Denmark has had a very pro-active energy policy in both energy efficiency and renewable energy while at the same time opening its gas and power markets to competition. The share of renewable energy has increased dramatically, going from 3% of all electricity generation in 1990 to 25% in 2004. At the same time, the government’s renewable support policies up to the early 2000s came with a high cost for consumers and taxpayers. However, the current government is very attentive to cost-effectiveness and inclined to market-based approaches. Greater use of cost-benefit analysis, including for offshore wind plants, is crucial in shaping future policies.
The review indicates that energy efficiency programmes have historically been more cost-effective than renewable energy programmes in lowering emissions and enhancing energy security. Denmark’s energy intensity is 35% below the IEA average, due in substantial part to the government’s efforts to improve efficiency. This policy provides an excellent example for other countries, although the review notes that more should be done for transport efficiency.
While Energy Policies of Denmark 2006, the first thematic review, places particular emphasis on energy efficiency and renewable energy, it also covers the full spectrum of the Danish energy sector. It analyses the country’s pioneering role in electricity and gas market reform, assesses the growing consolidation of the supply sector and provides recommendations for the Danish government on how to ensure true competition in this changing environment. This review is an informative analysis for readers interested in Denmark’s energy experience and an invaluable guide for policymakers facing similar challenges.