s own data, appears to be no. Although Denmark has more than doubled its wind power production over the past decade or so, it has not seen major reductions in its carbon dioxide emissions or its coal consumption.
In 2008, the European Environment Agency released a report that analyzed the progress (or lack thereof) that European countries are making toward their carbon emission reduction targets under the Kyoto Protocol. The report found that Denmark was falling short of its 2010 reduction targets by 18.8 percent.30 It also found that between 1990 and 2006, Denmark’s overall greenhouse gas emissions increased by 2.1 percent. 31 Although that’s a much better emissions profile than that of Spain, where emissions jumped by 50.6 percent over that same time period, it’s obvious that Denmark’s emissions have not declined despite its big increase in wind power production. Between 1990 and 20
06, according to the European Environment Agency, Denmark’s annual per-capita emissions of greenhouse gases stayed essentially the same—at about 13 tons of carbon dioxide.32
If Denmark’s huge wind-power sector were reducing carbon dioxide emissions, you’d expect the Danes to be bragging about it, right? Well, guess what? They’re not.
In early 2009, Energinet.dk, the operator of Denmark’s electricity and natural gas grids, published a handsome brochure available on its website entitled, “Wind Power to Combat Climate Change: How to Integrate Wind Energy into the Power System.”33 But the 56-page report does not contain any evidence that wind power has done anything to cut carbon dioxide emissions.34 The only claims it makes are about the role that wind might play in cutting emissions in the future. The report quotes Henriette Hindrichsen, a senior consultant at Energinet.dk, who declared that given enough wind power, Denmark “could” cut its use of hydrocarbons. “We could save fossil fuels,” she helpfully explained, “and thus reduce carbon dioxide emissions by moving some of our consumption away from peak-load periods to times of considerable wind and low consumption.”35
It’s critical to note that Energinet.dk does not say that wind will cut carbon emissions, only that it could. The report—which claims to be a “carbon dioxide–neutral product” because the gases produced during its production were “neutralized by buying carbon dioxide quotas from Climate Friendly via the WWF”—also discusses the potential for using wind power to charge electric vehicles in Denmark. It does so by breezily noting that “Danes have never really taken a fancy to electric cars even though they are tax-free. For this reason, only about 300 electric cars buzz along the Danish roads.”36
Despite all this, Energinet.dk is certain that someday soon—real soon—Danes will be driving electric cars, and when they do so, those cars will “absorb surplus wind power, significantly reduce transport sector carbon dioxide emissions and help to balance the power system if the batteries are charged or drained as required.”37 But of course, that will only happen when, or if, Danes “take a fancy” to electric cars. In late 2009, the Danish government announced that it would offer huge incentives—a $40,000 tax break on each electric car, as well as free parking in downtown Copenhagen—to customers who bought all-electric vehicles. The government also announced plans to set up thousands of charging stations, as part of a deal with Better Place, a California-based company that is promoting electric vehicles.38
Though the Danish government is pushing electric cars, Energinet.dk is not making any claims about the ability of wind power to cut carbon dioxide emissions. The grid operator’s annual reports from 2006 and 2007 contain no references to reduced carbon dioxide output due to wind.39 More important is this: Energinet.dk’s 2008 environmental report contains a graph showing that in 2007, carbon dioxide levels from electricity generation totaled about 23 million tons, about the same amount as in 1990, before the country began its frenzied construction of wind turbines.40 And the glossy 44-page document forecasts no decreases in carbon dioxide emissions through 2017.41 In other words, even though Denmark uses hydropower—a zero-carbon-dioxide source of backup power for its wind turbines—it still hasn’t seen a reduction in its carbon dioxide emissions from its electric generation sector.
Nor has Denmark seen a significant decrease in its total carbon dioxide emissions from all sources of electricity generation, transportation, and the like over the past two decades. According to the IEA, in 1990, Denmark emitted a total of 50.7 million tons of carbon dioxide. In 2007, the country’s emissions totaled 50.6 million tons, a reduction of just 0.1 percent.42
Denmark saw a significant increase in its overall electricity use during that same time period, with consumption rising from 28.8 billion kilowatt-hours in 1990 to about 35 billion kilowatt-hours in 2007.43 That’s an increase of 21.5 percent. Thus, Denmark has, it appears, been able to hold its carbon dioxide emissions flat while increasing electricity production by about one-fifth. That’s a laudable achievement. But part of the ability to control carbon dioxide emissions comes from demographics. In 2008, Denmark had a population of 5.5 million, and its population growth rate was just slightly above zero.44 In fact, Denmark has one of the slowest-growing populations in Europe. Between 1998 and 2008, the population grew by just 200,000 people.45 During that same time period, the U.S. population jumped by about 33 million people.46
FIGURE 15 Emissions from Denmark’s Electric Power and Combined Heat and Power Sectors, 1990 to 2007
Source: Energinet.dk, “Environmental Report 2008,” n.d., http://www.energinet.dk/NR/rdonlyres/EC3E484D-08D5-4179-9D85-7B9A9DBD3E08/0/Environmentalreport2008.pdf.
Given that population data, several key interrelated questions emerge: Has Denmark been able to keep its carbon dioxide emissions flat because of its slow-growing population? Is the emissions rate holding steady because of the exorbitant electricity and motor fuel taxes? Or is the increased use of domestic wind production and imported hydropower holding the emissions rate down?
There are no clear answers to those questions. But Energinet.dk’s environmental report holds some clues. It says that carbon dioxide emissions from power generation declined slightly in 2007, but that this decline was not due to wind power. Instead, Energinet.dk says, the decline was a result of the fact that 2007 “was a wet year in the Nordic region with massive hydropower production in Norway and Sweden.” It concluded that “the emissions level for 2007 followed the general trend of low emissions following wet years.”47 The environmental report from Energinet.dk explains that Denmark sees higher levels of carbon dioxide emissions from the electric sector during dry years “because the generation at coal-fired power stations in particular is higher during dry years. The Danish emissions level is thus affected by whether it is a wet year or a dry year.”48
Nevertheless, give the Danes their due: They are doing some things right. Between 1999 and 2006 (the latest year for which data is available), Denmark’s carbon intensity (that is, the amount of carbon dioxide emitted per unit of GDP) declined by nearly 11 percent.49 That’s a pretty good result. Denmark is also reducing the overall energy intensity of its economy. According to the Danish Energy Agency, between 1990 and 2008 the Danish economy grew by more than 42 percent, but energy use increased by less than 5 percent. According to the agency, “This means that today Denmark uses 3 units of energy to produce the same goods as required 4 units of energy in 1990.”50 And the average Dane uses far less energy than the average American. Denmark’s per-capita energy use is about 3.85 tons of oil equivalent per year, while the U.S. average is about 7.74 tons.51
But the reality is that even amidst all the praise for Denmark’s efforts, the United States is doing as well as—and in some cases, better than—Denmark in terms of carbon. Between 1999 and 2006, the carbon intensity of the U.S. economy decreased by nearly 13 percent—a rate about 2 percent better than the reduction rate seen in Denmark over that time period. Furthermore, in a longer time frame—1980 through 2006—America’s carbon intensity declined by 43.7 percent; Denmark managed just slightly better, with a 47 percent decrease.52 Thus, the United States is largely keeping up with Denmark even though it hasn’t made the same kind of massive investments in wind or made electricity exorbitantly expensive through punitive tax measures.
Although foreign journalists love to talk about Denmark’s wind sector, they seldom look at the country’s oil and gas business. If they were to do so, they’d be surprised by its size and by how reliant the Danes are on crude oil and natural gas.
Denmark has become largely self-sufficient in oil and gas, not because it’s more virtuous or because it’s using more alternative energy, but be-cause it has fully committed to drilling in the North Sea. Between 1981 and 2007, the country’s oil production jumped from less than 15,000 barrels per day to nearly 314,000 barrels per day—an increase of nearly 2,000 percent.53 The focus on sustained oil and gas exploration and production led to a corresponding increase in oil reserves, which jumped from about 50
0 million barrels to nearly 1.3 billion barrels.54 Denmark has had similar success with its natural gas production. In 1981, the country was producing no natural gas. By 2007, natural gas production was nearly 900 million cubic feet per day—enough to supply all of the country’s own consumption needs and to allow for substantial exports.55
FIGURE 16 Danish Oil Production, 1981 to 2008
Source: Energy Information Administration, “Denmark Energy Data,” http://tonto.eia.doe.gov/country/excel.cfm?fips=DA.
And the Danes are continuing their development of the North Sea. In 2008, Denmark signed a new exploration license for more offshore drilling, and two applications for additional licenses were submitted to the Danish Energy Agency. In early 2009, the agency accepted another application for drilling. That focus on oil and gas is paying dividends. In 2008, the Danish government took in about $7.1 billion in taxes and fees from oil and gas companies operating in its offshore waters in the North Sea.56
So how does Denmark’s oil and gas production compare with its wind production? As stated above, in 2007, Denmark’s wind-power sector produced 7.1 billion kilowatt-hours of electricity, which works out to about 19,400 megawatt-hours per day.57 Remember that 1 barrel of oil is approximately equal to 1.64 megawatt-hours of electricity. Thus, in 2007, the total primary energy production from Danish wind was about 11,800 barrels of oil equivalent per day.
Now let’s compare that to Denmark’s oil and gas production. In 2007, the country’s oil production was about 314,000 barrels per day. Natural gas production was almost 900 million cubic feet per day, or about 164,000 barrels of oil equivalent per day.58 Add in the 94,400 barrels of oil equivalent that the Danes use in the form of coal, and the math is clear: Denmark’s hydrocarbon diet consists of about 572,400 barrels of oil equivalent per day. Although some of the country’s oil and gas production is exported, here’s the punch line: Hydrocarbons provide Denmark with about forty-eight times as much energy as the country gets from wind power.