Denmark Strides Towards Independence from Fossil Fuels

Last year, the Danish government unveiled a strategy to shift to an economy powered by 100% renewable energy by 2050. The Maldives had previously set a goal for complete carbon neutrality, but Denmark’s decision was a first for the developed world. Naturally, the decision was met with widespread praise, with President Obama lauding the country as “a leader on clean energy and alternative energy” and describing the Energy Strategy 2050 program as “very ambitious and impressive.” While the knee-jerk assumption, however, might be that Denmark will attempt to reach the 2050 target simply through the massive deployment of existing energy technologies through subsidies and mandates, innovation is playing a substantial role in the nation’s energy successes thus far and will continue to do so as they strive to meet their 2050 goal.

Roughly 20% of Denmark’s energy supply already comes from renewable sources, a milestone achieved in large part due to a strong national energy innovation ecosystem. Since 1992, the country has employed a carbon tax that reinvests revenue back into clean energy R&D programs. In fact, the tax is not unlike the innovation carbon price that ITIF has advocated for in the United States.

Institutionally, energy innovation is served by a network of science hubs featuring research collaborations among universities, private enterprises, and occasionally foreign scientists. Denmark has certainly not been afraid to reach out to other nations, rather than viewing them as rivals in a zero-sum game. In fact, the country has opened “Innovation Center Denmark” offices in Shanghai and Silicon Valley. The institutes are tasked with encouraging investment in Denmark, analyzing local innovation best practices, and facilitating research cooperation between Danish and foreign companies, with clean technology as a focus. The Shanghai branch, for example, recently announced 30 million DKK (5.35 million USD) in available grants for joint research into innovative renewable energy technologies.

In addition, the Danish government provides robust direct funding for renewable energy research, development, and demonstration. Their proposed 2012 budget of 1.242 billion DKK (221.5 million USD) for energy RD&D – to be administered by the cabinet-level Ministry of Climate, Energy, and Building – represents an almost 55 percent increase over the previous year’s allocation.

Denmark’s energy innovation policies have received validation from a variety of sources. ITIF’s 2012 Global Innovation Policy Index ranks the country in the upper tier for innovation policy capacity, with high marks for core policy areas like science and R&D, domestic market competition, and government procurement. Cleantech Group and the World Wildlife Fund put Denmark at the very top of the list, ahead of 37 other countries, in their 2012 global cleantech innovation index. Finally, a review of Danish energy policies in February 2012 by the International Energy Agency described the country as “at the forefront of not only renewable energy policy development but also technology research, development and deployment.”

Naturally, energy innovation has figured prominently in the government’s plans as the country moves forward in its goal to be completely renewable energy-powered by 2050. Our Future Energy, a November 2011 follow-up to the Energy Strategy 2050 plan, explicitly recognizes that existing technologies are insufficient. “There are still concrete technological challenges to be overcome before transition to a society with 100 percent renewable energy can be realized,” the document states, before going on to highlight “energy storage, intelligent regulation of the electricity grid, green means of transport, and development of new renewable technologies” as areas where breakthroughs are needed. RD&D is thus characterized as one of the plan’s “critical focus areas,” with facilitating the transition away from obsolete technologies also getting top billing: “We have to avoid becoming trapped with inefficient and non-renewable technologies. Otherwise we will be caught with an expensive and outdated energy sector in 30-40 years.” Energy innovation will hopefully help ensure that Denmark is not only the first developed country to strive for complete independence from fossil fuels, but also the first one to meet that laudable goal.