On March 9th, the Danish Climate Council presented a number of recommendations aimed at achieving Denmark’s 70% reduction of greenhouse gases by 2030. The transition requires both rapid implementations of known clean technologies as well as a long-term strategic effort. Is it going to be hard? Of course it is! Do we have to do it? Of course we do!
The Corona Timeout
Two days after the report was released everybody stopped talking about it, because Denmark was effectively being shut down due to the spread of the Corona virus. All schools and institutions closed. All public servants were told to stay home. I had in fact just recovered from a severe flu and was ready to go back to work when I was told to stay home.
Any plans to pick up from the historic deal in December 2019 resulting in a Danish Climate Law will obviously be postponed, but that just gives us a bit more time to think about what this all means. We have to fight hard to minimize the impact of the Corona virus, yes, but we know it will be gone in a few months. Potentially civilization ending climate change will not go away unless we fight very hard to minimize the damage. Virus or no virus, mother nature just doesn’t care.
By the way, could a downturn in global fossil fuel use prompted by curtailments of travel and social gatherings in response to the spread of the Corona virus be seen in atmospheric carbon dioxide concentration? The Scripps Institution of Oceanography at UC San Diego, known for the Keeling Curve recording of CO2 levels, has an interesting take on this.
Known Roads & New Tracks
The broad majority in the Danish Parliament decided in December 2019 to enter into an agreement on a new climate law, meaning Denmark must have reduced its emissions of greenhouse gases by 70% in 2030 and be climate neutral by 2050. This has resulted the Danish Climate Council report by the name of “Known roads and new tracks to 70% reduction,” and it will be hard to swallow, because it contains drastic proposals.
It will require a significant effort to achieve a 70% reduction, and the transition will be felt in most parts of Danish society. The Climate Council’s report shows that the socio-economic costs of meeting the target will increase gradually over the next ten years, reaching DKK 15 — 20 billion ($2.2 — 3 billion) in the year 2030. This cost corresponds to less than 1% of GDP. Peter Møllgaard, chairman of the Climate Council says:
“We will not reach the 70% target by 2030 if we continue as we usually do. But if we put action behind the words and take action immediately, it is possible to achieve a 70% reduction without breaking the Danish economy. The Climate Council recommends that we quickly start implementing all the mitigation elements we already know — such as more electric cars, reduced soil cultivation and more biogas — but that we also start planning and develop the slightly more difficult adjustments that will bring us all the way to 70%.”
Implementation & Development
In the change towards 2030, the Climate Council distinguishes between two tracks: the implementation track and the development track.
The implementation track represents all the solutions and technologies we already know that need to be implemented to take that first step towards the 70% goal by 2030. This track achieves about a 60% reduction, which means, among other things, that all electricity and heat are to be produced by renewable sources. As a result coal will face total shutdown by 2025.
The development track represents the more unknown strategic change elements needed to reach the 70% target in 2030, and also to ensure that Denmark can reach the final goal of 2050 on climate neutrality. The track implies, among other things, that Denmark is developing a strategy for CO2 storage as soon as possible, as well as agriculture, transport and industry contributing to further reductions.
A General GHG Tax
Technological solutions or behavioral changes only come into effect when the right political tools are put into use. Therefore, the Climate Council presents a policy package in which a greenhouse gas tax is given a key role, but must be supplemented by a number of other instruments. The tax must reflect the principle of the polluter paying for the damage they do, and it must therefore be significantly more expensive to emit CO2 and other greenhouse gases. To reach the target of a 70% reduction in 2030, the Climate Council estimates that a GHG tax should be approx. DKK 1,500 ($223) per tonne by 2030. Peter Møllgaard elaborates:
“A general greenhouse gas tax is a key instrument in the Climate Council’s report, which will make it more expensive to emit CO2 and other greenhouse gases. Today, the Danish tax system is a bit of a mess, and we therefore believe that the system should be changed as soon as possible so that we get a uniform tax that has a significantly higher level than today. At the same time, we have to make sure that production does not just move to other countries, along with the pollution, but this can be handled with a so-called bottom deduction for competitive companies.”
I encourage you to read my explanation of the current Danish energy tax system, it doesn’t get more messy than that!
The policy package also contains a number of other initiatives such as investment in research and development, an expansion of the renewable energy from offshore wind farms, a reduction in the tax on electricity for heating, rolling out EV charging stations, taking out low-lying farmland, green public investment, and much more.
In 2025 We Pass The 50% Mark
The 70% target and the Danish commitments to the Paris Agreement can only be achieved if we implement the known solutions quickly. In this regard, the Danish Parliament has asked the Climate Council to make recommendations for an indicative target in 2025. In the report, the Climate Council indicates a target of 50 to 54% in 2025.
The Climate Council’s recommendations for the mitigation elements indicate a concrete way to achieve a 50% reduction in 2025. However, in order to follow a linear development towards the target in 2030, Denmark must have achieved a 54% reduction by 2025. This will require a significantly accelerated transition in the next few years and considerable political willingness to pay the price to reach 54%, because no current measures can reduce greenhouse gas emissions that much, and it will take time for new measures to have effect.
Immediate Package Spawns Immediate Resistance
The longer it takes for politicians to announce new framework conditions, the greater the risk that investments will be made that do not point towards the target in 2030. These are, for example, the choice of solutions in the heating sector. The Climate Council therefore also presents a package in the report that can be adopted immediately. Some cardinal points in the package is the hefty carbon tax and shift to electricity in the transport sector.
In the dr.dk news on the day of the release of the report, the director of the Danish industry organization Kent Damsgaard expressed it this way: “We would advise against imposing a high tax such as the Climate Council proposes.”
Well, yes of course he opposes. He has to express the fear of Danish industry moving business abroad and the resulting loss of employment. But do we have a choice?
When Peter Møllgaard was asked what the Climate Council would do if its guidelines were not accepted by the government, he answered without hesitation: “If the government chooses not to follow our advice, then we must find other ways to reach the 70%.”
This is no time to point fingers and blame one another, as time is of the essence. However, there is no response from the government on this report yet, as it has a certain virus to deal with right now. When the Corona crisis is over, I expect we will witness tough negotiations, but I expect many of these recommendations being converted into law along with reassurance of the Danish industry to not worry about job losses. After all, there is a lot of work to be done.