Main climate regulations, policies and authoritiesInternational agreements
Do any international agreements or regulations on climate matters apply in your country?
Denmark comprises mainland Denmark, Greenland and the Faroe Islands.
Greenland experienced home rule from 1979 to 21 June 2009, after which it obtained self-government. The Faroe Islands obtained home rule in 1948.
Denmark is a member state of the EU, but its membership only comprises mainland Denmark and not Greenland or the Faroe Islands.
The United Nations Framework Convention on Climate Change (UNFCCC) 1992 was ratified by Denmark in 1993 without any territorial reservation relating to Greenland and the Faroe Islands. It entered into force in Denmark on 21 March 1994.
The commitments under the UNFCCC comprise all anthropogenic emissions by sources and removals by sinks of all greenhouse gases, except those covered by the Montreal Protocol on Substances that Deplete the Ozone Layer 1987. The Montreal Protocol is a protocol to the Vienna Convention for the Protection of the Ozone Layer 1985 and only covers certain types of greenhouse gases that deplete the ozone layer, such as chlorofluorocarbons, halogens and hydrochlorofluorocarbons.
Denmark and other developed parties (including the EU) listed in Annex I to the UNFCCC have undertaken a non-binding commitment to reduce their greenhouse gas emissions to 1990 levels by 2000.
The Kyoto Protocol to the UNFCCC 1996 was ratified by Denmark in 2002 without any territorial reservation for Greenland, but with a territorial exclusion of the Faroe Islands. It entered into force for Denmark on 16 February 2005.
Denmark and other developed parties (including the EU) listed in Annex B to the Kyoto Protocol undertook binding commitments to limit or reduce their emissions of six greenhouse gases in the first five-year commitment period from 2008 to 2012. In 2012, the Doha Amendment was adopted, extending the Kyoto Protocol for a second period, through 2020. Denmark, the EU and other developed parties to the protocol made new commitments for the second period, which are included in an adjusted Annex B. It should be noted, however, that as of August 2019, the Doha Amendment has not entered into force. The amendment will enter into force for those parties having accepted it on the 90th day after the date of receipt by the Depositary of an instrument of acceptance by at least three-quarters of the parties to the Kyoto Protocol. This means that a total of 144 instruments of acceptance are required for the entry into force of the amendment. As of 15 July 2019, 130 parties have deposited their instrument of acceptance.
The quantified commitments to limit or reduce emissions of the greenhouse gases, listed in Annex A to the Kyoto Protocol, are set out in Annex B to the protocol. For the second period, a committed country’s average annual emissions between 2013 and 2020 must not exceed a specified percentage between 76 and 99.5 of its emissions in its base year or period. The average commitment of all countries is a reduction of 18.7 per cent.
The base year is 1990 for all developed countries and parties, except for a few countries undergoing the transition to a market economy. All developed countries may choose to use 1995 as the base year for total emissions of HFCs, PFCs and SF6 (collectively, F-gases). Denmark has chosen to do so.
Under the Kyoto Protocol, both Denmark and the EU member states jointly have binding emission reduction commitments. For the second period, Denmark and the EU member states jointly have a reduction commitment of 20 per cent, as their average annual emissions between 2013 and 2020 must not exceed 80 per cent of their emissions in 1990 (or 1995 for F-gases as regards Denmark and some other EU member states).
Denmark’s ratification of the Kyoto Protocol with effect also for Greenland was based on a framework agreement from 2001 between Greenland and Denmark. It is stated in the agreement that Greenland will make an active effort to reduce greenhouse gas emissions and contribute to the fulfilment of the Danish emission reduction commitment under the Kyoto Protocol. It is further stated in the agreement that Greenland and Denmark will engage in negotiations if Greenland is not able to contribute to the said extent to the achievement of the reduction.
In 2012, Denmark and Greenland entered into a cooperation agreement in which Greenland’s self-government has repatriated the authority of the climate area. As a result, Greenland has authority to determine Greenland’s climate policy. The security and foreign policies, including the international climate negotiations, rest with the Danish government. Greenland cannot negotiate independently in the climate negotiations under the UN Climate Convention but is part of Denmark’s negotiating team.
In December 2015, the parties to the UNFCCC adopted the Paris Agreement by decision 1/CP.21, at the 21st session of the Conference of the Parties held in Paris. The Paris Agreement was ratified by Denmark in 2016 with no territorial reservation for the Faroe Islands but with a territorial exclusion of Greenland. It entered into force in Denmark on 1 December 2016. Denmark will, inter alia, contribute to achieving the objectives of the Paris Agreement by shifting away from fossil fuels and cutting greenhouse gas emissions with a national target of 50 per cent renewable energy by 2030, as well as a target to reduce greenhouse gases by 70 per cent in 2030 (see questions 3 and 7).
The EU approved the UNFCCC in 1993, the Kyoto Protocol in 2002 and the Paris Agreement in 2016, entering into force for the EU on 21 March 1994, 16 February 2005 and 4 November 2016, respectively. They have been approved and implemented by various EU decisions and provisions, including:
- Council Decision No. 94/69/EC of 15 December 1993 concerning the conclusion of the United Nations Framework Convention on Climate Change;
- Council Decision No. 2002/358/EC of 25 April 2002 concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of commitments thereunder;
- Commission Decision No. 2005/166/EC of 10 February 2005 laying down rules implementing Decision No. 280/2004/EC of the European Parliament and of the Council concerning a mechanism for monitoring Community greenhouse gas emissions and for implementing the Kyoto Protocol; and
- Council Decision No. 2016/1841 of 5 October 2016 on the conclusion, on behalf of the European Union, of the Paris Agreement adopted under the United Nations Framework Convention on Climate Change.
Other major EU climate regulations and implementing Danish climate regulations are:
- Emission Trading Scheme (EU ETS) Directive (2003/87/EC) as subsequently amended. This establishes a scheme for greenhouse gas emission allowance trading within the EU. Among other matters, the directive includes provisions on greenhouse gas emissions permits, monitoring, reporting and verification of emissions, and penalties for infringements of implementing national provisions and for surrender of too few allowances. Part of the directive is implemented by Act No. 1095 of 28 November 2012 on CO2 Allowances, as subsequently amended (the CO2 Allowances Act) and orders issued under this act.
- Council Decision No. 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of member states to reduce their greenhouse gas emissions to meet the EU’s greenhouse gas emission reduction commitments up to 2020.
- Renewable Energy Directive (2009/28/EC), which establishes a common framework for the promotion and regulation of production and use of energy from renewable sources. Some parts of the directive are implemented by provisions in Consolidated Act No. 1288 of 27 October 2016 on the Promotion of Renewable Energy (as subsequently amended) (the RE Act) and amendments to acts on supply of electricity, heating and natural gas and orders issued under those acts. On 30 November 2016, the European Commission presented the ‘Clean Energy for All Europeans’ package of proposals (COM(2016) (0860)), including a revised Renewable Energy Directive (COM(2016) (0767)) containing, inter alia, a new binding EU-level target of at least 27 per cent renewable energy in the European Union’s gross final consumption of energy in 2030. The Renewable Energy Directive has been amended by Directive 2018/2001/EU, and must be implemented into national law by 30 June 2021.
- EU ETS Amending Directive (2009/29/EC) amends the EU ETS Directive to improve and extend the EU ETS for the period 2013 to 2020 (Phase III of the ETS). It includes other activities (installations) that are sources of emissions and other types of greenhouse gases. In July 2015, the European Commission presented a legislative proposal (COM(2015) (337)) to revise the EU ETS Directive. The proposed amendments improve and extend the EU ETS for the period 2021 to 2030 (Phase IV of the ETS). The proposal is still under discussion in the European Parliament and the Council.
- Geological Storage Directive (2009/31/EC), which contains provisions on geological storage of carbon dioxide. Some parts of the Directive were implemented by Act No. 541 of 30 May 2011 on amendment of the Subsoil Act (Consolidated Act No. 1190 of 21 September 2018). Other parts were implemented by Executive Order No. 1425 of 30 November 2016 on Geological Storage.
- The Energy Efficiency Directive (2012/27/EU), which establishes a set of binding measures to help the EU reach its 20 per cent energy efficiency target by 2020. The Directive was implemented by Act No. 345 of 8 April 2014 on the amendment of the Act on the Promotion of Savings in Energy consumption, the Heat Supply Act, the Act on Municipal District Cooling and various other acts. The Energy Efficiency Directive has been amended by Directive 2018/2002/EU, and must be implemented into national law by 25 June 2020.
- Deployment of Alternative Fuels Infrastructure Directive (2014/94/EU), which sets out minimum requirements for the building-up of alternative fuels infrastructure, including recharging points for electric vehicles and refuelling points for natural gas and hydrogen. Member states shall notify their national policy frameworks to the European Commission by 18 November 2016. Based on the national policy frameworks, the European Commission will publish and regularly update information on the national targets and the objectives submitted by each member state.
- Regulation 2018/842 of the European Parliament and of the Council of 30 May 2018 on binding annual greenhouse gas emission reductions, amending Regulation No. 525/2013. The regulation sets out binding targets for each member state for domestic reductions in economy-wide greenhouse gas emissions by 2030 compared to 1990. According to the regulation, all sectors of the member states’ national economies must contribute to achieving these greenhouse gas emission reductions and all member states must participate in this effort, balancing considerations of fairness and solidarity. Each member state must limit its greenhouse gas emissions by at least the percentage set for that member state in Annex I to the regulation in relation to its greenhouse gas emissions in 2005. In Denmark’s case, this means at least 39 per cent.
- Regulation 2019/1242/EU setting CO2 emission performance standards for new heavy-duty vehicles and amending Regulations 595/2009/EC and 2018/956/EU and Directive 96/53/EC. The regulation sets out targets for manufacturers, so they must, from 2025, meet the targets set for the fleet-wide average CO2 emissions of their new lorries registered in a given calendar year. According to the new regulation, the CO2 emissions of new heavy-duty vehicles shall be reduced for 2025 onwards by 15 per cent and for 2030 onwards by 30 per cent. The reference CO2 emissions shall be based on the monitoring data reported pursuant to Regulation 2018/956/EU for the period from 1 July 2019 to 30 June 2020.
How are the regulatory policies of your country affected by international regulations on climate matters?
As Denmark is party to the UNFCCC, the Kyoto Protocol, the Paris Agreement and a member of the European Union, its national regulatory policies must be in accordance with UN and EU climate regulations.
Denmark, therefore, implements and applies UN and EU climate regulations in due course, as outlined in question 1.
The EU is competent to enter into international agreements concerning climate change and to implement the resulting obligations. Based on this competence, the EU has approved the UNFCCC, the Kyoto Protocol and the Paris Agreement and undertaken to fulfil the commitments under these instruments jointly with its member states. The EU also negotiates international climate agreements that may amend, supplement or replace (parts of) these UN instruments.
Denmark has sole competence to negotiate and make international climate agreements for Denmark in respect of Greenland, which is not part of Denmark’s EU membership.Main national regulatory policies
Outline recent government policy on climate matters.
In Denmark, the long-term goal for energy and climate policy is for Denmark to become entirely independent of fossil fuels by 2050.
In March 2012, a political agreement was reached on Danish energy policy (the Energy Agreement 2012), applicable until 2020. The agreement was reached by a broad majority of the Danish parliament and contains a number of initiatives with the objective to promote the transition to a low-carbon economy in Denmark, including initiatives promoting wind power, new energy technologies, renewable energy in industry, buildings and transport, bioenergy and energy efficiency measures.
By 2020, Denmark aims to supply 35 per cent of its final energy consumption with energy from renewable sources. Approximately 50 per cent of the electricity consumption is to be supplied by wind power and there is to be a 7.6 per cent reduction in gross energy consumption in comparison to 2010 and a 34 per cent reduction in greenhouse gas emissions in comparison to 1990.
In 2014, a political agreement was reached by the then government. The agreement lays down an overall strategic framework for Denmark’s climate policy in order to ensure the transition to a low-carbon economy by 2050 and, inter alia, sets a national target of 40 per cent emission reduction in 2050 compared with 1990. Parts of the agreement are implemented by the Climate Act, which was passed by parliament in June 2014.
On 29 June 2018, the Danish government signed Energy Agreement 2018 with the support of all sitting parties in the Danish parliament. The focal point of the agreement is greener energy, including greener heating and cheaper, green electricity, more offshore wind energy, more efficient use of energy, research in energy technology and the reduction of CO2 emissions. The agreement sets out initiatives to reduce CO2 emissions from the part of the energy sector that is outside the quota system, with approximately 1.1 to 1.5 million tonnes in the period 2021-2030.
According to the Energy Agreement 2018, the Danish government aims to establish three offshore wind farms in Denmark before 2030. In February 2019, the parties to the Energy Agreement 2018 decided that the first of the three wind farms should be located in the Danish North Sea. The new offshore wind farm is named Thor and will have a capacity of minimum 800MW and maximum 1,000MW.
In October 2018, the Danish Ministry of Climate, Energy and Utilities published the climate and air proposal ‘Together for a greener future’. The proposal contains 38 specific initiatives to ensure cleaner transport, including the phase out of the sale of new petrol and diesel cars in 2030, efficient and modern agriculture, environmentally friendly shipping, and lower emissions from industry and housing.
In June 2019, Danish parliamentary elections resulted in the formation of a new government. In the new government’s coalition agreement, the government announced that it will present a proposal for new short- and long-term climate goals. The focal points in the coalition agreement are, inter alia, to reduce the level of greenhouse gases before 2030 by 70 per cent compared to the levels in 1990. According to the coalition agreement, the new government will present a Climate Action Plan and seek help from experts and the Climate Council to identify or develop the right tools to achieve its climate goals.
The tax policies supporting the Danish climate and energy policy mainly consist of a CO2 taxation scheme (based on Directive 2003/96/EC) and a Public Service Obligation (PSO) tariff. The PSO tariff is paid by way of the electricity consumers’ electrical bill. However, as the European Commission has deemed that the PSO tariff is in conflict with EU law, a broad political coalition in the Danish parliament has agreed to gradually phase out the PSO tariff during a period of five years (2017-2022). From 2023, eventual incentives for renewables, which are currently being financed through the PSO tariff, will be paid entirely through the state budget.Main national legislation
Identify the main national laws and regulations on climate matters.
The principal act on climate matters is the CO2 Allowances Act. The original Act implemented EU ETS Directive (2003/87/EC). The act was changed by Act No. 1497 of 23 December 2014, which contains the changes made to the EU ETS Directive (2003/87/EC) by Regulation (EU) No. 421/2014. It also creates a framework under which the Danish government has issued a number of executive orders regulating climate matters in greater detail.
The CO2 Allowances Act implements the main EU directives on climate regulation such as the Linking Directive and Aviation Directive.
Under the authority of various provisions of the CO2 Allowances Act, the Minister for Climate, Energy and Utilities has issued a number of executive orders, which include regulation of the Allowances Registry, Clean Development Mechanism (CDM) and joint implementation (JI) projects and credits, the use of biofuels to reduce emissions, and regulation of the verification and reporting of emissions of CO2 from installations.
The principal act with regard to renewable energy is the RE Act. Under the authority of the RE Act, the Minister for Climate, Energy and Utilities has issued a number of executive orders, some of which regulate the granting of admissions to establish and modify electricity production facilities, the loss of value of real property as a result of the installation of wind turbines, administration of subsidies in accordance with the green schemes and grid connection of wind turbines and an additional charge for electricity produced by wind turbines and other renewable energy-producing installations.National regulatory authorities
Identify the national regulatory authorities responsible for climate regulation and its implementation and administration. Outline their areas of competence.
The Minister for Climate, Energy and Utilities is generally responsible for legislation on climate and energy matters, including the introduction of acts to be enacted by Parliament and the issuing of executive orders.
The Minister for Climate, Energy and Utilities is also generally responsible for the administration of the climate and energy areas, including the administration of the CO2 Allowances Act, the Renewable Energy Act and executive orders issued under these acts. Under the authority of the various provisions, the Minister has to a great extent delegated the tasks and powers under the Acts to the Danish Energy Agency, by Executive Order No. 1512 of 15 December 2017 on the Tasks and Powers of the Danish Energy Agency.
In practical terms, this means that the Danish Energy Agency has the authority and responsibility in relation to most administrative matters concerning climate and energy.
The Danish national designated focal point for JI and the designated national authority for the CDM, under the Kyoto Protocol, is the Danish Energy Agency under the Danish Ministry of Climate, Energy and Utilities.
The Danish Energy Board of Appeals considers appeals against decisions made by the Danish Ministry of Climate, Energy and Utilities and the Danish Energy Agency under the CO2 Allowances Act, the RE Act and executive orders made under these Acts.
General national climate mattersNational emissions and limits
What are the main sources of emissions of greenhouse gases (GHG) (or other regulated emissions) in your country and the quantities of emissions from those sources? Describe any limitation or reduction obligations. Do they apply to private parties in your country?
Denmark’s National Inventory Report 2019, ‘Emission Inventories 1990 to 2017’ submitted under the UNFCCC and the Kyoto Protocol, is the most recent official national inventory report. The report was published in April 2019.
According to the report, CO2 is the most important greenhouse gas, making up 73.1 per cent of national total emissions in CO2 equivalent in 2017, excluding the land use and land use change and forestry (LULUCF), followed by CH4 at 14.4 per cent, N2O at 11.5 per cent and f-gases (HFCs, PFCs, SF6 and NF3) with 1 per cent.
Transport (28 per cent), energy industries (24 per cent), and agriculture (22 per cent) represent the largest emission categories, followed by non-industrial combustion (10 per cent), manufacturing (9 per cent), industrial processes (4 per cent) and waste (2 per cent). The net CO2 emission by LULUCF in 2017 is 5.9 per cent of the total emission in CO2 equivalents excluding LULUCF. The national total emission of CO2 equivalent, excluding LULUCF, has decreased by 31.9 per cent from 1990 to 2017. The Danish Energy Agency also provides information on emissions in its report, ‘Energy Statistics 2017’. According to the report, in 2010 the base year was determined in relation to emissions in 2005 for CO2, CH4 and N2O and the F-gases. In 2016, the total emissions of greenhouse gases (without adjustments) were 50.5 million tonnes of CO2 equivalent, which is 28.3 per cent lower than in 1990. Including adjustments for fluctuations in temperature and net exports of electricity, the level in 2016 was 53.7 million tonnes of CO2 equivalent, corresponding to a drop of approximately 31.5 per cent relative to the adjusted emissions in 1990.
Denmark’s binding emission reduction commitments for 2013 to 2020, expressed in percentages below the levels of 1990, are 20 per cent under the Kyoto Protocol after the Doha Amendment. Private parties are not bound by the emission reduction commitments.National GHG emission projects
Describe any major GHG emission reduction projects implemented or to be implemented in your country. Describe any similar projects in other countries involving the participation of government authorities or private parties from your country.
To comply with the reduction commitments undertaken by Denmark, the government implements domestic initiatives and participates in international projects. The government also encourages private parties to actively reduce greenhouse gas emissions through activities in both Denmark and other countries.
A broad range of national initiatives has been launched since 1989 when the first action plan to reduce greenhouse gas emissions was agreed. These initiatives have included:
- limiting production from electricity producing facilities;
- reducing industrial gases by banning their use in new products and facilities from 2006;
- reducing emissions from agriculture due to the increased use of biogas and changed feeding of animals;
- additional fees levied on fuel and vehicles;
- mandatory mixing of petrol and diesel oil with biofuels; and
- energy-saving and efficiency requirements on buildings and electric net and distribution companies.
In addition to national initiatives, the Danish government engaged in the development of 57 CDM and 19 JI projects within the framework of the Kyoto Protocol in June 2011. Approximately 1 billion kroner was allocated by the government for the purchase of JI and CDM credits from eastern European and developing countries between 2003 and 2008. These funds have been used for direct investments in projects in Africa, Asia and eastern Europe.
In September 2018, the Danish government joined the global Carbon Neutrality Coalition (CNC). CNC is committed to publishing long-term strategies by 2020 to achieve the Paris Agreement’s collective goal of reaching carbon neutrality in the second half of the century.
Domestic climate sectorDomestic climate sector
Describe the main commercial aspects of the climate sector in your country, including any related government policies.
Danish governments have actively promoted energy saving and renewable energy production and use for decades and have also subsidised renewable energy and efficient energy production in various ways, including by feed-in tariffs, other financial incentives and disincentives. For example, fees on vehicles and vehicle fuel have continually been very high. Subsidies for electricity from wind turbines have also been high enough to ensure installation and operation of a high wind turbine capacity when compared to most other countries.
Danish utility companies within the climate and energy sectors are among the global leaders in many areas, including energy efficiency, district heating, waste-to-energy, combined heat and power energy production (cogeneration), wind turbine production and onshore and offshore installation and operation of wind turbines.
General GHG emissions regulationRegulation of emissions
Do any obligations for GHG emission limitation, reduction or removal apply to your country and private parties in your country? If so, describe the main obligations.
Under the Kyoto Protocol, Denmark and the EU member states have joint binding emission reduction commitments. For the first period, the commitment was 8 per cent. According to the subsequent European Burden Sharing Agreement, Denmark has undertaken to reduce its annual average greenhouse gas emissions between 2008 and 2012 to 21 per cent below their 1990 level. Private individuals and businesses are not bound by these emission reduction commitments, but they may have limitation or reduction obligations under Danish national legislation implementing the international commitments. There is no Burden Sharing Agreement for the second commitment period of the Kyoto Protocol. The EU has submitted to the UNFCCC that the reduction commitments will be fulfilled jointly with the EU and its member states.
The EU Emission Trading Scheme Directive (2003/87/EC), as amended by the EU Linking Directive (2004/101/EC), the Aviation Directive (2008/101/EC) and Amending Directive (2009/29/EC), includes, but is not limited to, emissions of CO2 from the following sectors and activities that are also covered by the Danish CO2 Allowances Act.Energy activities
- Combustion of fuel installations with total rated thermal input exceeding 20MW (except hazardous or municipal waste installations), including such combustion installations (also for flaring) on offshore installation;
- waste-to-energy installations (from 2013);
- mineral oil refineries;
- coke production;
- production and processing of ferrous metals, namely:
- metal ore (including sulphide ore) roasting or sintering installations; and
- installations for the production of pig iron or steel (primary or secondary fusion) including continuous casting, with a capacity exceeding 2.5 tonnes per hour;
- aluminium production; and
- production of non-ferrous metals, including production of alloys, refining foundry casting, etc.
- Installations for the production of cement clinkers in rotary kilns with a production capacity exceeding 500 tonnes per day or lime in rotary kilns with a production capacity exceeding 50 tonnes per day or in other furnaces with a production capacity exceeding 50 tonnes per day;
- installations for the manufacture of glass, including glass fibre, with a melting capacity exceeding 20 tonnes per day, and installations for the manufacture of ceramic products by firing, in particular, roofing tiles, bricks, refractory bricks, tiles, stoneware or porcelain, with a production capacity exceeding 75 tonnes per day;
- manufacture of mineral wool with the use of glass, stone or slag with a melting capacity of more than 20 tonnes per day; and
- drying or calcination of gypsum or production of plaster boards and other gypsum products, where combustion units with a total rated thermal input exceeding 20MW are operated.
Industrial plants for the production or manufacture of:
- pulp from timber or other fibrous materials or paper and board with a production capacity exceeding 20 tonnes per day;
- carbon black involving the carbonisation of organic substances such as oils, tars, cracker and distillation residues, where combustion units with a total rated thermal input exceeding 20MW are operated;
- nitric, adipic, glyoxal or glyoxlic acid;
- bulk organic chemicals by cracking, reforming, partial or full oxidation or by similar processes, with a production capacity exceeding 25 tonnes per day;
- hydrogen and synthesis gas by reforming or partial oxidation with a production capacity exceeding 25 tonnes per day;
- sodas ash and sodium bicarbonate;
- capture of greenhouse gases from installations covered by this Directive for the purpose of transport and geological storage in a storage site permitted under Geological Storage Directive (2009/31/EC);
- transport of greenhouse gases by pipelines for geological storage in a storage site permitted under the Directive as well as geological storage of greenhouse gases in a storage site permitted under the Directive (from 2013 onwards); and
- some aviation activities as specified in the amended EU ETS Directive (from 2012 onwards).
Operators of stationary installations used for these activities must comply with the emissions limitation and reduction rules and other rules under the EU ETS Directive and the CO2 Allowances Act. This generally means that emissions from an installation must not exceed the number of emission allowances allocated for that installation to the operator by the Danish Energy Agency. If actual emissions are greater than the allocated number of allowances, the operator must cover the deficit by buying allowances or JI or CDM credits and transferring them to the operator’s account in the Union Registry.
In accordance with EU requirements, the government annually provides the European Commission with a national allocation plan. It sets out the allowed emissions of approximately 360 Danish installations, including airline operators, covered by the EU ETS Directive and the CO2 Allowances Act.GHG emission permits or approvals
Are there any requirements for obtaining GHG emission permits or approvals? If so, describe the main requirements.
According to the CO2 Allowances Act, an operator of an installation (see question 9) must apply for and obtain permission to emit CO2 from the Minister for Climate, Energy and Utilities. The application must be made on an application form issued by the Minister.
The Danish Energy Agency generally acts on behalf of the Minister in relation to all matters under the CO2 Allowances Act.
An application for an emission permit must include the following information:
- identification of the installation, its owner and the operator;
- expected activities, expected CO2 emissions from the individual units of the installation and the sources of emissions; and
- a plan specifying how the operator will monitor CO2 emissions.
The Minister for Climate, Energy and Utilities must generally issue a permit for CO2 emissions to the operator if an application contains the said information and the Minister has approved a plan for monitoring CO2 emissions from the installation.Oversight of GHG emissions
How are GHG emissions monitored, reported and verified?
Pursuant to the CO2 Allowances Act, an operator must monitor CO2 emissions from its installation in accordance with a monitoring plan, which must be approved by the Danish Energy Agency (on behalf of the Minister for Climate, Energy and Utilities). The emissions may be either calculated or measured.
The monitoring of CO2 emissions must be verified annually by an independent company that acts as a verifier and is approved by the Minister for Climate, Energy and Utilities.
An operator must annually, no later than 31 March, submit a report on the verified CO2 emissions for the previous year.
If an installation fails to comply with these rules, the Danish Energy Agency will determine an estimated emission volume from the installation in question, which will be used instead of a verification report to determine the future allocation of emission credits.
The rules for monitoring and reporting and for verification are laid down in recent Regulation (EC) No. 601/2012, as amended by Regulation (EC) No. 206/2014, Regulation (EU) No. 743/2014, and Regulation (EU) No. 600/2012, respectively. The rules are implemented into Danish law by means of the CO2 Allowances Act and executive orders issued under this Act.
GHG emission allowances (or similar emission instruments)Regime
Is there a GHG emission allowance regime (or similar regime) in your country? How does it operate?
Denmark has an emission trading scheme that is based on, and is part of, the EU emission trading scheme (as described in question 1). The rules of the Danish emission trading scheme are laid down in the CO2 Allowances Act.
An operator of an installation covered by the Act (see question 9) must not emit CO2 unless the operator has an emissions permit issued by the Minister for Climate, Energy and Utilities.
An operator holding a CO2 emission permit is entitled to receive allowances in accordance with the rules on the allocation of allowances in the Act.
According to EU ETS Directive (2003/87/EC), each member state had to prepare a national allocation plan before the trading period 2008-2012 began. Each national allocation plan sets out the total number of allowances the member state intends to allocate for the period and describes how and to which installations the allowances will be allocated. The Danish allocation plan documents how Denmark will eliminate the deficit between expected CO2 emissions and the target agreed under the Kyoto Protocol and the EU Burden Sharing Agreement.
From 2013 onwards, there is an EU-wide quantity of allowances that will decrease each year by 1.74 per cent of the average annual total quantity of allowances issued by the member states for 2008 to 2012. For 2017, the quantity has been determined at approximately 2 billion allowances (excluding aviation). The cap for aviation emissions has been set at 210 million allowances per year in the period 2013-2020.
As a main rule, all allowances must be auctioned off by the member states, however, there are limited and temporary exceptions for allocating free allowances to certain installations. Under EU ETS Directive (2003/87/EC), Denmark submitted to the European Commission by 15 March 2012 a list of installations covered by the Directive and any preliminary free allocation to each of those installations, the national implementation measures. The free allowances must be allocated based on EU-wide rules for the harmonised free allocation of emission allowances.
An operator must take the required action to ensure that actual emissions from an installation are not greater than the emissions represented by the allocated emission allowances. Alternatively, the operator must ensure that additional allowances or JI or CDM credits equal to any excess emissions are purchased and transferred to the account of the operator in the Union Registry.
Further, an operator must monitor the annual emissions and apply for and obtain a verification of the monitoring from an independent company (verifier) approved by the Danish Energy Agency.
An annual report on verified emissions must be submitted by the operator to the Danish Energy Agency no later than 31 March.
The operator must surrender to the Danish Energy Agency annually a number of emissions allowances or JI or CDM credits corresponding to the verified actual emissions of the preceding year no later than 30 April. If no, or too few allowances have been surrendered on 30 April, the operator must pay a penalty (fee) of an amount corresponding to €100 per tonne CO2 equivalent emitted without surrender of an allowance or a JI or CDM credit. The penalty must be paid no later than 14 days after the operator has received an order to pay it from the Danish Energy Agency. In such cases, the operators must still surrender allowances or credits corresponding to the deficit of surrendered allowances no later than 30 April the following year.Registration
Are there any GHG emission allowance registries in your country? How are they administered?
From June 2012 onwards, all allowances are held in the Union Registry that replaces all previous national registries in the member states, including the Danish Emissions Trading Registry. The Registry records the issuance, holding, transfer, surrender and cancellation of allowances under the EU ETS and operates all accounts.
Denmark has established a Danish Kyoto Registry that is administered by the Danish Business Authority. Accounts in the Kyoto Registry can hold country allowances and CDM and JI credits but cannot hold CO2 allowances valid under the EU ETS. Such allowances can only be held in the Union Registry.Obtaining, possessing and using GHG emission allowances
What are the requirements for obtaining GHG emission allowances? How are allowances held, cancelled, surrendered and transferred? Can rights in favour of third parties (eg, a pledge) be created on allowances?
The basis for the allocation of emission allowances is described in question 12. Since 2013, allowances are, as a general rule, to be obtained by auction.
Allocated allowances are held at the operator’s account with the Union Registry. This is an electronic registry and its accounts function like special electronic bank accounts. Any holder of an account may require the Registry to cancel allowances or credits that are held in the account and are at the disposal (control) of the holder. They can then no longer be used.
Allowances and JI and CDM credits held in an account will generally be surrendered to the Danish Energy Agency by the Union Registry if it is requested to do so by the holder. Likewise, a holder of an account may generally request the Union Registry to transfer allowances or JI or CDM credits to another account. Such transactions will generally be carried out by the Union Registry.
According to the explanatory notes to the Danish CO2 Allowances Act, allowances may be pledged as security, which must be registered in the Danish register of chattel mortgages. However, the legal status of Allowances, JI and CDM credits including the establishment of third-party rights is not yet fully settled in Danish law.
Trading of GHG emission allowances (or similar emission instruments)Emission allowances trading
What GHG emission trading systems or schemes are applied in your country?
The international emission trading scheme under the Kyoto Protocol (article 17) applies to Denmark and the other parties to the Protocol, including the European Union and all EU member states.
The EU emission trading scheme under the EU ETS Directive (2003/87/EC), as amended by the Linking Directive (2004/101/EC), the Aviation Directive (2008/101/EC) and amending Directive (2009/29/EC), applies in Denmark. It has been implemented by the CO2 Allowances Act (1095/2012).
Under the CO2 Allowances Act (section 21), the Minister for Industry, Business and Financial Affairs administers Danish accounts in the Union Registry. The Union Registry contains information on the issuance, holding, transfer, surrender and cancellation of allowances. Any person or company may hold an account in the registry. In addition, under the CO2 Allowances Act (section 22) the Danish Business Authority administers the Danish Kyoto Registry (see question 13), which is separate from the Union Registry. The Kyoto Registry contains information similar to that of the Union Registry but concerning country allowances. It therefore also includes information about CDM credits and JI credits.
It is a prerequisite for trading and registration of trading that both the seller and the purchaser have an account in the Union Registry. Any party with an account in the registry may request the Minister to cancel allowances or credits in its account.
Trading and other transactions regarding allowances are recorded by the Union Registry.
About 360 Danish installations, including airline operators, are covered by the CO2 allowance trading scheme. Most of them are power and heat generators. The rest are industrial enterprises, apart from a few installations within the offshore sector. In the EU, over 11,000 installations are covered by the scheme.
All Danish installations covered by the CO2 Allowances Act must have an operator holding account in the Union Registry. Other companies, organisations and private persons may also open and hold an account. Each account must have at least two different authorised representatives, who will have full access to the account.
The Registry records trades and other transactions concerning allowances and credits but not prices or other terms of agreements between sellers and buyers.Trading agreements
Are any standard agreements on GHG emissions trading used in your country? If so, describe their main features and provisions.
Various standard agreements on emissions trading are used in Denmark. Some of the most commonly used on the secondary market are those made by the European Federation of Energy Traders, the International Emissions Trading Association and the International Swaps and Derivatives Association.
On the primary market for project credits that have not yet been issued to the project developer, various forms of individual (forward trade) agreements are used, such as emission reduction purchase agreements.
Sectoral regulationEnergy sector
Give details of (non-renewable) energy production and consumption in your country. Describe any regulations on GHG emissions. Describe any obligations on the state and private persons for minimising energy consumption and improving energy efficiency. Describe the main features of any scheme for registration of energy savings and for trade of related accounting units or credits.
Information on these topics is set out in the Danish Energy Agency’s report ‘Energy Statistics 2017’.
In 2017, production of crude oil, natural gas and renewable energy, etc (including non-biodegradable waste) was 658 petajoules (PJ), as opposed to 638PJ in 2016, 675PJ in 2015, 425PJ in 1990 and 40PJ in 1980. In 2017, production of crude oil decreased by 2.7 per cent, while production of natural gas and renewable energy, etc increased by 7.3 per cent and 7.2 per cent, respectively.
In addition to observed energy consumption, the Danish Energy Agency also calculates figures for adjusted gross energy consumption, which include adjustments for fuel consumption linked to foreign trade in electricity as well as climate variations in relation to a normal weather year. The purpose of these adjusted calculations is to illustrate trends underlying changes.
As further set out in the report, economic activity in Denmark, measured in terms of gross domestic product (GDP) in 2010 prices, has increased much faster than energy consumption. In 2017, gross energy consumption was 0.386 terajoules (TJ) per million GDP (calculated in 2010 prices), as opposed to 0.636TJ in 1990. Thus, fuel intensity was reduced by 39.2 per cent during this period. Intensity in 2017 decreased by 1.9 per cent compared with 2016. If developments in GDP are instead compared to developments in final energy consumption, energy intensity fell by 32 per cent from 1990 to 2017.
Emissions statistics are based on the Agency’s report as well. Here, the energy system is divided into three sectors:
- the energy sector: extraction and refining;
- the transformation sector: production of electricity, district heating and town gas; and
- final consumption: transport and consumption by households and industries.
Of the total observed CO2 emissions in 1990 of 53 million tonnes, 25.1 million tonnes came from the transformation sector and 26.5 million tonnes from final consumption, while the energy sector emitted 1.4 million tonnes. In 2017, total observed CO2 emissions were 34.7 million tonnes, of which 9.4 million tonnes were from the transformation sector, 23.1 million tonnes were from final energy consumption and 2.2 million tonnes were from the energy sector. The transformation sector has seen a fall of 15.7 million tonnes of CO2 from 1990 to 2017, although electricity and district heating production grew significantly in this period. In 2017, final energy consumption in 2017 was 637PJ, which is 1.3 per cent higher than in 2016. Final consumption was 5.4 per cent higher compared with 1990. Energy emissions are governed by the general emissions regulation in Denmark, as described in question 9. There are no special emission targets for energy emissions. As for other sectors, emissions targets for the energy sector are set in the Danish national allocation plan.
Denmark has a national scheme for agreements on energy efficiency and related provisions on CO2 taxes and subsidies for energy-intensive businesses. The provisions are set out in acts and executive orders regarding those matters. Provisions on energy savings and energy efficiency are also set out in various other acts and executive orders.Other sectors
Describe, in general terms, any regulation on GHG emissions in connection with other sectors.
Emissions from sectors other than energy are also governed by the general emissions regulation in Denmark, which is described in question 9. There are no special emission targets for emissions from other sectors. Emissions targets are, however, set in the Danish national allocation plan.
Renewable energy and carbon captureRenewable energy consumption, policy and general regulation
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.Wind energy
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.Solar energy
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.Hydropower, geothermal, wave and tidal energy
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.Waste-to-energy
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.Biofuels and biomass
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.Carbon capture and storage
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.
Climate matters in transactionsClimate matters in M&A transactions
What are the main climate matters and regulations to consider in M&A transactions and other transactions?
The UN, EU and Danish regulations described above may all, in principle, have direct or indirect effects that must be considered in relation to M&A transactions. Generally, however, the EU and Danish regulations are the most relevant regulations for companies, and consequently also for M&A transactions.
For companies operating installations included in the EU Emission Trading Scheme, the EU ETS Directive and the Danish CO2 Allowances Act are by far the most important regulations to consider.
It must be assessed whether the target company is in compliance with these and other applicable climate regulations. Some of the key issues are:
- emission permits and their transfer and notification;
- monitoring, verification and reporting of emissions;
- emission trading registry accounts and their transfer and notification;
- holding (stock), allocation, surrender and transfer (trading) of allowances and CDM and JI credits and related agreements and registry notifications;
- status and development of relationship between verified emissions and number of allocated allowances;
- outstanding or possible future payments in the form of allowances that must be surrendered; and
- outstanding or possible future penalty (fee) amounts for surrender of too few allowances.
For other companies, other possible effects of climate regulations must be assessed. Indirect detrimental effects may include, for instance, low-emission requirements for car makers that produce high-emission cars or rising energy costs for energy-intensive productions companies. Alternatively, low-emission requirements for cars will improve the market position for car makers that produce low-emission cars.
Update and trendsEmerging trends
Are there any emerging trends or hot topics that may affect climate regulation in your country in the foreseeable future?Emerging trends27 Are there any emerging trends or hot topics that may affect climate regulation in your country in the foreseeable future?
In October 2018, The Danish Ministry of Climate, Energy and Utilities published the climate and air proposal ‘Together for a greener future’. The proposal contains 38 specific initiatives to ensure cleaner transport, including the phase out of the sale of new petrol and diesel cars in 2030, efficient and modern agriculture, environmentally friendly shipping, and lower emissions from industry and housing.
In June 2019, Danish parliamentary elections resulted in the formation of a new government. In the new government’s coalition agreement, the government announced that it will present a proposal for new short- and long-term climate goals. The focal points in the coalition agreement are, inter alia, to reduce the level of greenhouse gases before 2030 by 70 per cent compared to the levels in 1990. According to the coalition agreement, the new government will present a Climate Action Plan and seek help from experts and the Climate Council to identify or develop the right tools to achieve its climate goals.