Enhedens navn The Danish Transition — from 100

Enhedens navn The Danish Transition - from 100% Oil Imports - via 100% Indigenous Production - towards 100% Green Energy Anita Rønne Associate Professor in Energy Law, University of Copenhagen Member of the Danish Energy Regulatory Authority Member of the Evaluation Committee for Wind Turbines Chair of the Danish Energy Law Society Energy Policy and Constitutional Change University of Strathclyde Friday 18 January 2013 Dias 1

Enhedens navn The Kingdom of Denmark/the Danish Realm, includes 3 autonomous parts: Denmark (5. 5 m), Greenland (57 t) and the Faroe Islands (49 t). - Only DK is a member of EU Dias 2

Enhedens navn Greenland - the Home Rule system and the step by step approach 1979 – Introduction of Greenland Home Rule Arrangement • Legislative and administrative responsibility in specified matters • A special mineral resources regime was established • Pursuant to the Act on Mineral Resources in Greenland, and subsequent agreements between the Prime Minister of DK and Greenland, the main elements were: • Joint decision power and veto rights in resource matters; • Establishment of a joint Danish/Greenlandic Mineral Resource Council, composed of 5 Danish parliamentary members and 5 Greenlandic; • Division of incomes from natural resource activities between DK and Greenland; • Administration of mineral resources based in Greenland from 1 July 1998. Dias 3

Enhedens navn Greenland - the selfgovernment system 2009 - The Greenland Self. Government Act came into force • Provides for the Self-Government authorities to assume a number of new fields of responsibility, courts; police; aviation & mineral resource activities • Radically changes the Danish/Greenlandic relations regarding mineral resource activities in Greenland • Greenland decided to take over responsibility for the mineral resource area on 1 January 2010 • Revenues from mineral resource activities in Greenland are to accrue to the Self-Government. Such revenues will have influence on the size of the Danish Government subsidy Dias 4

Enhedens navn The Danish Point of Departure Ø 1973 -74 oil crisis Ø 2 countries 99% dependent on imported fuels • Japan • Denmark (oil and coal) Ø Severe impact on the Danish society including economic decline due to energy dependent growth model Ø The trigger for change Dias 5

Enhedens navn Energy Policy & Regulation in Denmark Until 1973: Sufficient and cheap oil supplies, limited awareness on security and environmental impact of energy consumption and different fuels • Energy legislation was rare and mainly dealt with safety matter 1970’ies: Focus on energy security. Public intervention, influence and control • Adoption of sector acts, Electricity, Heating, Natural Gas • Subsoil Act already in 1936 but new act in 1981 • Energy plans and strategies 1976 & 1979 -> supply flexibility • indigenous production; national gas grid, heat planning 1990’ies: Wave of liberalization - driven by European internal market • All energy acts amended After 2000: Climate Change (but still energy security and liberalization- 3 rd package) - CO 2 Quota Act, Act on Renewables, Amendments to Electricity & Subsoil Acts Dias 6

Enhedens navn The Result and the Danish Energy Supply situation In 1997 - Denmark became self-sufficient in energy In 2005, the total production of oil, gas and renewables was 58 % higher than total energy consumption. In 2011 and -> Selfsuffiency for another decade and then need for import (some uncertainty) Dias 7

Enhedens navn Danish Energy Consumption Covered by: • • • Domestic oil and natural gas resources Domestic renewable energy sources (wind, biogas, waste, straw, woodchips) Imported coal supplies No hydro-power No nuclear-power Dias 8

Enhedens navn Does production matter? Economy 2005 & 2011 • Income: the Danish state received from the activities in the North Sea • 2005 - > DKK 24 billion (exhange rate 1 £ = 9 DKK) • 2011 – DKK 9 billion • Oil production totalled • 2005 - 22 million m 3 • 2011 – 12, 8 million m 3 • Gas sales totalled • 2005 - 9. 2 billion Nm 3 • 2011 – 5. 6 Nm 3 • Danish oil and gas reserves assessed to constitute • 2005 - 257 million m 3 of oil and 122 billion Nm 3 of gas • 2011 - 128 million m 3 of oil and 43 billion Nm 3 of gas • Total production of oil, gas and renewable energy was • 2005 - 58 per cent higher than total energy consumption • 2011 – 110 percent of total energy consumption • Oil companies invested almost DKK 4 billion in 2005 in developing 19 fields and DKK 4, 3 billion in 2011 Source: Danish Energy Agency, Yearly Oil and Gas Report Dias 9

Enhedens navn Production now and in the future • • Production seems to have peaked None of the oil fields have discontinued production 34 years after production started in the Danish part of the North Sea New technologies have enabled the oil companies to recover increasing volumes of oil from the same fields • water and gas injection • horizontal drilling • Injecting CO 2 from power stations may prove to be a viable option Shale gas? Dias 10

Enhedens navn Policy Developments on changes in the energy mix – Renewables & Efficiency!!!! European Union: 20 -20 -20 by 2020 • 20 % reduction of CO 2 emissions • 20% binding renewable energy target (including a 10% RE in transport) • 20% indicative target for improvement of EE Dias 11 Denmark: • Political Strategy of 2011 & • Political Agreement between the Government and the opposition of March 2012 Ø independence from fossil fuels by 2050 By 2020: • 35% RES of gross energy consumption (primarily wind and biomass) Ø 50% RES of electricity consumption will come from wind (today 25%) Ø 30% reduction of fossil fuel consumption Ø Energy consumption will decrease by more than 12% in 2020 compared to 2006.

Enhedens navn Energy Policies of IEA Countries – Denmark - 2011 Review (Feb. 2012) • Denmark’s long-term energy goal is to become completely independent of fossil fuels use by 2050. • In 2011, the government published the Energy Strategy 2050 • a detailed and ambitious policy document that sets out a series of new energy-policy initiatives. ”Denmark is a leader among OECD member countries in terms of its well-designed policies for renewable energy, energy efficiency and climate change. ” Dias 12 • A long history of consensusbased policy making • political stability • clear long-term vision for low carbon future

Enhedens navn Types of Renewables in Denmark Share of Gross Energy Consumption: 17 % by 2007 (share doubled in 10 years) Share of Electricity Supply: 29½ % by 2007 (share tripled in 10 years) Dias 13

Enhedens navn Renewable energy in Denmark – current consumption and future potential Dias 14

Enhedens navn Wind Power in Denmark Installed capacity = 3, 124 MW (2007). 423 MW is off-shore. Wind power generates 20% of the electricity production (2007) The Danish wind turbine industry employs 28. 000 persons and sells turbines for 7 Billion Euro (2008) Most of the turbines are exported and Danish wind turbine industry serves 30% of the world market (2007) Dias 15

Enhedens navn > 20 Years of Offshore Wind Experience First Danish offshore wind farm 1991. Now 423 MW. 2 x 200 MW new wind farms in 2009 and 2010 and one 400 MW in 2012. Existing and planned off-shore capacity (1225 MW) = 12% of total electricity consumption in 2012. Dias 16

Enhedens navn Offshore wind farms No. of wind turbines, MW 1. Vindeby (1991) 11 turbines, 5 MW 2. Tunø Knob (1995) 10 turbines, 5 MW 3. 2 Danish Status of Offshore Wind 3. Middelgrunden (2000) 20 turbines, 40 MW 4. Horns Rev I (2002) 80 turbines, 160 MW 5. Rønland (2003) 8 turbines, 17 MW 6. Nysted (2003) 72 turbines, 165 MW 7. Samsø (2003) 10 turbines, 23 MW 8. Frederikshavn (2003) 3 turbines, 7 MW 9. Horns Rev II (2009) 91 turbines, 209 MW 10. Avedøre Holme (2009/10) 3 turbines, 10 -13 MW Source: Danish Energy Agency 11. Sprogø (2009) 7 turbines, 21 MW 12. Rødsand II (2010) 90 turbines, 207 MW Total: 1, 168 MW 13. Anholt (2012) 400 MW 14. Kriegers Flak (Planned) 600 MW 15. Horns Rev III (Planned) 400 MW 16. Coastal wind (Planned) 500 MW Dias 17 (Including Anholt) (2, 668 MW)

Enhedens navn DENMARK [Population 5, 5 mill] Electricity developments 1985 -2009 ø Sams Decentralisation of production Dias 18

Enhedens navn Samsø an island that transitioned from oil dependency to RES from wind, solar and biomass. Dias 19 Source: Energiakademiet. dk & ens. dk Samsø’s success inter alia: - local ownership - local commitment - practical action plans based on proven technology and feasible goals Facts: Designated in November 1997 100% RE in 10 years (2007) - > 120% Area of 114 square kilometres Population: 4, 100 inhabitants (2008) Business sectors: 1) Agriculture 2) Tourism (½ mill. overnight p. a. ) 3) RE projects • Investment in RE projects: DKK 368 million 21 modern wind turbines All six towns on Samsø have district heating 65% of Samsø homes receive heating from biomas (district heating)

Enhedens navn Key challenges for the grid/infrastructure • Integration of substantial higher amounts of RES • Implying more fluctuating energy – wind, solar – - output varies according to availability of the resource • Increasing number of smaller production units • Influencing production & demand - > smart grids • Consumers information and options for choice of supply. • Energy storage and linking new sectors like transport in the form of plug- in and electric cars Ø The keyword: FLEXIBILITY Dias 20

Enhedens navn Key Instruments to promote renewables Ø Public support to research & demonstration of REtechnologies Ø Investment grants for standardized RE-equipment Ø Favourable prices for electricity fed into the public grid Ø Obligation to buy and use RES Ø Tax incentives Ø A suitable legislative and planning framework Ø 2008 Act on Promotion of Renewable Energy Ø Binding planning obligations for municipalities Ø Promotion of local ownership Ø Agreements between the Government and the opposition and Government and the utilities Dias 21

Enhedens navn Wind turbines: Main challenges Ø Local resistance on more land turbines • from land owners and municipalities Ø Best sites taken by old turbines Ø Grants may be better in other countries § big companies go abroad Ø Lack of test facilities for MEGA- turbines How to meet these challenges? Dias 22

Enhedens navn Planning, Information and Public Participation Ø Through thorough planning and identification of suitable sites Ø Through involvement in the decision-making process (planning participation – EIA) Ø Through information about the project and the ongoing development Ø Through economic incentives or financial involvement in the project (financial participation) Dias 23

Enhedens navn New instruments • Binding planning obligations for municipalities • In 2010 & 2011 all municipalities have collectively prepared and adopted a supplement to their municipal plans, • with areas reserved for a total wind-turbine capacity of 75 MW in each of the years. • National testcenter for MEGA-turbines is under construction • Owned by the Government • Enforced by law • 7 sites for turbines up to 250 m/ 20 MW • Visible 50 km away • Industry rents the site temporally • Additional price supplement for scrapping certificates • Old ineffective turbines on good sites • Disfigures the landscape • When taken down you get a scrapping certificate, fully negotiable Dias 24 • For new turbines you obtain 5 -6 cent instead of 4 cent /k. Wh

Enhedens navn New ways of balancing conflicting interests 1. Green scheme to enhance local scenic and recreational values - reward to the municipalities for planning, about 25. 000 EURO for 1 turbine – site 1. Guarantee fund to support financing of preliminary investigations by local wind turbine owners’ associations - State guarantee for loan taken by local groups to investigate for local turbines 3. Offer on 20 % ownership of production facilities - IF Wind turbines at least 25 m in height onshore - person over 18 years, living < 4. 5 km from the site of installation 4. Compensation for losses of property value Dias 25

Enhedens navn Compensation Scheme v Any person who, due to the construction of wind turbines, causes the loss of value to real property, shall bear the costs v In addition to EIA process - obligation to hold a public meeting to explain the consequences for surrounding real properties v A Valuation authority shall decide on the size of the loss of value on the basis of an individual assessment • Composed by legal chairman and a real estate agent Dias 26

Enhedens navn Good or bad measure? Does it meet controversies in wind energy projects? ↓ ↓↓↓↓↓↓↓↓↓↓↓↓ ↑ ↑↑↑↑↑↑↑↑↑↑↑ • Extra cost for erecting turbines • Gives incentive to place turbines, where they causes • Some uncertainty for the minimum loss of value economy when investing • Helps to overcome local • Gives wind turbines a bad resistance as losses are now reputation on domestic & export compensated markets • Makes it easier for the • Spoils the respect of physical municipalities to reserve land planning for turbines • Could spread to other sectors (agriculture? ) Dias 27

Enhedens navn Climate Change, Energy, Sustainability and Law • ”a secure, competitive and lowcarbon energy sector is possible” ”Energy Roadmap 2050, December 2011 Thank you for your attention! Anita Rønne Faculty of Law University of Copenhagen, Denmark Email: anita. ronne@jur. ku. dk Dias 28