Renewable energy and carbon capture in Denmark

Renewable energy and carbon capture

Give details of the production and consumption of renewable energy in your country. What is the policy on renewable energy? Describe any obligations on the state and private parties for renewable energy production or use. Describe the main provisions of any scheme for registration of renewable energy production and use and for trade of related accounting units or credits.

According to the Danish Energy Agency’s report ‘Energy Statistics 2017’, final consumption of renewable energy was 4.4 per cent higher in 2017 than in 2016. The consumption of renewable energy has increased by 180 per cent since 1990. The electricity production based on renewables was 78.9PJ in 2017.

Denmark is one of the global leaders in renewable energy. As mentioned in question 3, the Danish government signed the Energy Agreement 2018 in June 2018 (see also ‘Update and trends’).

The EU Renewable Energy Directive (2009/28/EC) establishes a common framework for the promotion and regulation of production and use of energy from renewable sources. It had to be implemented into national legislation by 5 December 2010. Its implementation into Danish law is described in question 1.

The principal act on renewable energy is the RE Act (see question 4). Under the authority of the Act, the Minister for Climate, Energy and Utilities has issued executive orders as mentioned in question 4.

The Renewable Energy Directive defines and provides for the use of guarantees of origin regarding renewable energy as implemented by Executive Order No. 1323 of 30 November 2010. In the Directive, a guarantee of origin means an electronic document that has the sole function of providing proof to a final customer that a given share or quantity of energy was produced from renewable sources (article 2(j)). A guarantee of origin can be transferred, independently of the energy to which it relates, from one holder to another. Under article 15, member states must ensure that a guarantee of origin is issued in response to a request from a producer of electricity from renewable energy sources. Member states may also arrange for guarantees of origin to be issued in response to a request from producers of heating and cooling from renewable energy sources. A guarantee of origin is of a standard size of 1MWh.

Describe, in general terms, any regulation of wind energy.

Denmark has extensive experience with wind power and it plays an important role in the Danish electricity supply. There has been great development in wind power since the beginning of the 1980s and in particular within the past 10 to 20 years. In 2018, Denmark had a total of 4,773 offshore and onshore wind turbines with a total wind capacity of 6,104MW. The development in wind capacity has been increasing for many years, while the number of wind turbines has remained fairly constant over the past decade. This is in part because both onshore and offshore wind turbines are becoming more and more efficient, resulting in fewer wind turbines with bigger wind capacity. In 2017, wind power production accounted for 43.2 per cent of the total Danish electricity supply with a total production of 15,6TWh, which is the highest annual production in Denmark to date. The Danish government promotes the generation of wind energy from offshore and onshore wind turbines by various incentives. These include increased subsidies (for instance, feed-in tariffs) and improved planning consent administration as well as the introduction of statutory schemes for paying depreciation compensation to neighbours of wind turbines and for rights of neighbours to buy a part of the wind turbines or farms. The statutory basis for most parts of this was established by the RE Act. The Act contains statutory schemes for payment of depreciation compensation to neighbours of wind turbines and for rights of neighbours to buy a part of the wind turbines or farms. In early 2019, the Danish government allocated 50 million kroner for new wind turbine testing facilities at LORC. The turbines to be tested will be the largest in Denmark with the equivalent of a three-storey house, weighing between 600 and 800 tonnes. The goal is to develop better and more effective offshore wind turbines.

Offshore wind turbines may only be installed and operated if a permit to do so has been issued by the Minister for Climate, Energy and Utilities under the RE Act. An environmental impact assessment must also be made and approved.

The Minister for Climate, Energy and Utilities and may stipulate terms in the permit, including on any matter to be investigated, on reporting, on the performance and results of the preliminary investigation, on the access of the Minister to the results of the preliminary investigation, and on compliance with environmental and safety requirements and other similar requirements.

If a tendering procedure is used, a permit must be issued to the winner of the tender. The Minister for Climate, Energy and Utilities may stipulate specific matters or terms that will be afforded priority in decisions regarding the tenders received. Such terms may relate to financial matters, including support for the production, design and technical matters regarding the installation producing the electricity or the infrastructure that is to connect the installation with the general electricity supply system. The Minister may also set terms providing that consumers or others shall have an option to participate as parties in the project, together with the applicant, and that a fine is to be paid if the winner of the tendering procedure fails to comply with the conditions of the tender or other conditions agreed, including time limits.

Onshore wind turbines may only be installed and operated if the local municipality has made a local development plan including the wind turbines and issued a land zone permit. Further, onshore wind turbines are generally subject to both a value loss scheme, under which neighbours must be compensated for any loss of value to real property, and citizen participation schemes, under which neighbours are entitled to acquire part of the project. Finally, an environmental impact assessment must also be made and approved.

The Danish municipalities are generally responsible for planning related to installation of onshore wind turbines. The Danish Nature Agency under the Danish Ministry of Environment and Food manages the legislation on planning activities in connection with installation of onshore wind turbines. Environmental impact assessments of onshore wind turbine projects and environmental assessments of planning proposals at general and strategic levels are managed by the Danish Ministry of Environment and Food. Regulations on technical requirements for wind turbines, grid connection and subsidies for wind power are managed by the Danish Energy Agency.

Describe, in general terms, any regulation of solar energy.

While solar energy production in Denmark is still insignificant in comparison with other types of energy production, it has increased in recent years. In 2017, solar energy accounted for 2.2 per cent of Denmark’s total electricity supply, compared with 1.8 per cent in 2015.

Under section 10 of the Electricity Supply Act (consolidated Act No. 521 of 17 January 2019), electricity-producing plants with a capacity of more than 25MW may only be operated if a licence to do so has been granted by the Minister for Climate, Energy and Utilities.

However, in recent years, Denmark has seen an improvement in solar energy production, mainly as a result of small, privately held solar cell systems. The development can be attributed to governmental subsidy schemes containing, inter alia, a feed-in tariff for production delivered to the main grid.

Owners of all solar cell systems receive a feed-in tariff, the level of which depends on the time of grid connection. This is because the applicable regulation has been subject to great debate and has been changed multiple times in a relatively short period of time.

However, the subsidy schemes have been repealed for new installations, and in the future solar power must compete with other forms of renewable energy (onshore wind turbines and open-door offshore wind turbines) for subsidies in technology-neutral tenders. A total of 842 million kroner (2018 prices) has been allocated for an annual technology-neutral tender for wind and solar energy in 2018 and 2019. In the 2018 tender, six contracts were signed, including three contracts with approximately 165MW onshore wind turbines and three contracts with approximately 101MW solar PV installations. Tender conditions for both tenders are currently available at the DEA’s website. As part of the Energy Agreement 2018 (see question 3), technology-neutral tenders are also to be carried out in the period 2020-2024 for a total of 4.2 billion kroner.

Describe, in general terms, any regulation of hydropower, geothermal, wave or tidal energy.

The Electricity Supply Act generally applies to electricity production based on hydropower and wave and tidal energy. However, there is no hydropower production in Denmark proper.

Wave and tidal energy installations may only be installed and operated if a permit to do so has been issued by the Minister for Climate, Energy and Utilities under the RE Act. An environmental impact assessment must also be made and approved.

Pursuant to section 10 of the Electricity Supply Act, electricity-producing plants with a capacity of more than 25MW may only be operated if a licence to do so has been granted by the Minister for Climate, Energy and Utilities.

Denmark is currently hosting four active wave power demonstration plants at sea and is thereby among the global leaders in relation to development in this area. Owners of wave and tidal energy installations may receive a feed-in tariff. Hydropower and wave and tidal energy are to compete for subsidies in the technology-neutral tenders announced in the Energy Agreement 2018 (see questions 3 and 21).

In Denmark, geothermal energy is used for heating. At present, three geothermal installations are in operation based in Thisted, Sønderborg and Copenhagen. A number of licences have been granted to explore the opportunities for using geothermal energy in certain areas. Pursuant to the Subsoil Act, a licence issued by the Danish Energy Agency is needed for development and operation of geothermal energy projects. The Danish Energy Agency accepts applications for licences twice a year for certain delimited areas. The government has implemented an insurance scheme for geothermal energy projects under Act No. 736 of 1 June 2015. The purpose of the insurance scheme is to reduce the economic risk related to geothermal drilling for the licensees under the scheme. There is no subsidy scheme for heating produced by geothermal energy. Usually, producers of heating are not allowed to include a profit in their rates. This general principle is a departure for some producers of heating completely based on geothermal energy. Therefore, some producers of geothermal heating may include a profit in their prices, which are subject to the supervision of the Danish Utility Regulator.

Describe, in general terms, any regulation of production of energy based on waste.

In 2015, 27 waste-to-energy facilities treated a total of 3 million tonnes of waste corresponding to approximately 26 per cent of the waste produced in Denmark. In 2010, the total electricity and district heating produced by waste-to-energy facilities corresponded to 38 million gigajoules or approximately 31 per cent of the production of renewable energy in Denmark. Most waste-to-energy facilities are owned and managed by inter-municipal waste management companies.

The legal framework for the Danish waste-to-energy sector is the Environmental Protection Act (Consolidated Act No. 966 of 23 June 2017, as subsequently amended), the Heat Supply Act (Consolidated Act No. 523 of 22 May 2017, as subsequently amended) and the Electricity Supply Act.

Pursuant to the Environmental Protection Act, the municipalities shall collect household waste and assign treatment and disposal facilities for commercial and industrial waste. Since 1997, putting waste suitable for incineration into landfills has been banned. Municipalities must secure the incineration capacity necessary for incineration of all waste suitable for incineration. A municipality’s construction of a waste-to-energy facility is subject to government approval of the planned incineration capacity.

The Heat Supply Act ensures that waste-to-energy facilities can be connected to district heating supply systems and sell the produced heat. The Act is also the framework for the supervision of the pricing of the heat produced by district heating plants, including waste-to-energy facilities. The heat price must be the lower of the cost-based price or the substitution price. In Denmark, heat from waste-to-energy is generally the cheapest form of heating.

The Electricity Supply Act is intended to promote sustainable energy production while also creating competition in markets for production of and trade in electricity. To promote environmentally friendly electricity production, the Act lays down rules for surcharges (feed-in tariffs) for electricity produced on the basis of renewable energy, including waste-to-energy.

Describe, in general terms, any regulation of biofuel for transport uses and any regulation of biomass for generation of heat and power.

According to the Danish Energy Agency, the use of solid biomass for energy purposes has previously been primarily straw and wood. Since 2010, the use of wood chips has dominated the fixed biomass resources. In 2015, the total solid biomass production accounted for 62 per cent of renewable energy production. The production of energy based on biomass increased by 130 per cent from 39,996TJ in 1990 to 91,868TJ in 2017. The Danish Energy Agency has indicated that it expects that more biomass will continue to be used in the Danish energy supply in the future, mainly due to an increase in the use of solid biomass and primarily imports of wood pellets and wood chips.

The government’s climate and energy policy states that one of its targets is to increase the use of EU-certified biofuels for transport to 10 per cent by 2020. Act No. 674 of 21 June 2011 on Sustainable Biofuels, as subsequently amended, is part of this policy. Its purpose is to promote the use of sustainable biofuels in land transport to contribute to the fulfilment of Denmark’s international climate commitments. Pursuant to the Act, importers and producers of petrol and diesel must ensure that sustainable biofuels represent 5.75 per cent or more of their total annual sale of petrol and diesel to land transport. This obligation applied from 1 January 2010.

Electricity produced on biogas and biomass and biogas sold for transport, used for process purposes in enterprises or used for heat production may receive subsidies pursuant to subsidy schemes established under the RE Act. Producers of heating based solely on biofuels may charge a profit in their prices as opposed to producers of heating based on fossil fuels.

Describe, in general terms, any policy on and regulation of carbon capture and storage.

The Danish government’s policy on carbon capture and storage (CCS) seems to have been somewhat hesitant. Generally, the political parties are favourably disposed to projects in which injection and storage of CO2 is a means of enhancing oil production offshore, while there is a wait-and-see policy regarding onshore storage.

The EU Geological Storage Directive (2009/30/EC), which contains provisions on geological storage of carbon dioxide, had to be implemented into national legislation no later than 25 June 2011. Some parts of the directive were implemented in the Subsoil Act (by Act No. 1190 of 21 September 2018), while other parts are implemented by Executive Order No. 1425 of 30 November 2016.

Carbon storage in the Danish subsoil may be carried out if a licence to do so has been granted by the Minister for Climate, Energy and Utilities and under section 23 of the Subsoil Act. An environmental impact assessment must also be made and approved.

In 2008, licences were issued to two companies to undertake preliminary investigations of the Danish subsoil with a view to assessing the potential for storage of CO2. In autumn 2008, one of the companies performed a two-dimensional seismic survey of the subsoil northwest of Aalborg to map the relevant subsoil structure. In October 2011, the Danish Ministry of Climate, Energy and Utilities rejected an application for permission to use the subsoil in this area for storage of CO2 as the government awaits international CCS experiences.

In 2012, the Danish Energy Agency commissioned a socio-economic analysis of CCS/EOR in Denmark. The analysis assesses the socio-economic effects of a possible national CCS/EOR system, where CO2 is captured from Danish sources, transported by ship and injected into oilfields in the Danish part of the North Sea. The analysis covers three specific oilfields and three large combined heat and power (CHP) plants. It concludes that it is possible to enhance the oil production by 40 per cent (or approximately 151 million barrels of oil) in these three fields until 2049 if a CCS system is implemented. The enhanced oil production would require 95 million tonnes of CO2 to be captured from the CHP plants. Because of uncertain elements in the long term, the analysis does not offer a clear conclusion as to whether a CCS/EOR system would be socio-economically beneficial for Denmark.