POWER PLAY: HOW DENMARK PAVED WAY TO ENERGY INDEPENDENCE
By Leila Abboud
Thirty-Year Plan Uses Wind, Taxes, Pig Fat; Consumers Pay More
[Rachel’s introduction: Denmark is working steadily to conserve energy and get itself loose from the grip of Big Oil without falling into the twin traps of Big Coal and More Nukes. Their plan is succeeding. Here’s how it works.]
HORSENS, Denmark — Nothing goes to waste in the new Danish Crown slaughterhouse in eastern Denmark. Even the inedible fat of 50,000 pigs killed and processed here each week is used to heat the plant.
Turning pig blubber into heating oil is one of several techniques Danish Crown uses to save heat, water and electricity. The abattoir recently developed a method of scalding and removing hair from pig carcasses that conserves heat.
“We redesigned the whole manufacturing process to save energy,” says Soren Eriksen, technical director of Danish Crown, a meat company that produces $11 billion of pork and beef annually. “Everything is reused.”
Danish Crown is part of Denmark’s successful 30-year effort to keep its energy consumption in check. Through a wide variety of government- driven initiatives, this small northern European country has overcome one thorny challenge of global warming: how to dramatically reduce energy consumption while maintaining a solid growth rate and low unemployment. The downside is higher taxes and costs for businesses and consumers.
Today hundreds of thousands of Danish homes and other buildings are warmed by surplus heat from power plants. Government policies have spurred developers to build homes with thick insulation, and consumers to buy energy-efficient appliances. Utilities that can’t meet government energy-savings guidelines can buy credits from companies that have invested in efficiencies.
The result of these and other policies is that Denmark’s energy consumption — the amount of fuel it uses to heat its buildings, drive its cars and power its economy — has held stable for more than 30 years, even as the country’s gross domestic product has doubled, according to the International Energy Agency, a Paris group that tracks energy prices and policies. During the same period, energy consumption in the U.S. has risen 40%, while its GDP has quadrupled. The average Dane uses 6,600 kilowatt hours of electricity a year, compared with 13,300 for the average American. [Peter Bach]
“You can’t just sit back and wait for market forces to do this for you,” says Peter Bach, a civil engineer who has worked as a regulator at the Danish Energy Authority for 26 years.
Some of Denmark’s approaches can’t be easily replicated elsewhere. U.S. policy makers and businesses have resisted the type of aggressive intervention and regulation behind Denmark’s successes, concerned about higher costs and taxes, reduced competitiveness and slower growth.
But in Denmark, much of the country’s energy sector is in the hands of nonprofit cooperatives, with residents as shareholders, which makes it easier for government to direct policy with little opposition from business interests. With a population of 5.5 million people, Denmark also is a social welfare state that puts a higher priority on things like generous health care, free schools and guaranteed pensions than on profits, low taxes and individualism.
Danish consumers and businesses clearly pay a price for the energy programs. A Dane buying a new car must pay a registration fee of approximately 105% of the car’s value, plus additional taxes on fuel. Danish companies pay 43% more per megawatt hour of electricity than companies in the U.S., 24% more than in France and 19% more than in England, according to Dansk Industri, an industry trade association. Denmark’s high energy costs and its costly social-welfare system likely slow its economic growth in comparison to the U.S., but haven’t kept its economy from becoming one of Europe’s strongest, says Jonathan Coony, an energy specialist at the World Bank.
Yet Denmark has remained dogged about conservation. Like other countries, Denmark embarked upon its energy-saving crusade after 1973, when Arab nations temporarily cut off oil exports to countries that supported Israel. Many nations, including the U.S., relaxed their efforts as soon as the geopolitical situation stabilized. But Denmark, along with Japan, was one of the few countries that persisted.
Denmark was heavily dependent on imported oil in the 1970s, and the oil crisis helped set off a prolonged economic recession. To cope with the immediate energy shortage, driving was banned on Sundays. Some towns turned off street lights and schools cranked down the heat.
The experience convinced government officials that the country couldn’t rely on foreign oil. So in 1976, a government led by the Social Democratic Party laid out a series of ambitious energy plans, including developing renewable energy from wind turbines, exploring the North Sea for oil and natural gas, and conserving energy. Denmark is now self-sufficient in energy and actually exports oil, gas and electricity.
One key policy change was a gradual increase in taxes on the consumption of oil, natural gas and electricity. Taxes now make up more than half of Danish households’ electricity bills; prices at the gas pump doubled once fuel taxes took effect.
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