Foreword: A nature-positive energy system for Denmark

We are facing humanity's most comprehensive common project: the climate transition and bringing society within safe planetary boundaries. It is a transition that requires a reckoning with over 200 years of societal development based on deep dependence on fossil energy sources. We must change the entire way we produce and consume energy.

It's like a moon landing. And it calls for a fundamental transformation of our society.

But fortunately, it is a task we can solve. We already have the technologies. We pretty much know which paths we need to take. We know what to phase out and what is economically efficient to invest in.

However, the window for action is closing. Exceeding the 1,5 degree target from the UN climate agreement in Paris is now threateningly close, and our remaining CO2 budget will be exhausted in a few years. We are almost in a kind of state of emergency, where the room for action is rapidly shrinking. In the coming years, climate damage may have much greater negative consequences for nature, the environment, people's living conditions and economic prosperity than even wars and other man-made threats.

Global temperatures have broken new historical records in 2024, several places on the globe have been exposed to inhuman heat waves of over 50 degrees Celsius, and in Antarctica temperatures have been over 10 degrees above pre-industrial levels. Warning lights are flashing everywhere.

Because we still do too little.

If we do not take on the task today, we will push the bill ahead of us and on to the next generation. Globally, humanity has never burned more fossil fuels than it did in 2023. Although climate scientists around the world have warned for many years that it is urgent to phase out fossil energy, humanity is still acting in a way that threatens our common future.

The key to solving the climate crisis is, first and foremost, a rapid phasing out of oil, gas and coal, because the majority of greenhouse gases emitted come from fossil energy sources. They dominate all sectors, except for the electricity supply. Over half of Denmark's gross energy consumption and two-thirds of the EU's still come from fossil fuels, and we cannot solve the climate crisis without freeing ourselves from them. Every year we emit millions of tons of greenhouse gases into the atmosphere because we burn millions of tons of wood in our power plants. Only 13 percent of our gross energy consumption is clean renewable energy from the sun, wind, geothermal energy and heat pumps. In the coming years, a green energy revolution is needed if we are to phase out fossil energy and build a 100 percent clean and sustainable energy system. But it is both realistic and possible. Because in a way, the energy revolution is already underway.

The prices of solar and wind energy are already competitive with fossil fuels, and the prices of batteries are falling as the world market scales up. According to the think tank RethinkX, which has calculated Germany's transition to a fully sustainable energy system, the combination of solar, wind and batteries could even become 70 percent cheaper than conventional energy over the next decade. It is important that Denmark seizes the new opportunities that this green energy revolution opens up.

Fortunately, Denmark has a strong starting point: The share of renewable energy in Denmark's electricity supply is among the highest in the world, and this has been driven not least by the Danish wind turbine adventure. Also within heat pumps, energy efficiency, district heating, geothermal energy, sector coupling, energy parks and intelligent IT solutions for the energy sector, Danish companies have many of the green solutions that are in demand on the world market.

These companies will be much stronger if Denmark emerges as a global beacon that other nations see as a role model. In 2023, Danish companies exported energy and environmental technologies worth DKK 87 billion, but in the coming years this export could multiply. As more and more countries demand efficient and clean energy technologies to reduce their greenhouse gas emissions, new export opportunities will open up. However, a crucial prerequisite for success is that Denmark itself takes the lead. At the same time, as a green frontrunner nation, Denmark can take the lead in ensuring that the EU meets its climate goals through an ambitious and forward-looking energy policy in which fossil fuels are rapidly phased out.

That is why the Green Transition Denmark has – based on input from professional experts and a number of green frontrunner companies – prepared an ambitious roadmap that shows how Denmark can become fossil-free as early as 2040. As part of the project, we have had EA-Energianalyse make thorough calculations and analyses of how to implement a faster green transition of the energy system. A transformation scenario has been drawn up that shows a path for how Denmark can reach net zero in 2040, while ensuring the decarbonization of international aviation and shipping from Denmark. The transformation scenario sets out a new wave of energy efficiency 2.0 and a faster and larger expansion of solar and wind energy. And the large additional amounts of renewable energy will be used to accelerate the electrification of Denmark and to produce green hydrogen, which, among other things, will be used to make e-fuels for aviation and shipping.

No matter which energy path we choose to take, time is running out. If we are to prevent climate tipping points and secure new competitive advantages for our green industries, there is no time to take more detours.

Future competitiveness and prosperity depend on the fact that we succeed in a rapid, efficient and sustainable transformation of our entire energy system in the next few years. Denmark has many of the companies that can provide the solutions. The task now is to gather all forces to free ourselves from fossil fuels and build a clean and renewable energy system that can ensure a robust supply of cheap energy in the future that does not harm the climate, environment and biodiversity.

Strong leadership and political will are needed if Denmark is to succeed in becoming a frontrunner nation in the green energy revolution, which has the potential to transform the entire way we produce and consume energy. It is in our best self-interest to take on the task, because the old combustion society has become an increasingly costly affair.

The SVM government and the rest of political Denmark should not let this opportunity pass. The government should call for negotiations so that a broad political agreement can be reached on a comprehensive and ambitious green energy plan that can pave the way for a fossil-free and ash-free energy system in 2040. They can advantageously invite green frontrunner companies and green organizations to the negotiating table so that the whole process results in a future-proof and innovative roadmap that can unite all of Denmark around the common task: To build a climate-friendly zero-emission society, where Denmark can operate safely and securely within planetary boundaries in the future.

It is important for the climate and nature. It is about securing the future and conditions of existence for all of us. It will strengthen our future security if we can produce our own energy rather than import it from authoritarian powers whose values ​​we do not like. And we can at the same time secure jobs and competitiveness in a rapidly growing world market for green technologies and environmental solutions.

– Bjarke Møller, Director of the Green Transition Denmark

Chapter 1: Summary

This report sets out a comprehensive roadmap for how Denmark can free itself 100 percent from fossil fuels and build an ash-free and sustainable energy system as early as 2040, where greenhouse gas emissions are reduced to zero, and so that we can then become a climate-positive society. Through an accelerated green transition of all of Denmark's energy consumption and production, it is also possible to solve two burning challenges that have so far been ignored in Danish climate policy: The phasing out of the large-scale burning of solid wood biomass and eliminating emissions from international aviation and shipping that bunker in Denmark.

The report does not just look at the classic energy consumption, but is based on an extended and comprehensive analysis of all the energy we consume, which holds our common economy together. In economic thinking, energy policy has often been treated as sectoral policy and energy has played a limited role. This report seeks to explain why energy plays a much greater role in productivity and the development of prosperity in society. There is a significant knowledge gap that needs to be overcome. Until now, traditional analyses of the energy system have also not focused much on how we will obtain absolutely sustainable energy within planetary boundaries in the future. This report is an invitation to take these challenges seriously.

The Danish Green Transition Denmark has therefore – and with ongoing input from professional experts and from eight green frontrunner companies – drawn up a transformation scenario for Denmark, which aims to present a realistic and economically responsible proposal for how Denmark can phase out fossil energy in all parts of society. This scenario, T2040, is based on thorough calculations carried out by EA-Energianalyse on the Balmorel model.

The scenario is designed to show policymakers that there are significant climate and economic benefits to choosing an accelerated green transition instead of a more cautious approach or sticking to business as usual. It is an extremely difficult and demanding task for society to replace a more than 200-year-old fossil energy system and fossil infrastructure, so that all our energy in 2040 comes from clean and renewable energy sources and that the entire society can be powered by green electricity instead of polluting fossil fuels and solid wood biomass. This task should not be underestimated.

The T2040 scenario is a concrete suggestion for how the challenge can be approached. Our hope is that the government and the rest of Christiansborg will be inspired and act on it, so that Denmark will show the other EU countries in a significant and clear way how a country can build a modern, future-proof and robust energy system that can help solve the climate crisis in an economically responsible way. There must also be sufficient green electricity so that Danish PtX factories can produce the next generation of e-fuels for aviation and shipping.

Denmark has a strong starting point for leading the way in the major green transformation of the energy system, and this should also be made a key issue when Denmark takes over the EU presidency in the autumn of 2025.

What does the transition require?

There are many different paths to realizing the ambitions, but the scenario is set up to give political decision-makers a better and more precise tool to navigate from. There are clear milestones along the way.

The T2040 scenario requires behavioral changes and will pave the way for a new wave of energy efficiency improvements that can save more energy. The embedded energy consumption in all products must also be reduced through a strong focus on the circular economy, which can reduce waste volumes and ensure a much greater recycling of materials in society. The scenario calls for a faster and larger scaling of solar and wind energy combined with much more energy storage and batteries, and many more heat pumps and more geothermal energy are needed to create an absolutely sustainable energy system with high security of supply.

There must be a faster electrification of road transport, industry and heating supply, because it is a key prerequisite for saving fossil energy and ensuring a cost-effective transition. Through political regulations and economic incentives, as well as greater investments in the electricity grid's motorways, electrification can be accelerated in all parts of society. This will increase demand for green electricity. In recent years, there has been a great focus on the supply side, and many political promises have been made in both Denmark and the EU about more gigawatts of solar and wind energy. That is fine. But there has been far too little focus on the demand side, and electrification across all sectors is a very crucial piece here. Because it can also pave the way for a new and larger wave of investments in renewable energy.

It is also crucial to provide enough green electricity for future needs. Many more solar cells and wind turbines are needed so that the many new electrolysis plants can produce green hydrogen and create the next generation of e-fuels for shipping and aviation. All parts of society must be decarbonized, and where possible, this must be done through direct electrification, as it is the cheapest and most energy-efficient solution. However, in long-distance aviation and shipping and in parts of heavy industry, it may be necessary to make indirect electrification via green hydrogen.

It is important to scale up green technologies on the market in conjunction with new proactive green regulations. A more proactive green industrial policy in the EU, more green public procurement and larger targeted investments in new technologies must support an accelerated transition. Research studies show that it is cheaper and more cost-effective to accelerate the green transition rather than postpone it and choose business as usual. Fortunately, we are in the midst of a major green energy revolution, where the prices of solar, wind, batteries and other critical technologies are falling rapidly. Denmark has a unique historical opportunity to reap these benefits.

The calculations behind the Danish transformation scenario, T2040, show that it is cheaper to rapidly electrify road transport, industry and heat supply, but there are also significant costs associated with building new PtX factories that can produce e-fuels for aviation and shipping. Instead of excluding international transport from national and European climate accounts, we as a society should take responsibility for ensuring 100 percent decarbonization of these industries.

All sectors must contribute to ensuring that we reach our goals in relation to the linked climate and nature crises, so that we can live within planetary boundaries. Agriculture must also go through a major transformation to achieve this goal. This report shows that intensive and industrialized agriculture today also has a very high consumption of fossil energy, which is linked to the intensive operation with artificial fertilizers, pesticides and excessive animal production, and it occupies a large area outside Europe through the import of soybeans and energy from all over the world.

The overall equation can only be achieved if agriculture also cuts back sharply on animal production. In the agriculture of the future, much more plant-based food is produced, more carbon is sequestered in the soil and new bioeconomic businesses are developed that can create higher value on a much smaller area. This can free up large agricultural areas that have so far been used to produce animal feed, and these areas can in future make room for much greater afforestation, open nature and more renewable energy.

Green transformation in Denmark

The Transformation Scenario for Denmark (T2040) shows that Denmark can remove an extra 2040 million tons of CO207e by 2 compared to the emissions resulting from the government's Climate Projection. A faster scaling up with energy efficiency improvements and renewable energy, together with more ambitious electrification, a circular economy and much greater afforestation, can ensure these additional climate effects. The T2040 scenario shows that Denmark can reach net zero emissions in 2040 and then suck CO2 out of the atmosphere without becoming dependent on much CO2 capture. And instead of investing in expensive storage, the captured carbon must be actively used and utilized in the production of carbon-containing fuels for international transport that cannot be directly electrified.

The analysis shows that:

An accelerated green transition in the way we consume and produce energy will be a profitable business from a socio-economic perspective, as we can thus avoid much larger climate bills in the future, promote biodiversity and reduce environmental pollution, which is associated with significant costs for society.

Today, Denmark and the rest of the EU live far beyond planetary boundaries, and this is closely linked to the way we consume fossil energy and have structured our society. This report shows that the European electricity and heating system, with its dependence on fossil fuels and its large overconsumption of solid wood biomass, is breaking several of the planetary boundaries. It is time to choose a completely different path. It should be an ambitious, realistic and cost-effective reduction path that can ensure that our energy system can better stay safely within planetary boundaries – this applies not least in relation to climate, biodiversity, air pollution and land use. By choosing this green transformation path, we can also achieve greater security, because we will no longer be dependent on a large annual import of fossil fuels from authoritarian regimes whose values ​​we do not share.

Chapter 2: 15 strategic steps towards a fossil-free energy system by 2040

Ambitious political action and great political courage are needed if we are to succeed in developing a fossil-free energy system based on renewable energy and within planetary boundaries by 2040. Denmark is only one-sixth of the way to achieving this goal. Therefore, a political paradigm shift and much greater action are needed.

We must move away from considering climate policy as a separate area of ​​responsibility and instead make the climate and energy transition a crucial parameter in Denmark's economic policy. Energy policy should in future be treated as a major policy and not as a sectoral policy.

Due to the climate crisis, we can no longer postpone the necessary climate policy decisions. And for the sake of the economy, it is in our best self-interest to ensure a rapid phasing out of fossil fuels and biomass burning, which have created an environmentally harmful and inefficient energy system.

The speed of transition must be greatly accelerated. Within the next 100 days, an ambitious and comprehensive energy and climate policy action plan should be implemented that can ensure that Denmark has 2040 percent fossil-free energy consumption by 100 at the latest and can strengthen its competitiveness in the global energy race to absolute sustainability within planetary boundaries. At the same time, Denmark should take responsibility for its share of emissions from international transport and phase out the burning of solid wood biomass.

Political action is needed at two levels if the ambition is to be realized:

As is well known, hope is not a sustainable strategy. Green Transition Denmark has therefore – with input from professional experts and eight green frontrunner companies – drawn up a realistic and balanced transformation plan, which is a concrete proposal for how we can future-proof our energy supply and make it absolutely sustainable. Instead of attaching very high hopes to uncertain forest and wetland figures, or letting too much of climate policy depend on overly optimistic future estimates for CO2 capture and pyrolysis, one can instead choose the transformation path. It prioritizes safe, effective and rapid technological and economic measures that are highly likely to have a large and positive climate and nature effect.

The plan aims for much greater resource and energy savings through new initiatives to promote a circular economy and more ambitious targets for energy efficiency. The transformation plan can make Denmark completely fossil-free and climate-neutral by 2040, and it will save an extra 207 million tons of CO2e on the way there. The plan is based on thorough calculations of the effects in the overall energy system, carried out by EA-Energianalyse.

Many steps need to be taken along the way, and it is important that these are agreed upon in broad consensus, so that all players in the energy sector know what is planned for when new large long-term investments are to be made. But political decision-makers should take at least 15 decisive steps to realize the goal of a CO2-neutral and fossil-free Danish energy system based on 100 percent clean and renewable energy.

Chapter 3: Farewell to the fossil fuel society

The most important currency in any modern economy is not the marginal gains from an increased supply of labor. It is access to cheap, sufficient energy. For it is the basic prerequisite for most of the productivity gains that are the source of increased wealth and value added. Without energy, there is no movement. No human being can work or be productive without consuming sufficient amounts of energy in their daily diet. Similarly, no machine can function without energy. Or as economics professor Steve Keen has put it: “Labor without energy is a corpse, and a machine without energy is a sculpture.”

The global energy system is fundamental to the way we live. Modern food production, which today ensures citizens access to enormous quantities of historically cheap food, is powered by machines, chemicals and artificial fertilizers, and thus by fossil fuels. Transport, construction sites, offices, the internet, telephone networks, water and heating supplies are just as dependent on energy. Energy is embedded in all the goods we buy and consume. Today, most of that energy is fossil fuel. But it damages the climate, because it is behind 90 per centof global CO2emissions, it pollutes the air and it breaks several of the planetary boundaries. (See Chapter 4)

They don't have to be like that. The world's governments have decided to decarbonize society, phase out fossil fuels and reduce greenhouse gas emissions. It is crucial that this is successful. Not only for the sake of the climate and nature. It is also for the sake of the economy. Because in the fossil energy system, two-thirds of all energy is wasted before it is used by companies and households. The entire way we consume and produce energy must change within a few years.

Fortunately, a new green energy revolution is underway on the world market, which may send oil, gas and coal to the landfill of history faster than you imagine. But it is an extremely demanding and complex task to transform the entire current fossil energy system, which has been built up over 200 years. The system is composed of billions of units and machines, from extraction, to transport across the world's oceans and in pipelines, to refining, further processing and combustion in power plants and internal combustion engines. All of these parts of the value chain are hard physical units that need to be replaced. The total length of the world's oil and gas pipelines is about two million kilometers, which is equivalent to traveling to the Moon and back to Earth two and a half times.

Since the rise of industrial society in the 1800th century, access to fossil fuels has been a driving force for economic development. At the beginning of the 1800th century, biomass accounted for 98 percent of the energy used by humanity, and in Denmark we had burned so much wood in the previous centuries that only 2-3 percent of the country's area was covered by forest. But then came the fossils, and they gradually spread from sector to sector.

We went from horses to cars and trucks and then planes and giant container ships. We got enough energy to build bigger and bigger high-rise buildings and then skyscrapers, bridges over the Great Belt, the Sound and other straits of the world. And man reached the moon. What once seemed impossible gradually became possible.

The large additional energy input from first coal and then oil and gas has given humanity superpowers to build a modern society with historically high prosperity. The energy system makes it possible to process around seven billion tons of industrial materials such as steel, cement, plastics, fertilizers and much more every year.[2] There has been a historically large acceleration, and the exponential growth curves can be drawn from area to area.

Fossil fuels have been a major driver of productivity growth in such a profound way that even many leading economists have had difficulty grasping their importance.

In Europe, total energy consumption – measured in kilocalories (kcal) per capita – has increased by about 7 times since 1800. Now, each inhabitant of Europe uses on average so much fossil energy that – converted to the energy content of oil – it corresponds to more than 26 barrels of oil per year. An oil barrel contains 157 liters of oil. A very large part is burned in the transport system, and a lot of energy is embedded in the industrially manufactured products we consume. The agriculture and food sector also swallows enormous amounts of fossil energy. For example, the food of an average EU citizen contains so much fossil energy embedded that it corresponds to each citizen drinking 655 liters of diesel per year.[3]

Two-thirds of gross energy consumption in the EU still comes from oil, gas and coal. During the energy crisis in 2022, EU countries' imports of fossil fuels reached over 690 billion euros, and in 2023 fossil fuel imports were 456 billion euros. Behind these figures is revealed a deep dependence on authoritarian regimes whose values ​​we do not share in Europe. Our economy is very vulnerable to geopolitical conflicts and wars involving oil and gas producing countries, which can either lead to supply crises or major price fluctuations. Conversely, if we could produce our own energy in the form of renewable energy, the vulnerability would be significantly reduced. If so, we should only import raw materials before installing solar cells, wind turbines and heat pumps, but we would not be dependent on constant supplies of oil, gas and coal from third countries every day, month and year.

Fortunately, a turning point is occurring in electricity supply. In the first half of 2024, it was the first time ever in the EU that clean renewable energy sources supplied more green electricity to the electricity grid than fossil fuels, and it is a shining example of the new energy revolution that is about to break out. But there is still some way to go.

Denmark is more fossil than green

In Denmark, we often see ourselves as a green frontrunner nation. But in reality, we are still predominantly a fossil-fuel society. Denmark's national gross energy consumption was 692 petajoules (PJ) in 2023, and approximately 53 percent is fossil, according to The Energy Agency'sl. One petajoule covers the electricity consumption of approximately 165.000 Danes in their homes, but only a small part of our energy consumption is electrical. In Denmark, we talk a lot about the fact that our entire electricity consumption in 2030 may consist of green power from wind turbines and solar cells, and it would be positive if we could become one of the first countries in the world to succeed in doing so. We are well on our way to achieving the goal of 100 percent.

In 2023, total electricity consumption in Denmark was 36 TWh, which corresponds to almost a fifth of Denmark's gross energy consumption, which, converted from petajoules, was 192 TWh.[4] But it is not enough to make this part of energy consumption green by 2030. We must also make the last four-fifths green.

If you look at the Danish Energy Agency's 2022 statistics, you can see that renewable energy accounts for 39 percent of our total gross energy consumption, including bunkering for international shipping and aviation. But only 13 percent of gross energy consumption comes from completely clean sources such as solar and wind energy, heat pumps and geothermal energy, because two-thirds of our so-called renewable energy comes from burning wood biomass and biogas. This is another serious downside to the combustion society.

Denmark has an immediate emission of over 20 million tons of CO2e per year due to the burning of biomass – and of this, approximately three quarters come from the burning of wood. In the short term, it is greenhouse gas emissions that contribute to worsening the climate crisis, because new forests have not yet grown up to absorb the many megatons of CO2 out of the atmosphere.

In this chapter five, we have made some calculations of what the transformation away from fossil fuels and the burning of solid wood biomass will require. And we have chosen to make these calculations a somewhat more conservative estimate. If the climate impact from wood energy is considered over a longer period of years, then the time-weighted climate impact from Danish wood energy consumption can be calculated to be up to 4 million tons of CO2 in recent years.[5] This is because over time new forest grows up, or alternatively waste wood would rot.[6] Even with this correction, wood energy still has a climate impact equivalent to approximately one third of coal and just over half of natural gas, which is why it is best for the climate to replace it with clean renewable energy sources such as solar and wind combined with heat pumps, heat storage and batteries.

Count it all in

It is important to understand what is counted when we talk about Denmark's energy consumption, because often important parts of the complex system are overlooked or omitted. Denmark is often painted as greener than it actually is.

If all international transport – including international transport operated by Danish companies for a longer period of time (more than one year) – is included, the Danish economy as a whole has an even greater gross energy consumption across the board. 1170 petajoules. Viewed from this perspective, a full 68 percent of Denmark's total energy consumption is fossil fuel - and that figure has been fairly stable for the past twenty years. Viewed from this perspective, only 13 percent of energy consumption is electrified. Even though we have gained more renewable energy, fossil fuel consumption has increased by a good 63 percent since 1968. It should be emphasized that the rest of this analysis does not include energy for international shipping and aviation, which is fueled Udenfor Denmark, because a large part of this transport concerns goods that never arrive in Denmark.

Overall, the Danish economy burns over 120 million barrels of oil per year, if you include bunkered energy – i.e. fuel that is filled in Denmark on planes, ships and vehicles going abroad (the so-called bunkering).[7] The transport sector swallows the lion's share of oil products. Although sales of new electric cars to Danes have now overtaken sales of new fossil cars, there are currently around 2,5 million fossil cars and trucks on Danish roads, and we have plenty of other machines powered by fossil energy. If a clear plan is not put in place for their phasing out and a full electrification of road transport, non-road machines and other combustion engines, Denmark will continue to be deeply dependent on fossil fuels for the next decades. And we still have a long way to go here.

The EU has set such strict emission requirements that the sale of new fossil-fuelled passenger cars will effectively end in 2035. But since cars often last 14-15 years on the road, there could still be many fossil-fuelled cars on the road in the 2040s if the phase-out is not significantly accelerated. Continued sales of fossil-fuelled cars will increase our climate challenge considerably.

An important response to the challenge is to accelerate the electrification of transport and the rest of society. But here too, there are problems. Most of Denmark's gross energy consumption is still fossil, and almost 300.000 Danish households have gas boilers, even though there are good and well-developed alternatives in district heating or heat pumps.

In industry, only 38 percent of production is electrified, although research analyses have shown that 78 percent of industry can be electrified with known technologies, and perhaps up to 99 percent can be electrified with technologies under development. [8] According to an analysis for the Danish Energy Agency, it is estimated that as much as 92 percent of the total energy consumption of Danish industrial companies can be directly electrified.[9]

There is also a structural barrier in the electricity grid itself. Many Danish substations still lack spare capacity. Due to several years of underinvestment in the electricity grid, many solar and wind energy projects have been delayed and put on hold because the grid cannot handle the additional energy production. However, Energinet will invest DKK 41 billion in reinforcing the grid in the period from 2023-2026, and the plan is to establish up to 2030 km of power lines by 2700.[10] In the future, the grid must also become better at handling temporal imbalances between consumption and production of electricity, because solar and wind production fluctuates more and does not always coincide with electricity consumption. Transforming the entire Danish energy system away from fossil fuels is a demanding and complex task, and the challenges should not be underestimated. How this task is tackled is crucial. Much is at stake.

An energy boost on the really big blade

120 million barrels of oil are an extra energy boost for the Danish economy, which helps to increase productivity in society. If the energy in this oil is converted into the work of one person, it is equivalent to approximately 540 million people working day and night, 24 hours a day, for an entire year.[11] Put another way, more labor is squeezed out of oil than the total population of all EU-27 countries and the UK combined.

This may be hard to grasp, but without sufficient amounts of usable and cheap energy, the Danish welfare society would hardly survive. What kind of energy it is is not necessarily crucial. It does not have to be fossil energy, as it has been for the last century. It could also be renewable energy that makes the wheels turn in society. However, this requires that a robust and realistic roadmap is made for how we can remove the last fossils from the Danish energy supply and replace it with alternative energy sources that are clean and renewable.

It is important that the transformation happens in a smart way so that businesses and households still have access to sufficient amounts of energy – even when it goes from black to green.

Here, it is not enough to make the electricity in the electricity grid green. It is also important to make a clear political choice to – through regulations and economic incentives – phase out all fossil fuels in transport, industry, agriculture and heating. This is a demanding task, because it takes time to install enough solar cells, wind turbines, heat pumps, geothermal heating systems, optimize all energy systems and replace all fossil cars with electric cars. The day this succeeds, it will lead to fundamental changes in our economy and in the way we produce and consume.

You can't just leave the task to the market. Politicians can, through smart regulations, ensure faster electrification of transport and other sectors, and in doing so, they can also help create a greater and stable demand for green electricity, which can strengthen the business case for those investing in solar parks and wind turbines.

Until now, there has been a great deal of political focus on ensuring a quadrupling of onshore solar and wind energy by 2030, but little has been done to address the structural challenges on the demand side. If the green transition of the energy system is to be accelerated, it is crucial to ensure a better connection between supply and demand.

If energy levels fall, it could have dramatic consequences for the entire economy and the way we live. We should know that. After the energy crises of the 1970s, a major productivity crisis followed. At that time, people talked about "the great productivity slowdown", and many governments lost power along the way due to their impotence in the midst of stagflation that swept across Europe's economies with both economic stagnation and high inflation at the same time. It was neither the first nor the last time.

When Russian President Putin invaded Ukraine in February 2022 and triggered a new energy crisis, it immediately sent violent tremors through European societies, which at the time were heavily dependent on cheap Russian oil and gas. While EU countries closed the Russian gas taps and imposed embargoes, governments fought to get liquid LNG gas shipped in from the USA, Qatar and other countries. Energy was saved in households, companies and public institutions. Many EU countries dramatically increased the expansion of solar and wind energy, but it takes time to increase the supply of green electricity. And it usually takes far too long, because there are long waiting times to get permits through and new energy projects approved. Slowness has a high price. Also in terms of security of supply.

Fossil fuel consumption continues to rise

Global greenhouse gas emissions have never been higher, and fossil fuels are responsible for almost 37 of the 40,9 gigatons of CO2, which the world emits, including emissions from deforestation, etc. Although the world's climate scientists warn that it is urgent to phase out fossil fuels, the world's consumption of oil, gas and coal set a new historical record in 2023 with 504.830 petajoules, and 81,5 percent of the world's primary energy consumption is currently fossil.[12] Since the turn of the millennium, three-quarters of the additional energy consumption has been supplied by fossil fuels.

Although the amount of solar and wind energy has increased by over 100 times since 2000, as renewable energy has become competitive in price, solar and wind energy still provide approximately 6 percent of the world's primary energy consumption.[13] Hydropower supplies 6,4 percent. And nuclear power accounts for only 3,7 percent. and its share has even shrunk in recent decades because it has become more expensive from decade to decade, and in terms of lifetime costs, it cannot compete with solar and wind energy.

Although there are real and proven alternatives to fossil fuels, we have not yet reached the social and economic tipping point where the fossil era collapses and clean and alternative energy sources definitively displace fossil fuels. But it may happen sooner than we imagine. The International Energy Agency, IEA, now expects that demand for fossil fuels will peak this decade. “The transition to clean energy is happening all over the world and is unstoppable. It is not a question of ‘if’, but of how fast – and the faster the better for all of us,” says IEA Director-General Fatih Birol.[14]

It is possible, through targeted investments, an active industrial policy and courageous political decisions, to completely free ourselves from fossil fuels and build a 100% clean and sustainable energy system. But it is like turning a supertanker. The fossil fuel industry exercises great power and influence over political decision-makers, and it makes misinformation and disinformation campaigns to delay the transition.

Some countries are still holding on to the old infrastructure and fossil technologies that they have already invested in. This is largely because new energy investments often have to compete with established energy technologies, where the capital costs have already been incurred: for example, the investment and operating costs of a new electric heat pump must be able to compete with the fuel costs of an existing gas boiler. There are also ingrained habits and beliefs that citizens, companies and governments find it difficult to give up. But at some point the social tipping point occurs, and we know from history that the transition can then proceed very quickly. There is increasing evidence that it will be cheaper to switch to a 100 percent electrified energy system, powered by clean green electricity, than to cling to a system that burns oil, gas, coal and solid wood biomass, pollutes the air and damages the climate. Especially if you take into account the major negative environmental effects that fossil fuels have, which they do not pay for today.

The fossil fuel energy system has ended up as a dysfunctional system that threatens the climate and the living conditions of future generations. It also has so much waste in every part of the value chain that it is no longer competitive and has become economically irrational on a scale that makes any finance minister’s efforts to increase labor supply resemble a tea party on the Titanic.

Fossil waste

Although the fossil energy system has historically played a very important role in the development of prosperity, it is in reality very inefficient. The energy waste is enormous. Two thirds of all the world's primary energy is lost before it is transformed into active work and converted into energy services that add value to society. See Figure 1.

Fossil fuels account for 75 percent of this energy waste, because energy is lost during extraction, transportation, refineries, combustion in machines, and the conversion of fossil molecules into electrons and heat. See Figure 2.

Globally, up to $4.600 trillion in energy is wasted annually, or around 5 percent of the gross domestic product, because that is the reality of the fossil energy system. This is shown by calculations made by the American think tank, RMIIt's a staggering amount, but so much of fossil energy is wasted before it contributes to real value creation in society – before cars and trucks drive, cranes lift heavy elements on construction sites, ships sail, people's radiators heat up or before our dirty clothes are washed in the washing machine.  

But fortunately, there is a technological and proven alternative solution that can perform most of these tasks much more energy-efficiently and without the health-damaging noise and air pollution - and that is electricity. 

Instead of being concerned with how much primary energy society has available and how we can secure new supplies of oil and gas from authoritarian regimes abroad, we should rather focus on electrifying as much as possible and using energy as smartly as possible, so that end consumption can be powered directly by green electricity without the major waste and high conversion losses associated with both fossil fuels and the burning of solid wood biomass.  

Nick Eyre, Professor Emeritus at Oxford University, has calculated that in a fully electrified system we could get the same amount of energy services and save 40 percent. of the energy input that would otherwise be fed into the fossil fuel system. His calculations and the new figures from RMI are a wake-up call to the world's decision-makers.  

Government finance ministers and corporate CFOs, who often spend a lot of time finding cost-effective solutions, are looking into a green ocean where there is the opportunity to reap very large financial gains.

In reality, much more extra productivity can be extracted from transforming the energy system and moving away from inefficient fossil fuels than from squeezing the lemon a little more in relation to human labor. While many employees in the modern labor market are increasingly affected by stress, psychological crises and burnout – because the pace of work and the speed of change have accelerated sharply in recent decades – governments have overlooked that there is a large productivity gain hidden in society that can be easily harvested if inefficient fossil fuels are phased out.

Should society re-energizes – as it is called in modern Danish – the ministers of state, finance, economics and business should take much more interest in energy policy.

Increased speed can save money in the long run

It is often said that the green transition will be expensive. And that was also the case back then, when the states had to support the first wind farms and solar cells. But that is no longer the case. Some are put off by the fact that you have to make large up-front investments in solar cell systems, wind farms, batteries and other energy storage, industrial heat pumps, new infrastructure. And on top of that, they may feel that it is a hassle to change the old ways of doing things and take the old fossil plants out of operation. But the advantage is – as is also the case with energy efficiency improvements – that the money is quickly repaid. Although the capital costs of the transition may be high, the marginal operating costs are very small. You do not have to buy new oil, gas or fuel every year, but can produce your own energy. The costs of maintenance are also far lower than for the machines of the combustion society.

A great comparative study, based on more than 700 research papers, states that the transition to renewable energy on a global scale today is economically viable. One of the primary reasons for this is that the prices of solar and wind have fallen so much in recent years (despite increases in 2021-22), and they have become economically competitive energy sources compared to oil and gas.

The amount of fossil energy we get out of each unit of energy invested – i.e. Energy Return on Energy Invested (EROI) – has fallen in recent decades, and they can no longer compete with renewable energy.[15] On average, renewable energy systems deliver more usable net energy per unit for each dollar invested than investing the same amount in fossil fuels. This is even when taking into account the need for additional backup for fluctuating renewable energy.[16]

IfAccording to the think tank RethinkX, which has calculated Germany's transition to a fully sustainable energy system, the combination of solar, wind and batteries looks set to become 70 percent cheaper than conventional energy over the next decade.

A larger research study, which has analyzed technology developments and different scenarios, also shows that a rapid transition – to clean renewable energy sources, electrification of almost everything, combined with battery storage, sector coupling and PTX e-fuels for the last hard-to-abate areas – is far cheaper than both a slow transition with a gradual phasing out of fossil fuels and business as usual.[17] The accumulated gain could be between 5.000-12.000 billion dollars by 2070 – depending on interest rate developments, etc. See figure 6.

Figure 6: Decisions on how and when to decarbonize the global energy system depend largely on expected costs. Here, empirically valid probability projections of energy technology costs have been developed and used to estimate the costs of future energy systems under three different scenarios. Compared to continuing to use a fossil-fueled energy system, a rapid green transition would result in savings of billions – even without taking climate damage into account.

– Source: Way et al., Joule 6, 2057–2082, September 21, 2022.

By 2050, $514 billion could be saved on the annual global energy bill if a rapid green transition was made rather than business as usual. This calculation does not even include the large positive side benefits resulting from climate improvements, clean air, lower healthcare costs, etc. In the EU27 alone, fossil fuels and biomass burning are the main causes of air pollution, which causes around 250.000 premature deaths each year.[18]

A group of researchers at Stanford University has shown that it is technically, economically and organizationally possible to convert the entire EU energy supply to clean renewable energy sources within a short period of years. Their calculations show that the green transition will require 57 percent less energy overall, and private costs will be 61 percent lower by 2050 than if fossil fuels were to remain in use. At the same time, 28 million new long-term, full-time jobs would be created.[19] Other research studies have shown that investments in green infrastructure, renewable energy, and energy efficiency create almost three times as many jobs as investments in fossil fuel industries.[20]

It will also be safer for the financial system to turbocharge the green transition.

In 2023, the European Central Bank conducted a thorough stress test of the transition to a net-zero society, and it shows that it is cheaper and carries fewer economic risks to make an accelerated green transition in Europe than to postpone it until later or to proceed cautiously. A rapid transition with investments in electrification, in solar and wind energy and in energy efficiency improvements "will bring significant gains for businesses, households and the financial system" compared to a cautious and slow transition, where crucial decisions are postponed until later.[21]

The big climate bill

The risk and cost of not acting in time grows year by year.

Economists still disagree about the exact cost, as there are many factors and feedback loops at play. Some economists, including Nobel Prize-winning economist William Nordhaus, have argued that it would only cost about 2,1 percent of global GDP if global average temperatures rise by 3 degrees above pre-industrial levels, which is largely likely with current policies. But other and more recent research studies talking about a bill of 5-10 percent of GDP.

Economists from Harvard University and Northwestern University even estimate in an analysis published in 2024 that the additional bill could be as much as 12 percent of gross domestic product For every degree the global temperature rises.[22] If temperatures in the year 2100 are 3 degrees above pre-industrial levels, production, capital and consumption could shrink by 47 percent by then. According to this analysis, the total welfare loss would be equivalent to the Great Depression of 1929 – and that would be permanent.

The sooner we tackle the climate crisis, the more likely it is that we can avoid the enormous wealth losses that climate change seems to be causing. The longer we wait to deal with the climate crisis, the bigger the bill will be. These economists even estimate that the socio-economic cost of the current 3 degree climate policy is a whopping $1056 per ton of CO2e – i.e. approximately six times higher than the Danish CO2tax on industry. There is still disagreement among economists about where CO2The tax should be there to address climate change, but there is no doubt that it will lower future costs if we quickly phase out fossil energy sources.

If governments made a rational economic and informed choice of energy sources, they would choose the cheapest sources of energy, and that is no longer oil, gas and coal. (See Chapter 5) But that is not happening. And it is not just a matter of old habits. It is happening largely because many governments unfortunately still help to distort the market.

Today, there is a historically high level of state support for fossil fuels on a global scale, which de facto locks us into the combustion society and delays a rapid and profound transformation of our energy system to clean and renewable energy. Direct and indirect state support increased to 2022 trillion dollars in 7000, according to calculations from the International Monetary Fund, IMF. A full 60 percent of the total subsidies are indirect and are linked to air pollution and climate damage that fossil fuels cause to society, but for which they do not pay. If they had to pay the true price – and were not allowed to pollute the air and atmosphere almost for free – fossil fuels would hardly be able to compete.

In the midst of a historic climate crisis, the oil, gas and coal industries receive government subsidies equivalent to 7,1 percent of global gross domestic product. On top of that, one could also add the annual energy waste of approximately 5 percent of GDP associated with the old fossil energy system.

In comparison, governments spent only 4,4 percent of gross domestic product on education. If all fossil fuel subsidies were phased out, it would not only trigger a boom in solar and wind energy, batteries, heat pumps, geothermal systems and other green energy solutions. It could also save the lives of 1,6 million people worldwide who die prematurely each year as a result of fossil fuel air pollution.

If oil, gas and coal were to compete on pure market terms and pay for their major climate, environmental and health damage – instead of emitting CO2 for free or at very low quota prices2e to the atmosphere – these energy sources would certainly be outcompeted on the market.

It may be surprising that the world's finance ministers are not more actively involved in the work of ending the fossil energy system. One possible explanation may be that they still use economic models and equations that underestimate the importance of energy for basic productivity development, and they still attach much greater importance to labor supply and machinery. There seem to be good reasons to reassess these economic models. For there is some evidence that in practice there is a very strong correlation between energy and GDP. See figure 7.

Perhaps energy will gain a more prominent place in economic thinking as new and greener economic models are developed, and the negative side effects of fossil fuels will be priced more fairly through, for example, higher climate taxes. But we still have to see that the finance ministers of Denmark and other European countries proactively take energy policy as seriously as they should.

In Denmark, for example, the share of energy taxes in gross domestic product has more than halved in the last ten years. And even though CO2 emissions have been gradually introduced,2taxes, the reduction in total energy taxes has been even greater. Overall, the economic incentives to promote energy efficiency and reduce pollution have been eroded in the last 25 years. Just before the turn of the millennium, environmental and energy taxes together amounted to just over 5,2 percent of gross domestic product, but in 2023 it was only 2 percent of GDP. See Figure 8. 

Globally, Denmark has shown leadership by establishing Beyond Oil & Gas Alliance, which is internationally pushing to stop new concessions and licensing or leasing rounds for oil and gas, but in the North Sea the state has done the exact opposite and allowed new drilling. If Denmark is to credibly take the lead in a green transition of the energy sector and pursue an ambitious climate policy, a rapid phasing out of the Danish oil and gas fields should also be addressed. 

A broad majority in the Folketing has decided to stop extraction in 2050, but in relation to the climate it is far too late, for Denmark's global CO2-budget is running out in the next few years. (See chapter 4) If Denmark is to stay within the UN's Paris Agreement and the goal of a 1,5 degree temperature increase, there is a need for a rapid phase-out of fossil fuel extraction in the North Sea. 

A third place to start could be if finance ministers definitively end all market-distorting subsidies for fossil fuels that increase climate and environmental damage. The EU's 8th Environment Action Programme has committed member states to phase out fossil fuel subsidies, but according to the European Environment Agency, member states are still billions of euros in direct and indirect support for fossil fuels, and in Denmark it was approx. 3,6 billion. DKK in 2022. In Denmark, companies with energy-intensive processes and agriculture still receive 100 percent exemption or a significant reduction for a number of energy taxes, even though it actually makes it cheaper for them to use fossil fuels rather than choose electrical alternatives. This prolongs the fossil age instead of shortening it. 

A fourth way is to proactively provide financial support for the green technologies that will become the backbone of the energy system of the future. Denmark and other EU countries can more actively – as the USA has done with the Inflation Reduction Act, for example – provide more financial support and pursue industrial policies that can promote investments in green technologies and solutions. If this is not done on a large scale in the EU, the risk is that China will expand its geopolitical dominance within the green technologies and value chains of the future in the coming years. 

The good news is that we still have a lot of room for manoeuvre, because the prices of renewable energy are now historically cheap. They must be brought into play in a large-scale and far-sighted recalibration of the entire energy policy. And a new green industrial policy can help accelerate the transition here. Of course, one should not underestimate that the transformation is a demanding task, and all sectors must replace the old fossil technologies and solutions. The old capital apparatus must be replaced, and new green technologies and solutions must play together properly. In most areas, the green solutions are already ready, and they can be implemented quickly and cost-effectively.  

The T2040 scenario in this report shows that Denmark, for example, can save a lot of money by a faster transition to electric cars. (See Chapter 6) The restructuring of the heating sector and the electrification of industry will also be economically advantageous. Great gains can also be made by investing more in energy efficiency and stimulating citizens and companies to save energy. The cheapest energy is always the one we do not use. 

The biggest barrier to creating a fossil-free energy system is that the conversion of air and sea transport can be relatively expensive, because the production of e-fuels with green hydrogen is still relatively expensive. However, price increases in these sectors may be limited in the future. If the price of batteries continues to fall and the major advances in their energy density continue, it is not inconceivable that a significant proportion of shipping and air transport can also be electrified towards 2040.  

No one can predict the future, and in this report we have taken as our starting point that significant amounts of e-fuels will be necessary for a period of time to ensure 100 percent decarbonization of international transport over long distances. However, we do not believe that it is realistic to dream that people's desire to travel and mobility will decrease. But in relation to the climate crisis, we need to find a sustainable and realistic solution to this challenge. And we do not have time to wait for all the green electric solutions to be ready, and therefore it is important to get started with the transition. Also for the transition of international transport, even though it is an extremely difficult and demanding challenge.  

The most important societal challenge in the next 10-15 years is to phase out all fossil fuels. This requires, above all, that we build a 100 percent sustainable and robust energy system, where we can become self-sufficient in clean renewable energy. It is urgent. A faster scaling of green technologies and solutions on the market is crucial to bringing us to our goal. It can also strengthen our geopolitical security if we succeed in completely freeing ourselves from the import of fossil fuels from the authoritarian regimes from Russia to the Middle East, whose values ​​we do not share. Here, things can only go too slowly. 

Energy creates movement and drives society forward. Our energy choices also determine whether we can solve the climate crisis and what kind of world our children and grandchildren will grow up in. Energy policy should be treated as a major policy and not as a sectoral policy. 

chapter 4: The climate and natural crises. The costly backdrop

Flooding, extreme drought, wildfires, and historical heat records. Accelerated melting of the poles and Greenland ice sheet. Drying of rivers. Mass extinction of species. Massive occurrence of invasive species. Erosion and desertification. Acidification of the oceans.

We hear it again and again. The dramatic backdrop of extreme natural phenomena and weather records that testify to the imbalance that we humans, through our lifestyles, are inflicting on the planet. It is the clear evidence of how our massive dependence on and burning of fossil fuels such as oil, coal and gas – and the resulting CO2-emissions – are already affecting the Earth's ecosystems.

The world's temperature has risen by 1,28 degrees Celsius compared to pre-industrial levels – if you take an average over the past 30 years. But in recent years we have seen one record after another being broken. In a 12-month period leading up to the summer of 2024, the global temperature was measured at 1,68 ° C  above the average from 1850-1900. 2024 looks set to be the warmest year since the pre-industrial era. In August, global temperatures once again broke a new record. See Figure 9.

In other words, we are rapidly approaching the 1,5°C temperature increase (over a 30-year period) that the global community agreed in the Paris Agreement would be the safest limit to stay below by the year 2100. The world’s oceans are now so warm that they have become more difficult to absorb the heat that humanity is emitting into the atmosphere. If the temperature increases of recent years continue, we will exceed the Paris target of 1,5°C in March 2033. Some climate scientists believe that it could go even faster.

Since the 1980s, climate warming in Europe has been twice as fast as the global average.[23]

Despite decades of strong calls from the world's leading climate scientists, the world's governments, businesses and consumers are still operating contrary to the recommendations of science. Even though more than 70 percent of the world's greenhouse gas emissions – and 90 percent of CO2-emissions - originate from the burning of fossil fuels, human civilization has never pulled more fossil fuels out of the ground than in 2024.

In Denmark alone, Professor Peter Birch Sørensen and a group of economists have calculated that our economic activities now have such large negative side effects that at least 10 per centof the gross domestic product due to, among other things, air pollution, biodiversity loss, greenhouse gas emissions, pollution of drinking water and the sea. Nature also provides us with a number of free ecosystem services with clean air, clean water, arable land, raw materials and a livable climate, but when we destroy these values ​​and break planetary boundaries in the pursuit of narrow GDP growth, it comes at a high price. These negative side effects – like the central importance of energy for productivity and prosperity – are not properly accounted for in existing economic models. It is crucial to change economic models so that they better reflect reality.

We are breaking the planetary boundaries

Six of Earth's nine planetary boundaries are exceeded.[26] This means that in six areas we have now exceeded the limit of what human activity can “safely” allow without negatively affecting the global ecosystem – with the risk of triggering dramatic environmental changes on the planet. Of the nine planetary boundaries that are crucial for the global ecosystem to thrive, we have today exceeded biodiversity, pollution, climate, emissions of reactive nitrogen and phosphorus to the environment, our land use, including how much forest we cut down, and our consumption of freshwater. See figure 11.

It is important to protect the Earth's ecosystems and bring humanity safely within planetary boundaries – including in particular the six boundaries that have been exceeded today. None of the crises can be solved in isolation. The nine planetary boundaries are closely linked, shaped by mutual feedback loops, and their vulnerabilities and solutions depend on each other. For example, the Greenland ice sheet is capable – via the so-called albedo effect – of sending 89 per cent of the sun's heat back into the atmosphere, but when it melts rapidly, as has happened in recent decades, and the fresh meltwater is released into the North Atlantic, it can disrupt the uptake of CO2 in the oceans. Increased melting from the Greenland ice sheet ice sheet will reduce the salinity of the area's seawater enough to disrupt the great circulation pump in the North Atlantic and Gulf Stream. This could lead to a colder climate in the Northern Hemisphere. When global temperatures have risen above 2 degrees Celsius, it is expected that the ice sheet will no longer be able to save it.

Around 89 percent of the heat that the sun's rays send to the earth is absorbed by the world's oceans, and the effects of human-caused climate change have long been kept down by nature's free services. But as sea temperatures have risen significantly in recent years, it may be an indication that the oceans have become more difficult to absorb the large amounts of heat and CO2 up, which is caused by human activities. Forest ecosystems also appear to be out of balance, which is caused by, among other things, rising temperatures, deforestation for agriculture and the energy sector, urban development, etc. Up to 60 percent of CO2-the emissions to the atmosphere have so far been absorbed into the oceans and forests[27], but because of the negative feedback loops in the climate crisis, a tipping point can be reached where what was once a positive helper becomes a negative reinforcer. In the Amazon rainforest, which has been relatively resilient to climate change for 65 million years, it appears that more carbon is now being released into the atmosphere than is being absorbed.[28]

If we do not solve the climate crisis, it may be difficult, if not impossible, to bring Earth's ecosystems within a safe and sustainable framework. This requires us to quickly replace our fossil energy consumption with renewable energy sources that can effectively reduce the emission of dangerous greenhouse gases.

Globally, agricultural emissions account for up to a quarter of the total climate impact, and the climate cannot be saved without these also being significantly reduced. Likewise, other industries with a large climate footprint, such as industry, construction and transport, must be decarbonized.

Fossil energy amplifies planetary crises

The extensive extraction, production and burning of oil, gas and coal is the driving force behind most of the nine planetary crises – i.e. climate, the biosphere, air pollution, biochemical flows, new chemicals, ocean acidification and the ozone layer.[29] Fossil fuels are responsible for 90 percent of the world's CO2emissions and about a quarter of this CO2 is absorbed by the world's oceans, lowering the pH value of the oceans and leading to acidification of the oceans. On top of that, there are rising ocean temperatures as a result of climate change, which also has fossil fuels as its main driver. And fossil energy is needed to produce fertilizer, some of which then seeps into the aquatic environment, is discharged into the oceans and leads to sea death, as we have seen in Denmark, among other places.

Pesticides and fertilizers are also produced using fossil fuels. The use of pesticides may release up to 7-8 times as much N2O from the ground, and N20 is a greenhouse gas 300 times more potent than CO2.[30] However, this research result is not widely recognized and is therefore not used in the reporting of national climate accounts. Many pesticides also have a small film of microplastics, which are made of fossil fuels. This microplastic accumulates over time in nature. Fossil fuels are deeply embedded in our industrialized agriculture, and they have negative spill-over effects in relation to several of the planetary crises.

The biodiversity crisis on land is caused by many different factors, but the intense predation of nature and land areas, the industrialization of agriculture and the growth of cities would not have reached this point without humanity having extracted such large amounts of fossil energy from nature's old carbon stores.

Some researchers believe that energy should actually be referred to as the 10th planetary boundary.[31] There are absolute physical limits to how much fossil energy can be extracted or consumed without throwing the Earth's natural systems out of balance. This limit has long been exceeded, and not only in relation to the climate and other planetary boundaries.

As fossil fuels are phased out in the energy sector, it is possible that oil and gas companies will try to make a lateral shift to sell their products to the chemical and plastics industries. Today, approx. 12 per cent. of the total oil consumption for use in the petrochemical industry, but according to the International Energy Agency (IEA), they may be responsible for half of the world's oil consumption in the future. 99 percent of all plastic is made from fossil fuels, and the increasing amounts of plastic accumulating in nature are intensifying the planetary crisis regarding synthetic and toxic substances.

If future plastic production is based on fossil fuels, it will continue to exceed planetary boundaries. It already does so in terms of climate, ocean acidification, biodiversity, and aerosol air pollution.[32]

However, it is not impossible to transform the plastics industry so that it can – almost – be brought within planetary boundaries. If consumption is reduced, at least 75 percent of all plastics are recycled, more are produced with bio-based substances, and the remainder is produced with CO2, renewable energy, hydropower or nuclear power, some estimate researchersthat in the future, plastic can stay within perhaps eight of the nine planetary boundaries.

Europe's energy system operates beyond planetary boundaries

In the EU, 68 percent of primary energy consumption still comes from oil, gas and coal, while nuclear power accounts for almost 10 percent[33] and renewable energy covers 22 percent. Sector by sector, fossil fuels must be phased out and replaced by cleaner energy sources, while accelerating the circular economy, developing bio-based products and stimulating behavioural changes that can limit consumption. Energy efficiency and savings can reduce the EU's overall footprint and have a rapid climate impact, but how we produce the energy is also important.

Bioenergy currently accounts for approximately 10% of the EU countries' final energy consumption, but this share is expected to double by 2030. By then, Europe's bioenergy production will have a global footprint that is approximately equivalent to twice the area of ​​Germany. Already today, EU countries are operating outside planetary boundaries in this regard, and the burning of solid wood biomass in particular has given rise to concern. In the EU, it is still considered a CO2-neutral energy source, and the member states provide each year billions of euros in state aid to energy companies that burn wood biomass. However, the European Parliament tried in 2023 to ban state aid for burning wood biomass, but the member states in the Council rejected it – including with the support of the Danish government. This was done out of concern that it would lead to increased consumption of fossil fuels.

Regardless, continued growth in the burning of woody biomass will take us even further into the red zone in relation to planetary boundaries. Research shows that the burning of woody biomass leads to increasing particle pollution, it causes deforestation in Europe and other parts of the world and it has a detrimental effect on the climate. Or as one group of researchers concludes: Burning woody biomass in Europe will never provide a carbon gain, but will instead accumulate negative effects over time, because bioenergy production captures less carbon than the forests it replaces. “Even under very optimistic assumptions, the net gains are unlikely to be realized this century.”[34]

The European Research Council has estimated in an analysis that it requires 50-100 times as much land to generate energy from bioenergy as from solar and wind. So from a land use perspective alone, burning woody biomass is a very inefficient way to produce energy.[35]

An analysis of the European heating supply shows that if we continue business as usual, we are operating in the red zone far beyond the planetary boundaries. According to the researchers, large-scale electrification with heat pumps and clean green electricity is currently the only absolutely sustainable solution that can bring us within the planetary boundaries. We must also increase the amount of wind energy on land and lay many more high-voltage cables to bring electricity faster across European borders.[36] On the other hand, if hydrogen is used in the heating supply, it will be 2-3 times more expensive, and it will break several planetary boundaries, the researchers estimate.

Another research analysis of the EU countries' electricity supply has shown that if business as usual continues, several planetary boundaries will be exceeded. If the EU is to achieve absolute sustainability in its electricity supply, the researchers recommend that there be "a rapid expansion in the share of renewable energy sources such as hydropower, wind (onshore and offshore), solar cells and concentrated solar power" as well as CO2-capture at biomass plants (BECCS). BECCS can have negative side effects in terms of, among other things, biodiversity, which need to be addressed.[37] However, the climate effect is very uncertain. See Figure 12.

BECCS plants do not capture 85-99 percent of the CO2, which is emitted – as the Danish Energy Agency, among others, estimates – the figure is more likely 65-75 percent or even lower.[38] If we also take into account how long it takes to restore the lost stock in the forests, it is highly doubtful that BECCS can be scaled globally.[39]

Various natural effects of alternative energy sources

The clean renewable energy sources such as solar and wind, where you do not need to install new energy-intensive CO2-vacuum cleaners at the end of the chimney, will be crucial to bringing our society within planetary boundaries. But even in relation to solar and wind energy, there are challenges that need to be solved. They have very large positive effects in terms of climate, ocean acidification, air pollution and the ozone layer. But their footprint on land use is many times lower than, for example, bioenergy, and they will take up additional land area and may challenge biodiversity. The latter can, however, be countered by incorporating nature considerations and biodiversity in new installations of solar parks and wind turbines, and by removing even larger areas from industrial agriculture and investing in much more forest and wild nature.

Solar power plants have been shown in many places to lead to increased biodiversity, and this is evident when agricultural land – which has previously been intensively cultivated and sprayed – is taken out of production to make way for solar power plants.[40] Wind turbines require less space, but have a number of challenges regarding birds and bats, which can be killed by the blades, and where necessary, mitigating measures must be taken.

Area consumption for solar panels on bare ground is typically between 12,6-19 m2 per MWh, hydroelectric plants use 14 m2 per MWH and a wind turbine on land physically occupies 0,4 m2 per MWh, but due to distance requirements etc. it will typically be between 8-99 m2 per MWh. Nuclear power occupies 0,3 m2 per MWh, thus occupying a smaller clean area, but there are significant challenges in relation to radioactive waste. In the first research studies on planetary boundaries, radioactive waste was not mentioned, but in the latest analysis from the international research group led by Katherine Richardson et al. radioactive waste is included in the category of new synthetic and toxic substances.[41]

In terms of water consumption, solar and wind energy are clearly the best solutions, whereas electrolysis for hydrogen production has several times greater water consumption. CO2-capture from biomass and other point sources is performing worse than even fossil fuels. See Figure 13.

The climate crisis is exacerbating multiple planetary crises 

The climate crisis is a major risk multiplier that affects several of the planetary boundaries. For example, climate change with higher temperatures, more drought and changes in precipitation patterns will increase the pressure on biodiversity in relation to habitats for plant and animal species. With a two-degree temperature increase, up to 10 percent of all species on Earth could be threatened with extinction, so there is no greater threat to biodiversity on land and in the oceans than climate change. And thus also fossil fuels.  

In this light, it may seem paradoxical if, for reasons of risk to, for example, field mice or bats, one sometimes blocks the construction of new wind turbines – which could eliminate fossil fuels, minimize air pollution and do something real about climate change. It is important to ensure consideration for nature, but instead of focusing on specific local losses and environmental risks, one should maintain a holistic view and look at the overall living conditions of the species and ensure robust ecosystems. In the green transition of the energy sector, there are many dilemmas – or so-called wicked problems – but if we don't solve the climate crisis and free ourselves from fossil fuels, things look bleak for biodiversity. 

Continued high levels of greenhouse gas emissions will lead to further acidification and warming of the oceans. Climate change could lead to food and water shortages, job losses, poorer health, lower living standards and historically large waves of migration. These are just some of the human costs of climate change.  

Time and again, we have heard leading experts and organizations issue alarming warnings and clear calls for the international community to dramatically increase the pace of the transition, but so far it has gone in the exact opposite direction. The message from the Intergovernmental Panel on Climate Change, IPCC, is otherwise crystal clear: "Without immediate and deep reductions across all sectors, limiting global temperature increases to 1,5C will be out of reach." The IPCC describes the next few years as "critical" for whether we avoid a climate catastrophe with far-reaching negative consequences for the entire earth. 

The bill for inaction grows year by year 

As temperatures rise, the European energy system could be put to a series of new tests. The large peak load in large parts of Europe could shift from winter to summer, from heating to cooling. The infrastructure must be robust so that it can withstand floods, erosion, wildfires, etc. We need to have more energy sources to draw on, build larger energy reserves and have stronger network connections across EU borders. EU countries must be able to handle interruptions in nuclear power plants or sudden drops in hydropower during periods of drought with low river levels, so that long-term power outages, which will affect other critical public infrGreater climate resilience will be a factor that needs to be taken into account in the next wave of investments in critical infrastructure, new transmission and distribution networks, wind turbines, solar power plants, geothermal heating systems, etc. See Figure 14.

If we extend the fossil fuel path and do not reduce greenhouse gas emissions quickly enough, it could trigger climatic tipping points where humanity is no longer in control of its own future.

Our CO2 -budget will run out soon

The room for manoeuvre has been significantly reduced over the past few years, and we are reaching a critical limit. In 2023, 55 billion tonnes of greenhouse gases were emitted globally – 40,7 billion tonnes of which were CO2. CO alone2-emissions from the fossil energy system reached 36,8 billion tons, which is an increase of 1,1 percent compared to the previous year, the report shows Global Carbon Budget, prepared by a number of leading international research institutions.[42]

They have also calculated how much of the world's remaining CO2budget is. If we are to stay safely within the 50 degree target with a 1,5 percent probability, by the start of 2024 there would only be a global CO2-budget left at 200 billion tons of CO2, shows the latest figures. See figure 15.

Our remaining CO2-budget is actually half as big as when the numbers were calculated four years ago, and the reason is that instead of reducing emissions, humanity has increased them. It just means that we are now extremely busy changing course.

If the budget were to be distributed equally to each of the world's nearly 8,2 billion inhabitants, each individual could only emit 24,4 tons of COXNUMX over the rest of this century.2With unchanged behavior, the world's population will already pass the ceiling in 2029. It will require a drastic slowdown to change course before then.

In reality, things should go even faster for us as Danes. If we are to take responsibility for our historical CO2emissions, we already used up our fair share several years ago. But what does it mean if we instead want to maintain our current share of global CO2emissions, i.e. approximately 0,08 percent of total emissions? In that case, Denmark's remaining budget will already be exhausted in 2029 if we from now on reduce our emissions linearly in a reduction path towards a net-zero society in 2045.

However, this calculation does not include the 20 million tons of CO2, which currently comes from burning biomass, and the approximately 4 million tons of CO2 from the fuels that are filled in the tanks of outbound international flights and ships from Denmark. If these emissions are included, our remaining budget in a linear reduction path will be exhausted already in May 2027.

The figures underline the urgency of reducing Danish greenhouse gas emissions. There is no longer a hockey stick to grab. Substantial and rapid behavioral changes in production and consumption are needed in the next few years. It is too late if we wait until sometime in the 2030s for a potential breakthrough in CO2-capture, or that through increased afforestation from the late 2030s, some of that CO can be absorbed2 out of the atmosphere, which in the 2010s and 2020s has been released into the atmosphere from the burning of solid woody biomass. Action must be taken now and quickly if we are to stay within or close to 1,5 degrees.

If, on the other hand, we bet that it is possible to stay below 1,7 degrees Celsius of temperature increase, the global carbon budget is 550 billion tons of CO.2. At 2 degrees by the end of the 21st century, the remaining budget is 1100 billion tons. Even if one finds it politically opportune to relax the effort in this way, there are not many years to run. If Denmark is to take responsibility for its emissions from burning biomass and bunkering for international transport, our budget in the 1,7 degree framework will run out in late summer 2033.

Every 0,1 degree increase in temperature counts, and since we cannot simply assume that all countries will live up to their promises and obligations, Denmark should rather operate with a certain margin to be on the safe side. It would therefore be timely to accelerate the transition away from fossil fuels. Time is extremely short, and it takes time to initiate and implement new green reforms.

The UN environmental organization, which takes stock of the world's climate policy in its annual Gap Emissions Report recommends that from 2024 onwards we reduce our greenhouse gas emissions by at least 8,7 percent every year.[43] If the whole world does this, we can still – with a 50 percent probability – stay within the Paris target of maximum temperature increases of 1,5 degrees. But the 8,7 percent are not relative reductions. They are absolute reductions in greenhouse gases. So even if countries or companies grow economically, they still have to reduce the amount of greenhouse gases in absolute numbers. This is not an easy exercise. During the Covid crisis, when many countries' economies shut down for several months, for example, we only managed to reduce global emissions by 4,7 percent in 2020 compared to the year before.

Some countries will not live up to UNEP's recommendations. A number of developing countries hope to achieve higher economic growth and benefit from greater energy consumption in the coming years. It is only fair and reasonable that more people can be lifted out of poverty. Conversely, the rich northwestern European and North American societies – which have historically and collectively been responsible for the largest emissions – should also absorb a larger share of the total load. See text box below.

We need to get back on track and in the lead.

Denmark has the right conditions to become a role model for the rest of Europe and show how to approach it. We have a number of global green frontrunner companies that can deliver the new climate-friendly and energy-efficient solutions that the world needs. In 2023, they exported energy and environmental technologies worth over DKK 87 billion, and several of them are major players in the global market. At the same time, they have strong growth potential in the coming years as more and more countries get busy reducing their greenhouse gas emissions and switching to green and energy-efficient technologies.

It is also important that Denmark leads by example. For many years, we have been able to pride ourselves on being a green frontrunner nation, and we have been at the top of global green rankings such as Yale University's Environmental Performance Index for several years. But in 2024, Denmark has fallen to a modest 10th place in Yale's rankings because other nations have set more ambitious goals and are running faster than we do.

Denmark already lives far beyond planetary boundaries. Our consumption-based greenhouse gas emissions are between 11 and 13 tons per Dane per year.[44] An increasing proportion of emissions is linked to imports of goods from abroad and the energy embedded in the imported goods. See Figure 17.

If everyone in the world lived like us Danes, it would require 4,2 Earths. And each Dane has a material consumption of 25,3 tons per year, and that is a good 11 tons more than the average EU citizen. Danish material consumption has increased by 14 percent in the last decade. In particular, our consumption of biomass, but also our consumption of fossil energy and non-metallic minerals – including sand and gravel – is significantly above the EU average.  

Denmark's embedded energy consumption is historically high because we have one of the highest footprints among EU countries, and as a nation we operate far beyond planetary boundaries. Denmark is at the top of the EU countries measured in CO2-footprint per capita, surpassed only by Luxembourg. See Figure 18. 

Denmark has a statutory climate target for 2030 to achieve a 70 percent reduction in our national greenhouse gas emissions, and the government wants to bring Denmark's emissions down to net zero by 2045 at the latest, and ensure 110 percent reductions by 2050. However, these political declarations of intent have not yet been written into the Climate Act. The Climate Council has recommended that these targets be written into the Climate Act and that Denmark take responsibility for its share of the energy for international air and sea transport. A clear and legally binding management target is an important instrument, and it should be followed up by a clear reduction target for 2035 and 2040, respectively. A target for 2025 must be set by 2035 at the latest, and it is important to maintain a high level of ambition.

So far, politicians have had difficulty achieving the set goals, even though many green reform packages have been implemented. But the big and difficult decisions have often been postponed until later. Many new fossil cars and gas boilers are still being sold, the number of air trips continues to increase, and politicians have allowed more oil and gas extraction in the North Sea, even though this contributes to exacerbating the climate crisis. At the same time, it is often difficult to ensure rapid implementation, even though it is crucial to achieving the goals. In industry, a CO2-tax, which increases to DKK 1125 per ton in 2030, but emissions in transport have increased, and in agriculture it is difficult to reduce emissions.

The transport sector is currently responsible for 28 percent of Denmark's total emissions, and the sector could see its share increase as other sectors reduce their climate impact. By 2030, transport in Denmark could account for around 35 percent. And that's without even including the greenhouse gases emitted from Denmark's international transport by plane and ship.

The agricultural sector, including low-lying soils, currently emits around 14 million tons of CO2 per year, accounting for more than a third of Denmark's total greenhouse gas emissions. Emissions from agriculture, forestry, horticulture and fisheries are expected to account for a full 45 percent of our climate footprint in 2030 – because agriculture, unlike other sectors in Danish business, has not presented a clear and realistic plan for climate reductions. The emissions come largely from meat and milk production.

The latest climate projection from spring 2024 showed that, on paper, we are on track to meet the Climate Act's targets for 2025 and 2030. The so-called reduction shortfall, which is what is estimated to be missing in 2030 to meet the 70 percent target, is 1,5 million tons. CO2e and the 2025 target of 50-54 percent reduction is expected to be met with a reduction of approximately 55,5 percent. We are therefore close to the politically set target.

Last year, the reduction shortfall was still 5,4 million tonnes. CO2e. The reduction in the new projection, which has been reduced to approximately 1,5 million tonnes CO2e has not been obtained by implementing major climate policy decisions and initiatives. Overall, 2,3 million tons of the expected reductions have come about because the climate effect of trees is projected in a new way. In addition, there are new calculations for low-lying soils, which are expected to emit 1,9 million tons less. CO2 in the coming years than in the 2023 projection. Not because they have been actively wetted, but because the carbon content of large areas has degassed faster than previously expected, so that they are now below the lower reporting limit of 6%.

In addition, a large part of the reductions we need in the coming years are based on technologies and calculations whose real effect is still uncertain. This is particularly true for CO2-catch, which must be said to be an unknown factor. It is expected to catch 3,2 million tons. From 2030, but there is still some uncertainty about whether it will succeed. In the latest NECCS tender, a downward adjustment had to be made from 0,5 million tons of biogenic CO2 to just 160.350 ton, which is expected to be stored from 2026.

There is still considerable uncertainty about emissions from low-lying soils, and new figures may go the other way, which suggests that it would be wise to operate with a certain safety margin to the climate target.

The green tripartite agreement for agriculture will first aim to raise CO2-tax up to 750 kr/ton in 2035 and on top of that give a handsome base deduction of 60 percent. This means that agriculture will not bear as much of the burden of climate policy as other industries. However, it is hoped that agriculture – through investments in new technologies, new stables, feed additives and biochar produced via pyrolysis – can reduce its emissions by 2030 million tons in 1,8, increasing to 2030 million tons in 3,3..[45] Politicians will provide a total of 10 billion DKK in support for pyrolysis, but it must still be considered an untested technology with uncertain climate effects. And there are also potentially negative health consequences. The risk is that you burn a lot of tax money on a technology that – if you use wood or degassed biomass as feedstock – will only deliver real climate benefits in 30-40 years, if natural carbon storage by the biomass used is offset.

The government has apparently overlooked that the EU Commission is expected to make such an offset. Pyrolysis of energy crops and straw may well provide a faster climate effect, but there are limited bioresources available and there are limits to how much the technology can be scaled.

Technology choices and structural change

In Denmark, significant government funds are already being spent on promoting green technologies. Most notably in relation to CO2-capture, which has been made one of the main pillars of Danish climate and energy policy. Over 38 billion DKK has been allocated until 2040 to scale up this technology and the tripartite agreement plans to provide 10 billion for pyrolysis/biochar. But the capture of industrial point sources is not as effective because the actual capture rates are still significantly below the expected ones. It is both expensive and very energy-intensive technology, which in the worst case could delay the phasing out of fossil fuels. The large amounts of government support for CO2-capture and storage could alternatively be used to invest in green energy solutions, which could ensure a faster phasing out of fossil fuels and wood.

It is possible that CO2-capture during the 2030s may play a certain role in areas such as cement production, where it may be difficult to achieve 100 percent decarbonization. But in the next 5-10 years, Denmark can achieve greater climate effects by investing in a much faster scaling with solar, wind, batteries and heat pumps, as well as new climate-friendly foods. And the challenge is great.

Denmark is still deeply dependent on fossil fuels in our energy system, where Oil, natural gas and coal account for almost 53 percent of Denmark's gross energy consumption, and they are the main driver behind national greenhouse gas emissions. Even though we have received much more renewable energy, biomass burning accounts for around 2/3 of the total production of renewable energy. And solar and wind energy only cover around 10 percent of Denmark's gross energy consumption – if you include the energy that is loaded onto ships and planes in Denmark. This shows that Denmark is still stuck in the combustion society. Our consumption of biomass for energy is more than four times greater than in 1995, and forest chips and wood pellets in particular are filling up. A contributing factor to the explosive development is that for several years state support has been given to power plants that burn trees and straw to convert it into electricity.

The direct emissions from the burning of biomass are only counted in Denmark's national climate accounts for wood felled in Denmark. This is done in the so-called LULUCF account, which is included 1:1 in the overall climate account. However, the LULUCF account does not separate the CO2 and carbon loss in forests caused by burning wood. Over half of wood energy consumption is imported, which burdens LULUCF and climate accounts in the countries of origin. The immediate emissions from burning biomass in Denmark are over 20 million tonnes of CO2 per year, but the net climate impact is significantly lower because some of the biomass would alternatively quickly rot and emit CO2. Wood energy consumption has the highest climate impact because Denmark uses a lot of trunk wood, which can take centuries to grow back, and because even felling residues decompose relatively slowly. The time-weighted climate impact from Danish wood energy consumption is between 4-5,6 million t CO2e per year, depending on the method and assumptions used.1 If you count this and also include emissions from international transport by Danish aircraft and ships, emissions from the Danish economy are largely the same as in 1990. If we are to take responsibility for these emissions, the climate challenge to the Danish economy is approximately twice as large as the targets set in the Climate Act. See figure 19.

This underlines how difficult the challenge is for Danish society. A beautiful picture of the state of affairs is not helpful. Danish climate and energy policy should be based on a realistic and sober picture of reality. Denmark has lost the green frontrunner position on a number of points, which we previously could claim with some right. The good news, however, is that it can be regained.

Above all, this requires that we accelerate the transition away from fossil energy sources and the burning of solid wood biomass in the next few years. In addition, the consumption and production of animal foods must be significantly limited in order to achieve the goal. At the same time, the other natural and environmental crises must be solved, and our large resource consumption must be reduced if Denmark is to credibly regain its position as a green frontrunner nation. Fortunately, this is within our reach.

Danish society has never had higher prosperity, and there is considerable fiscal room for manoeuvre. Economically and technologically, it is possible to quickly decouple from fossil fuel dependence, but this requires targeted political reform efforts, action and implementation.

This energy report sets out a Danish transformation scenario that shows how Denmark can reduce its absolute emissions by more than 8,7 percent per year, so that Denmark becomes a net-zero society in 2040. (See the specific recommendations in Chapter 6) If politicians choose to follow the transformation scenario towards 2040, Denmark can save the atmosphere approximately 207 million tons of CO2 compared to following the government's climate policy.

The task is to make a much more ambitious expansion with renewable energy, electrification of society and energy efficiency improvements. simultaneous by taking firm action to phase out and stop all technologies powered by fossil fuels. This means strongly accelerating green technologies and solutions, while at the same time severely reducing fossil fuel consumption.

Chapter 5: The green energy revolution. Understanding the S-curves

We are in the midst of a green energy revolution. In the last ten years, the annual global expansion of solar energy has increased sixfold, and wind energy has increased more than threefold. Battery sales are doubling every 2-3 years, and their energy intensity is increasing at a pace that could revolutionize not only the automotive sector, but also the energy system, industry and perhaps long-distance heavy transport. We are in the midst of the largest and fastest technological development since World War II, and it could disrupt the fossil energy system, and it will have a significant impact on all parts of society.

However, many traditional mainstream analyses, economic and technological projections have consistently underestimated for many years how solar, wind, batteries and electric cars are growing explosively, and how prices are simultaneously being forced further and further down with each doubling in volume. The costs of renewable energy have been overestimated, while the price decline, sales growth and innovative power of solar, wind and batteries have been underestimated. This monumental misjudgment has also led to the relative competitiveness of fossil fuels being put in a much better light than they should be. And this has led political and economic decision-makers to be far too slow to phase out fossil energy or to drop investments in fossil energy projects.

It is urgent to update our economic models and technological forecasts, because green energy technologies have developed in explosive S-curves for a number of years, shattering all expectations. See figure 20.

The main reason is that solar, wind and batteries are granular and well-proven technologies that are mass-produced and can be quickly scaled on the market. This has both triggered major price drops and paved the way for lots of innovation. The price of solar cells and batteries fell by 80 percent in the ten years up to 2022 and the price of offshore wind fell by 73 percent and onshore wind by 57 percent. The price development for renewable energy sources has largely followed the so-called Wright's law. The prices for solar cells have fallen by an average of about 28 percent for each time the installed amount of solar energy has doubled – the doubling time has now been reduced to about 2-3 years. And the efficiency of solar cells has also improved significantly, and they are the best solar cells now manufactured 43 per cent. more energy per cell than they did in 2016. For wind energy, the price drop has been approximately 15 percent for each doubling in volume.

Batteries can revolutionize the energy system

The battery industry is building 400 gigafactories around the world. According to the think tank RMI, these gigafactories will have the capacity to supply 9 TWh of batteries by 2030.[46] This figure corresponds to a quarter of Denmark's total electricity consumption.

Globally, Chinese companies account for over 80 percent of the world's battery production, but the EU and the European Battery Alliance are working hard to build a strong European battery industry and to attract foreign competitors to the EU. According to Transport & Environment, European battery production could reach 1,7 TWh by 2030, but more than half of the announced projects could be cancelled or postponed.[47]

Building a strong supply chain for the new green industries, from mining to refining and manufacturing, is an extremely demanding task, but it is geopolitically important for the EU to be able to become more self-sufficient in batteries. Because it is a critical factor for success in the great green energy revolution.

From sector to sector, batteries will spread and enable 100 percent electrification.

The dominoes are already falling in the automotive industry, where sales of electric cars in many countries - including Denmark - have overtaken new sales of fossil-fuel cars.

The rapid development of battery technology – and the significant expansion of production capacity – could also have a revolutionary impact on the storage of renewable energy. The energy crisis accelerated this development, and more private households and companies have invested in batteries to back up their solar cells.

More and more countries are understanding that the battery revolution can also give us a crucial piece in creating a much more resilient energy system.

From China, Australia to California and a number of EU countries, massive investments are now being made to build large battery-based energy storage (BESS) systems that can store fluctuating solar and wind energy, thus providing greater security of supply. The Commission's research arm, the JRC, has concluded in an analysis that "batteries enable a wider deployment of fluctuating renewable energy, also in the context of increasing energy independence from Russia."[48]

The market is rapidly scaling. Container-based large batteries are being installed in rows, can multiply capacity and create a more stable grid. And the prices of this type of battery have fallen sharply. The so-called lithium-iron-phosphate batteries (LFP) have fallen to around 2024 kr/KWh in the market in August 358, and this is much cheaper than the so-called nickel-manganese-cobalt batteries. (NMC) In 2020, NMC batteries accounted for more than half of the battery storage market, but now it seems that the cheaper and stable LFP batteries are winning the race, and this year they will be behind by up to 85 percent. of the market. And they are increasing in size, intensity and storage capacity. The world's largest battery manufacturer, Chinese CATL, is now on the way with a new generation of lithium-iron-phosphate batteries in a standard 20-foot container that can store 6,25 MWh. See text box .

Battery storage also looks set to become a financial investment opportunity. Currently, many BESS companies are stepping up to take advantage of rapidly falling battery prices, and are building a business case for providing ancillary services and balancing the grid. They buy solar and wind energy when it is cheapest and sell it back when it is expensive. In the EU alone, twice as much battery storage was installed in 2023 as in 2022, and total BESS storage in the EU now exceeds 36 GWh. Bloomberg New Energy Finance expects that around 155 GWh of battery storage can be installed globally, and one of the main explanations is that prices have halved within the last year alone.

Denmark has fallen behind in this race, but increased battery storage will undoubtedly be one of the crucial prerequisites for creating a stable and secure renewable energy system without fossil fuels. According to The Danish Energy Agency's figures Denmark has a total battery capacity of 2 MW in 2024, which is expected to increase to 2050 MW by 460. In other words, Denmark is expected to go from zero GWh in 2023 to approximately 0,45 GWh in 2050. However, the ongoing battery revolution may well mean that Denmark will reach several GWh within a very few years.

The power of the sun

On the global market, solar cells have surpassed all expectations, and the entire 78 points of the renewable energy capacity installed last year was solar, while wind energy accounted for 20% of the newly installed capacity. However, the useful life of wind power is typically significantly longer than that of solar cells, which is why the difference in production from the two sources is correspondingly smaller. The best mix of solar and wind energy varies greatly from country to country.

A massive scale-up of production – not least in China – has meant that the price of solar cells has almost halved in just one year. The global forecast is that 500 GW of solar cells will be installed by 2024. In China, they have installed over 100 GW of solar cells in the first year of the year, and they seem to have a total of 1200 GW solar cells in place by the end of 2024, six years ahead of what the government in Beijing had planned. In the EU, the pace is also picking up, and by the end there were 269 GW of solar energy in EU countries. By 2030, it could be around 900-1000 GW, or up to 33 more than was decided in the 2022 RePowerEU plan.

In Denmark, the installation of more solar cells is also progressing more quickly, and in the second quarter of 2024, they reached just over 3,7 GW, which is twice as much as in the fourth quarter of 2021. In the government's Climate projection 2024 It is estimated that there could be up to 18 GW of solar energy in Denmark by 2030. New rules for more flexible case processing could speed up development.

The Netherlands is a European frontrunner here, and several member states – including Denmark – can learn from it. It is the story of a nation that for many years turned its back on solar energy and was deeply dependent on natural gas, but which has experienced an extreme growth boom in solar energy over the past few years. See case below.

The solar cell revolution looks set to continue in the coming years. Globally, solar energy may even become the dominant energy source in the sustainable energy system of the future – and it will naturally play a much larger role in sunny countries in Southern Europe. But even in the temperate climate of Denmark, solar energy can be a very important supplement to wind energy. It also has the advantage that the two energy sources complement each other well, because wind production is typically highest at night, when the sun is not shining, and in winter. Land shortages do not have to be a real challenge if more agricultural land is taken up, solar cells are installed on large roof areas, parking lots, over highways and on water. Globally, it only requires 0,3 percent of the land area to supply the entire world's current electricity consumption with energy produced by solar cells.[50]

There have also been concerns about a shortage of critical minerals to manufacture the many new solar cells, but these concerns appear to be overblown. After thorough studies of the challenge, researchers have concluded that access to these raw materials is not a real problem and will not limit the growth of solar cells.[51] Silicon is one of the world's most abundant elements, and the other materials, silver, glass, plastic, aluminum and steel, are not expected to be in short supply either. For a while there was concern that solar cells would require excessive amounts of silver, but through innovation and circular initiatives this is no longer a major problem. Recycling rates at several manufacturers have now reached between 75-97 percent for several of the critical and valuable materials.

Both solar cells and wind turbines can today be installed on market-based terms, without necessarily needing government support. Because today, solar and wind energy are cheaper than fossil fuels, and in terms of lifetime costs, large solar cell systems on bare ground and onshore wind are clearly competitive. Even if you add the costs of, for example, electricity storage in batteries, they can match the price of both gas and coal in many places. If the positive side effects for the climate and environment are included, there is no doubt what will be the optimal choice from a purely socio-economic perspective. See figure 23, which refers to average conditions in the United States.

En win-win-win solution

It has become economically attractive to invest in green and clean energy sources. Because they offer a win-win-win solution: A) They are cheaper in life-long costs; B) They can remove a large part of the air pollution from fossil fuels and burned wood biomass; C) They can contribute to solving the climate crisis and bring us closer to the goal of a zero-emission society.

Governments should not rely on a single renewable energy source, as they will need a wide range of different types to build a robust and secure energy system with a stable supply. Countries that embrace the green wave fastest can gain significant competitive advantages in the coming years. Because access to cheap energy is of fundamental importance in the competition in the global market. Instead of moving behind the curve, it is increasingly important to invest ahead of the curve.

The big challenge is to remove all the bureaucratic stumbling blocks with slow approvals for new projects with solar cells or the installation of wind turbines. This has been a major problem in many countries, including Denmark. In 2023, only one new commercial wind turbine was installed in Denmark, which in a few years has gone from being a frontrunner in the EU to being one of the most lagging countries when it comes to wind energy.

In the EU, 17 GW of wind energy was installed last year, of which 14 GW was onshore, but this is too little. The industry organisation Wind Europe has estimated that EU countries need to install at least 30 GW of wind every year until 2030 to meet its own targets. However, some countries like Germany have shown that when the political will is there, it can be done. They not only installed an additional 14 GW of solar cells, but also managed to install 2,9 GW of onshore wind energy. And in the first five months of 2024, the Germans have approved additional 3,1 GW of onshore wind energyIn just over a year, the German authorities have granted permission for more new onshore wind than is already available in Denmark. More countries could benefit from following the German example.

Europe's wind turbine manufacturers are poised to scale up significantly, and if they fail to fill their order books, there is also a risk that they will have to cut capacity further, which could give Chinese competitors, among others, better opportunities to fill the void. Around 370.000 jobs are at stake in the long supply chain that the European wind turbine industry has built up in recent decades.

The more wind energy that is produced, the more fossil energy we can free ourselves from. And the better opportunities individual countries have to obtain cheap and sufficient energy for new industries. But when large offshore wind turbine projects and energy islands are cancelled or postponed, or when onshore wind turbines are not erected due to concerns about, for example, field mice or bats in the local environment, it becomes more difficult to solve the climate crisis, which is the greatest threat to biodiversity.

In Germany, they therefore quickly decided to use the EU emergency regulation, which was adopted in December 2022. In the interests of security of supply, the regulation allows for much faster case processing and efficient complaint processes for new renewable energy projects. Renewable energy projects are seen as something that is of significant public interest. Shorter deadlines can be given, also for environmental approvals, and it can also be made easier to carry out a so-called repowering of old plants when it leads to more renewable energy.

In Denmark, we should learn from the German approach, and here we can also make a targeted effort to scrap some of the old turbines – for example, all older wind turbines under 500 KW – and replace them with new, state-of-the-art and efficient wind turbines that can deliver much more energy per turbine. At the same time, it would be beneficial to become better at involving the municipalities and local citizens early in the decision-making process. New economic incentives that make it attractive for locals to welcome new renewable energy projects could, for example, be a form of profit sharing, where the money goes directly to the municipality that installed the turbine.

More digital energy management

The old fossil energy system has historically been dominated by large central operators and monopoly companies, but in the great green acceleration the energy system will change radically and become much more flexible, decentralized and network-based. Renewable energy is a flexible and fluctuating energy, where production varies a lot depending on weather conditions. Instead of large central power plants, the energy system will have many more decentralized production sites with green electricity, fed into the grid from thousands of wind turbines and from many scattered solar cell systems on fields and roofs. It is a new system for distributed and flexible energy. And it will be linked together by data on the internet. With data intelligent networks and the digitalization of electricity and heat meters, it is easier to promote “load-shifting"and “peak-shaving” in the energy system. See Figure 25.

Just over half of European households and businesses now have smart electricity meters, but they should be installed in all buildings and connected to the grid. The more electricity data that is shared in anonymised form on open public data platforms, the more value can be created for the benefit of all. In the next few decades, we will see a new wave of digitalisation rolling through the energy system, and artificial intelligence will be used to a much greater extent to optimise all systems. In some places, there is hope for efficiency gains and a reduction in downtime by between 20-30-50 percent. In Sweden, some housing associations have reduced energy consumption by 20 per cent. by using AI, and the Japanese mobile company, KDDI, has saved up to 50 per cent. of energy consumption in the outermost parts of their mobile network, where traffic is lowest.

The Internet of Things (IoT) is growing rapidly, and it is also affecting energy consumption. Today, over 16 billion. products connected to the internet via sensors and GPS, and in eight years there could be over 40 billion IoT devices. On the internet of things, communication is crisscrossed in real time. Logistics companies in the transport sector as well as large players in the energy sector can get very precise knowledge about where the goods are right now, and how demand, needs and electricity are changing minute by minute, hour by hour. With Google Street View and other open platforms, you can create large data sets that can provide valuable information about behavior, and with artificial intelligence, you can optimize the distribution of electricity in the network.

But there is also a risk of a large rebound effect, because the increased use of artificial intelligence can lead to much greater energy consumption.

The world's data centers and artificial intelligence currently consume approximately two percent of the world's electricity, but by 2026, data centers will require more than twice as much energy and reach a total consumption of 1000 TWh, which is roughly equivalent to the entire electricity consumption of Japan. In the EU, there are currently over 1200 data centres, accounting for 4% of the Union's total electricity consumption, but by 2026 their electricity consumption is expected to increase by around 30%.[52]

If the data centers are located close to clean renewable energy and are powered by 100 percent green electricity, it is not such a big problem in terms of climate, but it requires that this enormous amount of accumulated knowledge in the cloud is used for something useful that supports the green transition.

By drawing on large cloud-based data stores with knowledge of historical weather data and the specific behavioral patterns in production and demand, the algorithms can be trained to make predictions about how to optimize the entire value chain from the individual wind turbine to the electrical appliances at the consumers' homes. It is a kind of virtual energy system that can create a new ecosystem where companies from different sectors can also collaborate with each other to find more energy-efficient solutions. At the same time, the individual consumer can use this data to gain greater insight into acting sustainably and saving energy. For companies, it also has great value. According to the International Energy Agency, the world's wind turbines each produce over 400 billion data points, and for large turbine manufacturers, such as Vestas, data analysis has long been an important competitive parameter.

Flexible distributed energy solutions – including district heating in local communities and individual citizens' production and storage of solar energy on their plots – can play an effective role in conjunction with the large central energy parks, the distribution grid and the transmission grid, without one actor crowding out the other. If more production and consumption occurs in local energy communities, and it is made attractive for companies or business parks to build their own "energy islands", backed up by their own battery and heat storage, this can take some of the pressure off the expansion of transmission lines. In Denmark, for example, large amounts of wind energy are currently being moved from Western Denmark to Eastern Denmark, but if you increase both green electricity production and storage capacity in Eastern Denmark, you can save on transmission costs and, for example, free up more green electricity for PtX factories in Jutland. This type of thing must be addressed in a comprehensive and long-term energy planning.

The grid must also be able to support the new charging structure to pave the way for 100 percent electrification of road transport in the EU, and from 2026 there must be, for example, fast chargers every 60 km on the main European motorways. The car batteries can also be used as an additional energy resource that can stabilize the market during peak loads, and they can send electricity back to the grid. The new generation of vehicle-to-grid (V2G) electric cars can in practice be used as a large grid-based battery that can increase security of supply in society. It is important here that the charging stations are prepared for V2G.

As one of the most digitalized countries in Europe, Denmark has a strong starting point for using digital technology to develop a modern distributed and flexible energy system. 28 percent of companies already use artificial intelligence, and all Danish homes have smart electricity meters installed.

In autumn 2022, the European Commission adopted a action plan for a digitalisation of the energy system, where, among other things, plans are being made to manage the IT sector's energy consumption, to introduce new energy labels and to create increased transparency about the energy consumption of data centres. The EU also wants to give citizens better access to using digital tools so that they can better control their energy consumption and bills. A third main point is to improve the cybersecurity of the energy system so that critical infrastructure becomes more resistant to hacker attacks.

The Commission expects European grid operators to invest at least €170 billion in new digital solutions this decade, out of a total of €400 billion to modernise the distribution grid. At the same time, grid operators from more than 15 EU countries have joined forces to develop a virtual grid ecosystem that operates in parallel with the physical grid. Here, transmission and distribution operators will share data with each other and use artificial intelligence to model and predict consumption, as well as help each other better prevent emerging cyberattacks.

New geothermal potentials

Geothermal energy can also play an important role in the green transition of the energy system, although it is currently a niche technology with a very modest market share. Geothermal energy is, in short, a technology that extracts hot water from saline reservoirs underground and then uses the heat from the water for district heating and electricity. Geothermal energy also has the advantage of being independent of the weather.

Iceland is the world leader in geothermal heating. Over 90 percent of all homes here are heated with geothermal water, which is piped to consumers through a national network of pipelines. Countries such as the United States, the Netherlands, Japan, Italy and Kenya also have geothermal plants, but in 2022 only eight countries opened new geothermal plants. Overall, global geothermal energy production only increased by 281 MW from 2021 to 2022 and reached a total capacity of 14.9 GW in 2022. The theoretical potential is also very large in the EU countries, but here the net capacity has still not reached 1 GW.

Geothermal energy is challenged by higher initial capital costs, but in terms of lifetime costs it is gradually becoming competitive with traditional fossil energy sources. In the best business cases it has reached around $50-70 per MWh in the last 10 years, according to figures from the International Renewable Energy Agency, IRENA. Geothermal expansion is therefore expected to grow in the coming years, as it is a low-cost energy source that can provide reliable heat in an efficient manner in local areas where district heating networks already exist. New horizontal drilling is also on the way, so that drilling does not have to be as deep, which could reduce the cost of geothermal projects.

Various analyses show that Denmark also has good opportunities for geothermal energy. A survey by GEUS has indicated that in several places in the Danish subsoil it is possible to utilize hot water from the subsoil for energy purposes. Two to three km underground there are several places with 60-80 degrees hot water, which can be pumped up so that the heat can be harvested and, for example, transferred to the water in the district heating network in a closed circuit. The water is then pumped back into the subsoil. This process can be repeated indefinitely.

Geothermal energy can become an important and stabilizing part of an overall energy mix based on renewable energy, because energy production is constant, unlike wind and solar, which fluctuate. Geothermal energy can also help replace part of the large burning of wood-based biomass in the Danish heating supply.

There has been a growing political focus on geothermal energy in recent years. In Denmark, a political majority approved new rules for geothermal district heating in 2021, which make it more economically attractive to set up geothermal plants. A parliamentary majority has also relaxed the legislation, making it possible to establish large-scale geothermal plants in Denmark. The first one is being set up in Aarhus, and it is The company Innargi, owned by Maersk, is responsible for it. When completed, it will, according to the Ministry of Climate, be the largest plant in Europe and will be able to supply energy equivalent to 2030 percent of the district heating needs in Aarhus in 20. There are also partnerships that are currently looking into the possibility of establishing large-scale plants in, among others, Holbæk, Copenhagen and Aarhus.

However, there is still a long way to go in terms of getting geothermal energy to a scale that is actually relevant to Denmark's energy consumption. Today, only around 1 percent of our total heat consumption is covered by geothermal energy, from three smaller plants at Sønderborg, Thisted and on Amager.

It is uncertain how much geothermal heat Denmark and other European countries can benefit from in the future. The European Commission's research centre, JRC, has assessed that there may be 80 GW geothermal energy in a best-case scenario towards 2040, but the industry is pushing for more ambitious targets. In June 2024, over 200 stakeholders in the geothermal industry value chain sent a letter to the European Commission, calling on the EU to develop a specific geothermal strategy, with the EU goal being to reach 250 GW of geothermal energy in 2040.

The hunt for a new green hydrogen adventure

99 percent of the world's hydrogen production is currently made with fossil fuels, and their total greenhouse gas emissions are roughly equivalent to the emissions from the world's aviation industry. In relation to the climate challenge, it is important to decarbonize this industry.

Globally, up to 120 million tons of hydrogen or hydrogen in combination with other gases are produced. 42 percent of it is used in refineries to remove sulfur from gasoline and diesel (which limits acid rain), 37 percent is used to make fertilizers, and the rest is used to produce methanol, chemicals, plastics, and in industrial processes.

But how can fossil fuels be displaced from the world's hydrogen production, and can a solid supply chain be built with green hydrogen produced via electrolysis and clean renewable energy? It is important to understand here that hydrogen is an energy carrier that can produce heat (via combustion) or electricity (e.g. through a fuel cell). And it can be used to store energy over a longer period of time, so that together with batteries, thermal storage, hydroelectric power and other technologies it can help store fluctuating solar and wind energy.

The EU has high ambitions for EU countries to produce 2030 million tonnes of green hydrogen by 10 and will import an additional 10 million tonnes of green hydrogen. But there is still a long way to go. It would require 100 GW of electrolysis capacity and 200-300 GW of clean renewable energy to produce 10 million tonnes of green hydrogen.[53]

In 2023, there were only 2 GW of electrolysis facilities globally, and they produced just 148.000 tones green hydrogen. The capital costs are still very high, so there are no large-scale plants in Europe yet. Up until now, scaling up has been hampered by several factors. Firstly, the price of green hydrogen is several times higher, i.e. typically 5-8 euros per kg versus hydrogen produced from gas, which costs only 1,5 euros per kgIf prices are not brought down further – or governments provide financial support and state guarantees during the transformation phase – the dreams of a new green hydrogen adventure may suffer a dire fate.

Another serious challenge is the lack of sufficient green electricity for the upcoming PtX factories. As long as there is no surplus of green electricity and fossil fuels in energy consumption, there is a risk of using fossil energy in the electricity grid to produce green hydrogen, which will leave an extra large climate footprint. State support for green hydrogen production – before there are sufficient amounts of green electricity and fossil fuels have been phased out of the energy system – will not displace as many tons of CO2, which direct support for clean renewable energy or heat pumps could ensure. See table below.

However, private investors and consortia have already made ambitious plans for new PtX factories in Denmark and other EU countries. European Energy has, for example, built the world's largest commercial e-methanol plant in Kassø near Aabenraa, which will produce E-methanol, the first container ship in the world that is CO2-neutral. But at the same time, we have seen Ørsted back out of some of its large green hydrogen projects in Sweden and Germany, citing the very high investment costs.

It is still unclear who will win the race to gain a first-mover advantage in the market and succeed in creating a scalable PtX business. We are witnessing a race to the bottom. However, if Denmark is to develop a strong PtX industry, it requires a significantly larger and faster expansion of onshore and offshore wind and solar cells. And it is still going far too slowly. In the longer term, there may also be a challenge in obtaining sufficient carbon to produce the new e-fuels, which needs to be addressed in time.

The uncertain needs of the future

It is difficult to predict with precision the future demand for green hydrogen. It depends largely on technological development and how far one gets with the direct electrification of hard-to-abate industries. Green hydrogen will never – due to the large conversion losses – be able to compete with technological alternatives that are powered directly by green electricity. This applies, for example, to road transport or the heating sector. At least 30 percent of the energy is lost in the production of green hydrogen from electricity, and in the heating sector, hydrogen cannot compete at all with heat pumps, which are 5-6 times more energy efficient.

Other sectors are harder to decarbonize, and here green hydrogen may play an important role. Despite the rapid battery revolution, the main forecast is that ships and aircraft on long routes will be powered by a new generation of e-fuels in the coming years.

Countries with large amounts of cheap green renewable energy – such as Denmark – have good opportunities to join this race and scale up production with e-fuels. But the competition on price is fierce, and countries with large amounts of both cheap wind and solar energy, which are geographically close to the major markets, can be expected to have a competitive advantage.

Behavior and regulations can also change the game. For example, if people can change their behavior and fly less through much higher climate taxes, it will reduce the need for e-kerosene for the planes. And will digitalization reduce the need for a number of physical work meetings and trips to foreign conferences – or even stimulate people to travel more? We don't know yet. In agriculture, there is also great potential to replace artificial fertilizers produced with fossil energy and switch to e-ammonia. At the same time, however, political regulatory pressure must be expected to get agriculture to reduce the consumption of artificial fertilizers, which lead to major water environment problems with excessive leaching of nutrients into drinking water and the marine environment.

PtX products made with green hydrogen will reduce air pollution from the burning of fossil fuels, and will be better for the climate than fossil business as usual.

However, producing green hydrogen is expensive and will require significant land use. It is twice as effective in transport, it is more efficient to use clean green electricity directly than to produce e-fuels with green hydrogen. In other words, it means that it requires, for example, twice as many wind turbines to produce green e-fuels as to use the green electricity directly.

PtX requires very large amounts of very ultrapure water – it takes 9-10 liters of water to produce one kilogram of hydrogen – so access to water also becomes a critical factor that must be included in energy planning.

In the transition, one should also not overlook the fact that hydrogen itself has a significant warming effect when leaked into the atmosphere, as it functions as an indirect greenhouse gas. When hydrogen rises into the atmosphere and troposphere and combines with free radicals, it extends the lifetime of other greenhouse gases. There is still scientific disagreement about the level of warming and calculation methods, because hydrogen has a very large immediate effect, but at the same time has a relatively short lifetime in the atmosphere. A study published in Nature estimates the warming to be more than 11 times as harmful to the climate as CO2 over 100 years.[54] Other studies have shown that hydrogen over 20 years can be between 19-38 times more harmful than CO2. [55]

If the transition from fossil fuels to a hydrogen-based economy is not to have an inappropriate side, requirements should therefore be set for minimal leakage and thorough control along the entire value chain. This may suggest that it is better to produce green hydrogen at local electrolysis plants and to produce the next generation of e-fuels and e-ammonia in the same geographical area, so as to save the high costs and energy losses of transporting hydrogen over long distances. Co-location of renewable energy and green hydrogen production should be promoted, and this should take place in urban areas, so that the excess heat can be utilized in district heating.

Transporting hydrogen over long distances is much more energy-intensive than, for example, transporting gas – the difference is a factor 3Over a 30-year period, according to energy expert Paul Martin, you will lose at least 10 times as much energy by producing green hydrogen and transporting it over long distances in hydrogen pipes than by choosing to send green electricity through HVDC transmission lines.[56]

There is still considerable uncertainty about the amount of hydrogen that will be needed in the future energy system. Even in a business as usual scenario, the need for green hydrogen in Europe could be up to 5 times smaller in 2030 than the European Commission is otherwise targeting.[57] Before embarking on a massive scale-up of green hydrogen in Denmark and the EU, there is a need for more thorough analyses of future energy needs, taking into account increased energy efficiency and electrification in, among other things, road transport and industry.

The electrolysis process – where renewable energy is converted into green hydrogen, which is then used to produce e-fuels – is fundamentally an expensive and inefficient process because there are very large energy losses along the way. To ensure a cost- and climate-efficient transition, PtX should be limited to those sectors where no other sensible solutions exist. Hydrogen and PtX should be kept out of cars, trucks and home heating completely, where more efficient alternatives already exist. Progress in the direct electrification of heavy industry also means that one should be cautious about introducing hydrogen here, as investments in infrastructure and production equipment can lock industries into indirect electrification, which will be more expensive than direct electrification.

Electrification needs to step up

Today, however, electrification is progressing far too slowly in Europe. In fact, it has stalled in recent years if calculated as a share of the EU countries' final energy consumption, and it only accounts for 23 percent of the final energy consumption within the community.

Electrification has the potential to pave the way for major energy savings – a kind of energy efficiency 2.0, as Danfoss has called it.[59] The explanation is that the electrical solutions can cut 40 percent of the final energy consumption, rather than continuing with fossil energy. In an electric excavator, you can already cut 15-30 percent of the energy consumption by switching to electric-powered machines, and Danfoss estimates that you can cut as much as half of the energy.

One of the biggest barriers to faster electrification lies in the electricity grid, which is in many places dilapidated and under-capacity. EU countries have one of the oldest electricity grids in the world, and around 40 percent of the grid is over 40 years old, so the need for modernisation is urgent. The challenge is that, as the Commission points out in its grid strategy, it often takes between 4 and 10 years for grid companies to be allowed to strengthen the grid, and it can take up to 8 to 10 years for the high-voltage transmission grid.[60] These waiting times are bureaucratic obstacles to the green transition that should be removed.

If the European electricity grid is not expanded significantly, the risk is that many new solar cell systems, wind turbines and heat pumps can be connected, and that long waiting times will occur.

Today, the European transmission grid, which moves electricity over long, high-voltage currents, is 340.000 kilometers long, but it will need to be expanded significantly in the coming years.

Europe already has more than 400 interconnectors that help move excess solar and wind energy across borders, reducing the vulnerability of countries and stabilizing the overall grid. But the capacity, at 93 GW, is too small for future needs. The think tank Ember estimates that many more interconnectors need to be built, and the capacity over the next 10-15 years needs to be increased to at least 148-187 GW.[61]

All parts of the energy system must work together properly, and there must be enough capacity on the main green highways so that we do not end up falling back on the old fossil infrastructure.

We are still not good enough at saving energy

Da total calculation to achieve the necessary CO2– and resource reductions cannot ultimately succeed without significant energy efficiency improvements. If energy is not saved and if energy is not used efficiently, the costs of the green transition will increase significantly. We already do not have enough green electricity and with the high demand for it in the future due to the electrification of transport, heating and industry, data centers, PtX, etc., it is therefore imperative to use energy wisely and energy efficiently.

The first prerequisite is to electrify as much as possible. Behavioral changes that ensure that companies and citizens save energy are also crucial. In addition, major gains can be achieved by minimizing the large losses of excess heat, which occur in factories, data centers, supermarkets, etc. In the EU alone, the lost excess heat is equivalent to up to 2860 TWh per year, which is almost equal to the total consumption of heating and hot water in the EU countries.[62] Much of this excess heat can be captured and used by optimizing existing systems and using energy-efficient technologies. We also need to embark on a major renovation wave to make our buildings more energy-efficient.

Energy savings are one of the most important tools for reducing fossil fuel consumption in the short term. In Denmark, this is the transition from fossil fuels to renewable energy. og increased energy intensity, which has been responsible for the most significant CO2-reductions so far. The adjusted gross energy consumption (which takes into account fuel related to foreign trade in electricity and weather fluctuations compared to normal years - but not our international transport) was 2022 PJ in 696, while back in 1990 it was 819 PJ, which is a reduction of 15%.

Another way to look at energy consumption is via energy intensity. This corresponds to energy consumption relative to GDP, and thus how efficiently we use energy to create economic value.

This is evident, among other things, from the International Energy Agency's (IEA) net-zero carbon scenario, where they assume that energy intensity should be twice as high in the 2020s as in the 2010s. Each year, energy intensity should increase by 4,2% from 2020-2030 according to the IEA, compared to 1,6% from 2010-2020. The EU countries are not meeting this target today. Denmark also has homework to do.

Looking at energy intensity from 1990-2022, Denmark has had an annual improvement of 2,25% – which is far from the IEA's ambition of more than 4 percent.

These figures clearly show that the Danish effort to ensure energy savings is still insufficient. It is going too slowly. to ensure efficient energy utilization, and the instruments are too few. This applies to the energy sector, industry and our buildings.

Resource efficiency is also a critical factor for success

The energy transition is also a physical and material challenge. It is important to quickly scale up mining operations for a number of the critical raw materials that will be used in the new green energy technologies. In recent years, serious concerns have been raised that the green transition of the energy sector will lead to such an explosive increase in demand for rare metals and minerals that shortages and increased inflation may arise. For example, that rising prices for copper, aluminum, lithium and other metals could lead to a kind of “greenflation” that spreads to the entire economy and creates strong price inflation. This is a concern that is also widespread in the EU, where a Critical Raw Materials law has been adopted, which, among other things, is intended to promote increased mining operations in the European community. At the same time, it is intended to ensure that EU countries do not become too dependent on China and other major powers that have established themselves on the important supply chains from the world's mines to the refining industry. It is important to address this risk in a broad strategic effort.

The European Commission's research centre, JRC, estimates that the EU's green transition could increase demand for rare metals by a factor of 5-12. And demand for lithium, for example, will be 9-12 times as large in 2030 and 14-21 times as large in 2050, depending on which scenario is used.[63]

An accelerated green transition will reduce global oil, gas and coal extraction, and at the same time many new mines are already being opened to meet the growing demand for new metals and minerals. For example, there has been exponential growth in the extraction of lithium, cobalt and nickel in the last five years, and as much as 60 percent of current lithium mining has been opened in the last five years.[64] According to the Energy Transitions Commission, global lithium reserves are 85 million tons, which are 25 million tons of cobalt, 300 million tons of nickel and 5600 million tons of copper, and only a small proportion of these reserves are needed to complete the green transition in the energy sector.

The total material requirement to ensure a green transition of the energy sector up to 2050 is less than one year of extraction in the coal industry. See Figure 29.

The International Renewable Energy Agency, IRENA, also believes that fears of greenflation are exaggerated. The quantity needed for the various critical metals and minerals that will be used for the transition in the energy sector is very small compared to the total demand for them. In addition, alternative materials can be used, products can be redesigned or raw materials can be recycled more. They are durable, while fossil fuels are burned every year.[65]

By consciously investing in circular economy and innovation, resource consumption can be reduced. In the wind turbine industry, they are able to recycle between 85-90 percent of the materials in wind turbine blades, and Tesla and Volkswagen are able to recycle 90 percent of the critical raw materials in batteries.

The rapidly increasing demand for batteries, which consume many of the critical raw materials, has been a cause for concern for several years. But as the industry has scaled up, battery manufacturers have also become more adept at recycling the materials. Brunp, a subsidiary of the Chinese battery giant, can draw the entire 99,6 points of nickel, cobalt and manganese from the old, used batteries and recycle these critical minerals. And for lithium, they recycle 91 percent.

According to the think tank RMI, the demand for nickel and cobalt would have been twice as large, and the demand for lithium would have been 58 percent higher, if we had made batteries today as we did in 2015. Among other things, the chemical composition of the batteries has been changed so that they are much more energy-dense, while using fewer minerals. RMI estimates that the battery industry could become 2050 percent circular by 100, so that there will be no need to extract more minerals from the ground.[66]

The total resource draw is much lower than if business as usual were to continue. In the battery industry, an accelerated transition will require overall 125 million tons of minerals. That is 17 times less than the amount of oil that every year extracted to keep road transport going. It would also be about 20 times cheaper to replace fossil fuels with batteries, RMI estimates.

It is crucial to get control of supply chains and make them circular if the green energy transition is to be sustainable and stay within planetary boundaries. At the same time, political regulations can also work to make mobility much more sustainable if we accelerate electrification, ensure better and electric public transport, promote electric micromobility and support cyclists and pedestrians through better urban planning. Sufficiency and circularity need to be built into energy policy from the start.

A new generation of green industrial policy

Until now, energy efficiency and resource efficiency have not enjoyed much political support measured in terms of money. In Denmark, the state has spent far more money on state subsidies for CO2-capture and storage, biogas and conversion of biomass to electricity. Over 38 billion DKK has been allocated to CO2-catch. From 2021-27, the state will provide 4,3 billion DKK. to power plants that produce electricity from burned biomass. And during the same period, biogas plants around the country will 19 billion DKK in state aid. The biogas sector receives over a third of the total climate and energy support – and that is more than solar, wind and energy efficiency improvements receive combined. And in the green tripartite agreement for agriculture, the parties to the agreement agreed that a full 10 billion DKK should be allocated to pyrolysis – which is ten times as much as Michaels Svarer's expert committee had itself planned. It is uncertain whether this major investment can deliver as high a climate impact as the politicians hope for. This should be weighed against all the money that is otherwise allocated to support green technologies.

For example, the government has provided DKK 1,25 billion in state support for six different Power to X projects, which together will build a capacity of 280 MW – but there is still a long way to go to achieve the political goal of establishing 4-6 GW PtX factories in Denmark by 2030.

Unless Denmark expands renewable energy faster, it may be difficult to secure enough green power for these new PtX facilities and the next generation of e-fuels. Other EU countries are now scaling up renewable energy faster, and they also provide larger amounts of support for PtX than the Danish state does. This makes it harder for Danish developers to compete in this race.

Denmark has spent several years using state funds to pursue an active industrial policy to promote the green transition, it is debatable whether the money has been spent in a cost-effective way on green technologies that make the greatest contribution to phasing out fossil fuels. The biggest and fastest climate gains can be achieved by, for example, investing much more in energy efficiency and a rapid expansion of solar and wind energy and heat pumps, but these solutions currently receive the smallest share of green public funding. And when the state provides very large amounts of support for pyrolysis, biogas and CO2-catch, it may be difficult to find sufficient funds for other purposes.

Going forward, it would be better to provide more support to the technologies and solutions that deliver the greatest and fastest climate impact. Danish business support can be recalibrated and restructured to ensure an accelerated phasing out of fossil fuels.

Regardless, public funds will undoubtedly be needed to scale green technologies and solutions faster. In the EU, there is growing awareness of the role that an active green industrial policy can play in the transformation. And the same is happening in the US, where President Biden's Inflation Reduction Act has paved the way for a wave of green investments. See case below.

In a way, the circle is closing. For many years, it was taboo in the Western world to talk about state aid. But it is no longer so. Time is a critical factor. We cannot solve the climate crisis and reach the goal on the journey to a net-zero society if the state does not play a more active role as a catalyst and as an early investor, helping to cover some of the risk in the market. In the same way, the European Investment Bank, pension funds and other financial institutions can mobilize additional investment capital to scale new technologies faster.

Today, solar cells and onshore wind are cheaper than fossil fuels in terms of lifetime costs. This was not the case when the first business pioneers put the first solar cells on their rooftops or erected wind turbines in the wake of the international energy crisis in the 1970s. Back then, their costs per KWh were not competitive with fossil fuels. They are today. Thanks to targeted business support and attractive incentives, the foundation was laid for the later market boom for solar cells and wind turbines. An innovative ecosystem was built that was scaled globally. China has done the same with solar cells, batteries and electric cars. We must learn from the great successes of business history.

Harvard professor Michael E. Porter wrote 34 years ago in his seminal work on the competitive advantages of nations that the state can play a key role through high standards, targeted research support, strategic public procurement and targeted business support for the maturation of critical technologies. A mission-driven and strategic business policy can stimulate the development of innovative ecosystems and ensure fierce competition between many companies, which can then scale up the new green solutions.

Chapter 6: The energy analysis – a scenario for a fossil-free energy system in Denmark in 2040

This report has shown that Denmark still has a long way to go before fossil fuels are phased out. We are at most one-sixth of the way away from the fossil fuel society and towards a green, sustainable, clean and electrified energy system that can stay within planetary boundaries.

If you look at the entire Danish economy as a whole – and including our international transport – 68 percent of gross energy consumption still fossil. See chapter 3. And although we are good at telling the whole world about our wind turbine adventure, this adventure has unfortunately come to a standstill in recent years. We are also far from powering the entire society with 100 percent green electricity. And if you just look at our gross domestic energy consumption – including the fossil energy that is refueled on planes and ships in Denmark – only 13 percent is clean energy from the sun, wind, heat pumps, geothermal energy and hydropower. Number by number, the challenge is piling up.

But it is nevertheless possible to make Denmark's energy consumption fossil-free by 2040, even though it is a difficult and demanding task. This chapter presents a transformation scenario – T2040 – which contains a clear reduction path for fossil fuels, so that they can be completely out of our energy supply in 15 years.

EA-Energianalyse has, on behalf of the Danish Green Transition Denmark, made a series of thorough calculations of what the green transformation journey could look like. It shows how to build a 100% clean and renewable energy system, while at the same time ensuring the economic and supply conditions that a rapid transition can bring.

The goal is to bring Danish greenhouse gas emissions to zero by 2040 at the latest, and at the same time – as recommended by the Climate Council – to also take responsibility for the part of international air and sea transport that is bunkered in Denmark. Furthermore, the changes in the Danish energy system must contribute to bringing Denmark within planetary boundaries.[67] Until now, the climate and energy debate has had a blind spot in relation to planetary boundaries, but Denmark's large resource consumption, strong dependence on fossil fuels and the burning of solid wood biomass clearly lie outside several of the planetary boundaries.

In the analysis, we have addressed the question of how far we can go in reducing Danish emissions through known technologies. At the same time, we have wanted to shed light on how the Danish energy system today burdens the climate and other planetary boundaries, including land use, biodiversity and particle pollution. The overall purpose of the analysis is to provide a comprehensive assessment of what is needed for the Danish energy system to be sustainable in an absolute sense, so that we do not burden the earth beyond its carrying capacity. In short, is it possible to adjust our energy system to be in line with planetary boundaries?

For the analysis of Danish climate and energy policy, three scenarios have been set up with impact points in 2025, 2030, 2035 and 2040. The starting point for the projections is the base year 1990 and the base year 2022. The main result of the scenario analysis is a review of the differences between a Frozen Policy development based on Denmark's Climate Projection, and then the new transformation scenario that will bring Denmark to net zero in 2040. 

Since the analysis was prepared during the spring of 2024, the reference scenario has been determined based on the Danish Energy Agency's Climate Projection 2023 (KF23). In order to incorporate expected changes in KF24, a KF23+ scenario. Selected elements that were known at the time of analysis, e.g. updated, are included here.  

A safer path to a sustainable energy system

Denmark can become 100 percent self-sufficient in clean renewable energy by 2040, and achieve net zero emissions by 2040. The transformation scenario (T2040) in this chapter shows that it is technically possible and economically realistic to build a balanced, secure and absolutely sustainable energy system with solar, wind, heat pumps and geothermal energy – largely without burning biomass, and with only a small amount of peak load for extreme weather conditions. A faster scale-up with energy efficiency improvements and renewable energy, together with more ambitious electrification, more circular economy and ambitious afforestation, can ensure major climate effects, so that Denmark can stay within the 1,5 degree framework from the UN's Paris climate agreement. And we can even take responsibility for our share of international transport, which has so far been kept outside the national climate accounts.

Overall, T2040 ensures significantly greater climate benefits up to 2040 than in the government's climate projection. The more ambitious reduction path will remove an additional 207 million tons of CO2e towards 2040. See figure 30.

The big CO2-savings in the T2040 scenario will have a total value of DKK 315 billion, if calculated based on the expected CO2price in 2040.[69] But there are also a number of costs to the investments.

The total cost of making the Danish energy system fossil-free has been calculated by EA-Energianalyse. The transformation scenario has additional costs in 2040, which are calculated at 5,4 billion DKK/year. The figure below indicates the total cost at 6,2 billion DKK/year, but this calculation has not included 800 million DKK in additional costs in the reference scenario, because Denmark is obliged to comply with the FuelEU Maritime initiative, which requires shipping to decarbonize by at least 31% in 2040. The transformation scenario already more than delivers on this point. Furthermore, the costs in the T2040 scenario can be reduced by 920 million DKK if heat pumps are installed in the peripheral areas that were otherwise intended to be connected to district heating. The benefits of more heat pumps, thermal networks as well as more geothermal energy in the district heating supply may contain additional potential that should be included in future studies.

This analysis has not included conversion costs in agriculture, costs for increased afforestation or the economic impact of stopping oil and gas production in Denmark. Similarly, the costs of measures to meet the assumed developments are not included. There may be additional costs associated with this, which should be mapped out in separate analyses. However, the Green Transition Denmark has made a calculation that shows that additional afforestation in the T2040 scenario will be a profitable business from a purely socio-economic perspective.

The investments in the T2040 scenario are generally assumed to be carried out by private commercial actors. The analysis's calculations are therefore based on a conservative assumption that market actors will use a real interest rate of 5 percent when calculating costs for energy production plants, CO2 capture plants, PtX plants, etc.

The transformation scenario requires major investments in renewable energy plants and new green technologies, and the interest rate level is therefore of great importance. In socio-economic calculations, the Ministry of Finance recommends that for plants of 0-35 years, a discount rate of 3,5 percent, and if this is used, the final bill will be significantly lower than indicated in this analysis.

However, some sectors still show a positive net result, where the Transformation Scenario entails lower costs than in the reference. This applies, among others, to the electrification of road transport and the conversion of parts of the heating sector (conversion to heat pumps) and parts of industry (electrification of low-temperature processes).

The analysis is based on expectations for long-term price developments, and for oil products, coal and natural gas, as well as CO2 The figures are taken from the IEA's World Energy Outlook 2023. And the basic assumption is that there is a socio-economic value for Denmark in reducing CO2-emissions. In the analysis, CO2-price set at 767 DKK/ton in 2025 and 1407 DKK/ton in 2040. This is higher than the prices that the Ministry of Finance uses within the quota sector. But it is lower than the CO2e-prices that the Climate Council recommends in sensitivity analyses (812 DKK/ton in 2025 and increasing to 2758 DKK/ton in 2040) 

The valuation of CO2 However, it has a significant impact on the overall economic estimate. When any derived effects are disregarded, a higher value of CO2 in 2040 at 100 kr/ton improve the economy in the Transformation Scenario by approx. 1,2 billion kr/year compared to the reference scenario. In other words, this means that if CO2-price exceeds 1950 DKK/ton, the T2040 proposal's recommendations for the energy sector will be cheaper than the reference scenario.  

The analysis also uses relatively conservative assumptions for the price development of solar and wind energy towards 2040, which may be more pessimistic than is warranted. 

These price assumptions are somewhat higher than the figures used by the Danish Energy Agency in the Climate Projection 2024. Here, the annual average consumer price (stated in 2023 prices) is expected to be 432 DKK/MWh in 2030 and 415 DKK/MWh in 2035. However, a greater price drop is expected for solar cells, where the electricity price in 2035 will be 125 DKK/MWh – or approximately 70 percent lower than in 2025. Similarly, the electricity price for onshore wind is expected to be halved to 253 DKK/MWh in 2035.

No one can say for sure what the price development will be in the coming years, or whether new wars, geopolitical conflicts, new pandemics, climatic tipping points or new technological leaps will lead to major changes in the market. But solar and wind energy have delivered large price drops in the last few decades because they are granular technologies that have scaled quickly in the market. And there is much evidence that this development will continue. (See also Chapter 5) If the price drops are as large as those shown in the Climate Projection, it could lower the total costs in the T2040 scenario, as it has a higher share of wind and solar energy.

The increased expansion of onshore wind and solar will, in isolation, lead to a gain for Denmark in the form of lower electricity prices for consumers, and from 2025 to 2040, the analysis shows that electricity prices will fall by 35-45 percent, depending on whether you live in Eastern Denmark or Western Denmark. Jutland will experience the largest decline in electricity prices, but they also produce more renewable energy.

Growth, sufficiency and the risk of tunnel vision

Expectations for growth, technological development, political regulations and behavioural changes are of great importance for whether energy and resource consumption is brought within planetary boundaries. However, the analysis does not change the established assumptions for growth across sectors, so that it can be illustrated how far one can go without significant behavioural changes. However, it would be positive if a greater degree of political and economic stimulation could be provided sufficiency – i.e. adequacy – in energy consumption through efficiency improvements og real energy savings, because it can make it easier to stay within planetary boundaries, and it will lower the costs of expanding energy production and the transmission grid.

Ultimately, it is up to politicians whether they want to stimulate behavioral changes through higher climate and environmental taxes. Furthermore, changing values ​​and desires for more time and well-being may resonate with a growing group of citizens, leading to a social tipping point and behavioral changes with lower energy and resource consumption.

In the technology race, it cannot be denied that there will be a greater and faster electrification of industry, shipping and aviation than has been assumed in the calculations. If so, significant economic savings will be achieved, as e-fuels are expensive to produce, require extra carbon and involve large energy losses.

The analysis has generally aimed to identify potential "ceilings" or "boundaries" that could be found in a future energy system, which is discussed below. The only deviation from this principle of unchanged growth assumptions is agriculture, which should implement significant changes if the industry is to take its fair share of the climate transition. The report assumes that agriculture should be able to reduce its emissions in line with other sectors and reach net zero by 2040. However, this requires a much more ambitious and structural transformation of agriculture than agreed in the latest tripartite agreement.

In this analysis, we have not dealt with the specific instruments, but have relied on recent reports – partly on "Denmark's Future Land Use" from the Climate Council[70] and "From Feed to Food 2" from nine green NGOs, including the Danish Green Transition Denmark. Both reports provide a number of recommendations to ensure significant reductions from agriculture through the removal of up to 1/3 of the agricultural area or up to approx. 760.000 hectares. The climate effect from the removed areas comes partly from the wetting of low-lying soils and afforestation of other areas. And in "From Feed to Food 2" there is also a significant reduction in animal production through a shift to more plant-based food.

On the other hand, there is no plan for such a strong financial investment in new technologies, including pyrolysis, as agreed in the tripartite agreement. The T2040 scenario proposes that greater climate benefits are secured through structural adjustment and behavioral changes. A sufficiently large area must also be freed up for, among other things, increased afforestation, biodiversity and more renewable energy.

As described in Chapter 4, we are currently exceeding planetary boundaries in six out of nine parameters. And the Danish energy system is exceeding boundaries in relation to climate, particle pollution, land use and biodiversity.

Until now, Danish climate policy has primarily focused on reducing CO2e-emissions, but in the pursuit of reductions, it is important that we do not pursue a narrow CO2tunnel vision. The large-scale Danish burning of especially wood-based biomass is a clear example of this tunnel vision. While the biomass is registered as CO2-free energy source in the energy sector, it affects CO2-balance in the LULUCF Regulation is negative. According to the government's budget proposal In the period from 2022-2028, the state will provide a total of DKK 4,6 billion in state aid for burning wood biomass to produce electricity. This is not only distorting competition compared to solar and wind energy, but it is also harmful to the climate. In addition, these biomass power plants make money by selling guarantees of origin – as so-called renewable energy – even though in practice they emit millions of tons of CO2 into the atmosphere. This form of direct and indirect state support is phased out in the transformation scenario, where the firing of solid wood biomass is phased out and replaced with green electricity.

Since approximately 30% of Danish biomass consumption for energy is imported, on paper it does not burden the Danish CO2-accounting, and thus concealing its harmful climate impact. As mentioned in Chapter 3, the direct emissions from the burning of biomass are over 20 million tons of CO2, but the calculations from EA-Energianalyse are based on a time-weighted climate impact of 4 million tons.

At the same time, the overconsumption of wood-based biomass affects planetary boundaries on three crucial parameters. A) Land use comes under pressure when scarce wood resources are cut down for energy purposes. It is imperative for biodiversity reasons that larger and more contiguous areas are allocated to forest areas, but increased extraction for energy challenges this objective. B) The type of forest is also crucial for biodiversity. In a typical Danish production forest, there is only a good 5,7-6,5 cubic meters of dead wood per hectare, while in untouched forests there is an average of between 130-150 cubic meters of dead wood per hectare.[71] The lack of untouched forest and dead wood in production forests is a direct cause of the poor biodiversity in large parts of the Danish habitats, where both fungal, plant and animal species lack habitats. C) The burning of biomass leads to increased particle pollution, which increases the risk of a number of respiratory diseases for citizens.

The transformation scenario therefore envisages a very ambitious plan for afforestation, in which approximately 2040 ha of new forest will be established by 320.000. This is 290.000 ha more than assumed in the government's climate projection. It is also more than the 250.000 ha that the parties to the agricultural tripartite agreement want to establish by 2045. See figure 33.

Part of the new forest new forest must be designated as virgin forest to promote biodiversity. Today, there are 74.100 ha of designated and planned virgin forest, but the T2040 scenario will lead to an additional 140.000 ha being designated as virgin forest by 2040, and this must be in large, contiguous areas, as also recommended by the Biodiversity Council.

Rapid and deep reductions – but lack of carbon

In the transformation scenario, greenhouse gas emissions are reduced to net zero by 2040 through a full phase-out of fossil fuels, faster electrification, energy savings, a ninefold increase in solar and wind energy by 2040, a phase-out of wood burning, increased waste sorting, structural transformation of agriculture, increased afforestation. At the end of the period, the expensive direct-air-capture (DAC) technology may be needed to obtain additional carbon, because Danes are still expected to travel a lot by plane, and climate-neutral e-fuels must be made for these planes.

But the T2040 scenario shows that even if Denmark takes responsibility for its share of international transport, it is possible to reach net zero already in 2040. However, this requires faster and deeper reductions in CO2e-emissions, which are particularly driven by accelerated electrification in all sectors.

In line with the recommendations of climate research, the largest reductions will occur towards 2030, when more than 30 million tons of CO will be reduced.2 compared to the 2022 level. At the same time, the Climate Act's 2030 target of a 70% reduction compared to 1990 is almost met, even when emissions associated with international transport are included. Excluding international transport, the target is exceeded by approx. 3 million tonnes/year.

This gives us a larger safety buffer, and it can be good to have if later in the 2020s we get new figures for lowland soil or forest that are less positive than the latest updates. This buffer also makes climate policy more resilient if expectations for CO2-catch in the government's climate projection does not meet expectations.

Denmark's share of international air and sea traffic is calculated as the share of air and sea traffic that is refueled/bunkered in Denmark. An underestimate of Danes' energy consumption in international transport has been given, as many Danes' flights abroad involve stopovers where they refuel extra en route. The analysis shows that there will be a need to produce 90 PJ of renewable energy fuels in 2040 if we want to continue flying abroad and have a strong maritime industry. Unfortunately, long-distance air and sea traffic still appear to be difficult to electrify, and both biofuels and electrofuels will therefore play a crucial role in reducing their climate footprint. See figure 34.

To produce large quantities of electrofuels for international transport, there is also a need to obtain more carbon.

Since biogenic carbon is a scarce and expensive resource, this analysis is based on the assumption that shipping from 2040 will predominantly choose to sail carbon-free fuel, i.e. e-ammonia, while carbon is primarily used for the aviation fuel e-kerosene.

In the period from 2025-2040, however, there will be a number of ships, including from Maersk, that will sail on e-methanol. But our expectation is that e-ammonia will over time dominate the maritime sector on long distances. In total economic terms, e-ammonia will be cheaper for ships to use than carbon-containing renewable fuels. It is possible that some carbon will still be used in shipping after 2040, but then carbon will have to be released elsewhere to make the calculation work. One possibility is that the expected 61 percent increase in air traffic towards 2040 will be lower than expected, for example if higher aviation taxes are introduced. Another possibility is increased electrification.

The analysis assumes that short-distance shipping will be electrified by 2040, but perhaps longer routes can be electrified. In China, there are already cargo ships that sail over 1000 km with 700 twenty-foot containers on board. Whether longer routes and larger cargo ships will sail on electricity in the future will be determined primarily by technological developments in batteries. As batteries become larger and have higher energy intensity, this could open up the possibility that larger parts of shipping and aviation can be powered by electricity or hybrid technologies consisting of hydrogen and electricity. However, the analysis does not assume that these solutions will have made a breakthrough on the market in 2040.

Need for much more green electricity

Looking ahead to 2030 and the politically adopted plans for the expansion of renewable energy, there is not enough wind and solar on the drawing board to displace fossil energy in Denmark's energy system, let alone to cover the need for green power in the new PtX factories. Climate agreement on green electricity and heat from June 2022 set a political goal of quadrupling electricity production from onshore wind and solar cells by 2030. This corresponds to approximately a doubling of the expected production in 2030 according to The Danish Energy Agency's Climate Status and Projection 2023. The agreement came about in the wake of Russia's invasion of Ukraine, which had triggered an energy crisis, and led many politicians to call for a significant expansion of renewable energy. Since then, several energy agreements have been concluded, and each time new promises of additional GW have been added. But so far, it has been difficult to deliver on all the promises.

One of the burning questions is what will happen to what was once launched as Denmark's new "Mars mission": the two energy islands in the North Sea and Bornholm, respectively. If they are completed, Denmark could theoretically go from approximately 40 TWh today to 130 TWh in 2035.

But the promises have run aground. The energy island in the North Sea has so far been postponed from 2030 to 2036 because the operating economy cannot be made to work. It will require a double-digit billion from the state to get the project off the ground. The government hopes that the German federal government will help co-finance the energy island and the cables. However, this is quite uncertain, because in Germany they have an open door scheme, where the state receives billions from the market operators to open up new offshore wind turbine projects. The Bornholm Energy Island is also severely challenged, even though politicians have given the green light for up to 18 billion. DKK in state aid, but the costs of the project appear to run up to 31,5 billion. DKK. The think tank Kraka Economics has called it “an economic disaster in slow motion”.

Even if the plans get back on track and both energy islands are realized, there will not be enough volume in electricity production to meet the increasing demand that electrification brings, if one includes the electricity that, according to the government's current plans, will go to produce PtX fuels.

The political and economic uncertainty about the energy islands could have negative consequences for the expansion of renewable energy in Denmark. Previously, the government cancelled the so-called open-door scheme for more offshore wind, where there were projects for up to 23 GW in the pipeline. A new model for future tenders has since been agreed, where the state, via a concession agreement, requires a 20 percent co-ownership. These price changes have led to delays in the process. In April 2024, the Danish Energy Agency finally opened a new tender round, which could potentially lead to between 6-10 GW of additional offshore wind, but even if it is successful, we are far from covering the increasing demand for green electricity or realizing the large-scale plans for a new Power to X industry in Denmark.

Plans to quadruple onshore solar and wind energy production by 2030 are also progressing more slowly than expected. Although several new solar cell plants in 2023 gave Danes 53 percent more solar energy, the construction of new onshore wind turbines has stalled and only one onshore wind turbine has been erected in the past year. Plans to designate large renewable energy zones and accelerate approval processes have still not been implemented.

The T2040 scenario suggests that the current standstill will end and that a larger and faster expansion of solar and wind will be carried out. A number of bureaucratic obstacles must be removed, large renewable energy zones must be laid out on land and at sea, and it is recommended that a new open door 2.0 scheme be created. Clear and harmonised pre-qualification requirements can open the door to market-based bids for a range of new offshore projects. Case processing and environmental approvals should be processed quickly and smoothly, so that long waiting times of several years can be reduced to months. The state should simply require that offshore projects meet selected non-price criteria – e.g. safeguarding the environment and biodiversity. And then a simple model for profit sharing can be created.

In general, it is recommended that Denmark use the EU's emergency regulation for new renewable energy projects, to ensure a much faster processing of environmental permits and approval of the projects. This can accelerate the deployment of renewable energy. And that is needed.

Factor 9 the revolution for green energy

In the base year 2022, Denmark's gross energy consumption (including bunkered energy for our international aviation and shipping) was approximately 750 petajoules, which can be converted to approximately 208 TWh. However, in the T2040 scenario, the growing production of e-fuels and the extensive electrification of all sectors will increase the demand for green electricity, and the total consumption will increase to around 250 TWh.

There will be a need to allocate slightly larger areas for renewable energy, but this is a limited challenge that can be overcome. Establishing 40 GW of solar cells in 2040 - and three-quarters of this on bare ground - will require approximately 42.000 hectares or just under 1 percent of Denmark's total land area.[72] And the wind turbines do not require much space, and they can coexist with both agricultural and forest areas. According to the Ministry of Climate, Energy and Utilities, up to 98 percent of the areas around the wind turbines can be used for other purposes. The increased capacity of wind energy in 2040 can be largely covered by dismantling old and small turbines and replacing them – via repowering – with larger and modern turbines, so there is a minimal area requirement associated with the expansion of onshore wind energy.

In several places in the country, however, additional land must be used to establish more power lines on high-voltage pylons, but some of the transmission lines are buried in the ground, and the land load is negligible compared to the load that, for example, road transport has.

Today, Denmark's consumption of biofuels alone accounts for 100.000 hectares agricultural land – within and outside Denmark’s borders – and this land could have a total annual storage potential of 1 million tons of CO2, if it were allowed to run wild. The EU's total consumption of biofuels today occupies 5,3 million hectares of agricultural land (i.e. 1 million hectares more than the total area of ​​Denmark), and the overall climate and land accounts are negative.[73] Solar cells are also a much more efficient way to use land for energy purposes. You need to use 40 times less land to power an electric car with electricity from solar cells than a car with a combustion engine powered by biofuels (via the politically determined blending requirements).

The expansion of solar and wind energy must take into account considerations for biodiversity, so that the new projects contribute to nature-positive solutions that also benefit local citizens. Real dilemmas may arise between green energy production and biodiversity that need to be resolved. But they should be solvable. See text box at the end of the chapter.

The increasing amounts of renewable and fluctuating energy will also increase the need for energy storage. See Chapter 5, which discusses, among other things, the need for increased battery storage. However, in the T2040 scenario, no more detailed calculations have been made on how the storage need will develop. This requires more comprehensive studies that also take into account the rapid change in battery technologies. There are several ways to store more, and this may become extra valuable if the transmission grid is not expanded quickly enough in the EU. See text box.

Denmark's energy system is not an isolated island in the world. We are closely connected to the energy systems of our neighbouring countries, and via transmission connections we import hydropower from Norway, nuclear power from Sweden, and we get both renewable energy, fossil electricity and nuclear power from the other EU countries. We are part of an internal European market. This affects price developments, how other countries' energy systems develop, which forms of energy they choose, and above all, they can help to provide Denmark with greater security of electricity supply. We can balance fluctuations across national borders, and we can also export large amounts of excess wind energy to Germany and other EU countries, thereby helping them to get rid of fossil fuels more quickly. However, it is worrying if, for example, neighbouring countries such as Sweden and Norway, which have a lot of cheap electricity, start to stop establishing more transmission lines, and these kinds of challenges need to be addressed politically.

The Balmorel model seeks to optimize the overall European electricity system, taking into account technology, capacity, costs and how the European trade in electricity and hydrogen across national borders is expected to develop. A scenario for the European electricity system has therefore been established, which forms the basis for the detailed analysis of the Danish conditions.

A projection of electricity consumption in Europe has been made, based on the ENTSO-E Global Ambition scenario in TYNDP 2022, while hydrogen consumption towards 2030 is based on the Commission's REPower Europe towards 2030 and on the Commission's mix scenario towards 2050, where it is assumed that the European electricity system will reach net-zero emissions in 2050. In light of recent challenges with the costs and speed of expansion with renewable energy and in particular the concretization of hydrogen consumption and production, the development in the short term is particularly uncertain.

In the EU, too, demand for electricity is expected to increase, with PtX hydrogen production in particular driving a large part of the growth. On the other hand, conventional electricity consumption is quite stable. See figure 37.

The T-2040 scenario recommends doing this to accelerate the transformation of road transport. The majority of citizens are already ready to embrace the electric car revolution, and by the summer of 2024, households had purchased far more electric cars than fossil-fuel cars. However, an end date should be set soon for the sale of new fossil-fuel cars – as cars typically last 14-15 years on the roads – otherwise it will not be possible to make Denmark's energy consumption fossil-free in 2040. The scenario assumes that traffic work for passenger cars will increase by 24 percent, by 12 percent for vans and 5 percent for trucks by 2040, but electrification will still ensure that road transport has no direct emissions in 2040.  

There is a lot of embedded energy from the manufacture of cars, but these emissions occur in the car-producing countries abroad. A reduction in the number of cars in Denmark could, however, contribute to lowering our footprint further, but this requires behavioral changes, where more people travel together in the car or a switch to lighter forms of transport. This footprint is not included in the analysis, but it is assumed that the resource footprint can be reduced significantly through a circular economy and a much higher recycling rate for materials. 

If fossil energy consumption in Denmark is to be phased out, it is crucial to accelerate the electrification of the transport sector. The sector has traditionally consumed large amounts of imported oil, and it has been a major source of both greenhouse gas emissions and air pollution. More electric cars powered by green electricity will contribute to significantly reducing emissions, despite an increase in traffic work. There will also be positive side effects in the form of a large decrease in air pollution, which will trigger lower health costs, as well as less noise in public spaces. The calculations show that rapid electrification of road transport ensures large savings, and this increases to 2040 billion DKK annually in 7,1 compared to the reference scenario. This even excludes health costs due to particle pollution.  

In the heating sector, all individual oil, gas and biomass boilers will be phased out by 2040, leaving households with only electricity and district heating-based heating. See text box. 

District heating is being expanded, and at the same time electrification is gaining ground. By 2040, around two-fifths of the space heating needs in households will be covered by heat pumps, including geothermalSee figure 40.

Heat pumps are far more energy efficient than traditional heating methods, and the phasing out of biomass contributes to lowering CO2emissions significantly and to reduce energy costs. Overall, households show a positive socio-economic impact of approximately DKK 900 million in 2040, which is due to savings because district heating replaces biomass and natural gas with heat pumps.

In the service industries and in the public sector, there are extra costs because the scenario has assumed that larger parts of these companies are connected to district heating than is actually cost-effective.

However, the total costs in the T2040 scenario can be reduced by DKK 920 million in 2040, allowing service industries to decarbonize without greater costs than in the reference scenario. However, this requires that more areas are connected to heat pumps, which is more cost-effective in areas where there is no existing district heating network.

The industry will also see significant changes in the T2040 scenario, where final energy consumption can be halved from 2022 to 2040. This assumes that process heat consumption can be electrified more. 100% of low-temperature consumption can be electrified with heat pumps, 50% of medium-temperature consumption can be electrified with heat pumps and 20% of high-temperature consumption goes to electricity. Other parts of the remaining energy consumption can be electrified in 2035 either by direct electricity or by electric boilers, which means that in total 100% of low-temperature, 90% of medium-temperature and 65% of high-temperature are electrified respectively.

It is possible that it is possible to provide even more green electricity to industry in the coming years. International studies have shown that within a few years it may be possible to electrify perhaps up to 99 percent of industry in Europe.[74] And an analysis for the Danish Energy Agency shows that in Denmark it could be up to 92 percent of industry.[75] The estimates in the T2040 scenario are therefore relatively conservative, so there may be additional gains to be reaped towards 2040 if it is possible to electrify even more of the industry.

The recommendation is that Denmark should strive to become one of the leading EU countries in the race to electrify industry. Significant savings in operating costs can be achieved when fossil fuels are replaced with green electricity.

Need for greater resource awareness

T2040 emphasizes ensuring resource savings and this is done through many different initiatives. Energy renovation of buildings and infrastructure is one of the critical areas of focus. By improving the energy efficiency of buildings, net heating demand can be reduced by 6% by 2040, despite increasing population numbers. Energy renovations can include better insulation, more efficient windows, and optimized heating systems. This reduction in energy demand not only reduces CO2emissions, but also contributes to financial savings and improved comfort for residents.

Increased waste sorting leads to a 57% reduction in waste for incineration by 2040. Waste incineration is a significant source of greenhouse gas emissions, and by reducing the amount of waste burned, CO2emissions are significantly reduced. Although the economics of waste sorting can be challenging, the benefits of reduced incineration and increased reuse and recycling are significant in relation to CO2-reduction. Emissions from the residual waste that is burned will, according to the scenario, be captured via CO2-capture, although these facilities are expensive to establish. This will happen in the late 2030s, as investments in energy efficiency and more renewable energy have a greater direct climate impact.

A general halt to the production of fossil oil and gas products is also necessary to achieve the goal of net-zero emissions. The emissions associated with the extraction and refining of oil and gas alone currently account for a total of 2,4 million tonnes of CO2With current policy, Danish oil and gas production will continue until the concessions expire in 2049, and with the reopening of the Thyra field, production is expected to increase and peak for oil in 2030, while for gas it is expected to peak in 2028.[76] If Denmark is to be taken seriously as a global frontrunner in the phasing out of oil and gas production, as our initiative for the “Beyond Oil and Gas Alliance” (BOGA) suggests, we should aim for a much earlier phase-out and at least in 2040, in line with the rest of society becoming fossil-free. This is in line with Danish gas consumption, which with current plans is expected to be covered 2030% by biogas by 100. In the transformation scenario, gas consumption falls significantly due to increased electrification

In Denmark, in recent decades there has been a sharp increase in the burning of solid wood biomass, which was considered a “green” energy source to replace coal in power plants. However, this has led to large immediate emissions of CO2. In the T2040 scenario, the burning of wood biomass is phased out relatively quickly, while the primary input to district heating is transferred to heat pumps and electric boilers. Rather than burning so much wood, it should be utilized and embedded in products with higher value creation, such as furniture, new wooden structures in construction, wooden packaging, bioeconomic products, etc.

In 2040, a maximum of 10,5 PJ of biomass will be used, which is residual wood – including from sawmills, etc., and this is assessed to be within planetary boundaries. See figure 43.

By leaving the biomass in the forests, a reduction effect of 0,95 million tons of CO is achieved.2 in 2040 through increased carbon storage, which is recorded in the LULUCF land use account. See figure 44.

Agriculture and forestry can take greater climate responsibility

Agriculture is one of the largest sources of greenhouse gas emissions, especially via methane and nitrous oxide. In the T2040 scenario, emissions are reduced through the removal of low-lying soils, reduction in livestock populations, and reduction in cultivated area. These measures are based on the recommendations of the report "From Feed to Food 2", which aims to minimize the climate footprint of agriculture and bring food consumption within planetary boundaries.

The removal of low-lying soils reduces greenhouse gas emissions, and a reduction in the animal population reduces methane from ruminants. T2040 is a much more ambitious reduction path than the one in the government's climate projection, where there are no major changes in relation to animal production. See Figure 45.

In the latest tripartite agreement on agriculture between the government, the social partners and the Danish Nature Conservation Association, significant funds have been allocated for technological measures that it is hoped can reduce agricultural emissions, while intensive farming continues as before. However, it is uncertain whether these measures are sufficient to reduce the greenhouse gas impact of agriculture. This applies, among other things, to the 10 billion DKK that is planned to be allocated to pyrolysis up to 2045. The parties to the agreement hope that pyrolysis can contribute up to 0,6 million tonnes of CO2 in 2030.

But today there is no full-scale pyrolysis plant in operation. In addition, the Green Transition Denmark shows calculations, that it takes a long time before pyrolysis has a climate effect. For manure that has been through a biogas plant, it takes between 8 and 40 years, for straw it takes only a few years, while for wood it takes about 30 years before pyrolysis has a climate effect.[77] A much greater climate impact could be achieved by using the money for structural restructuring of agriculture and electrifying agricultural energy consumption.

The tripartite agreement also includes several positive initiatives that can benefit nature and the aquatic environment. Among other things, 22 billion DKK will be allocated to establish 250.000 ha. of new forest by 2045. In addition, funds have been allocated for research and development of sustainable forestry techniques that will optimize carbon storage while ensuring biodiversity and forest health. When the tripartite agreement is implemented, it could lead to many more afforestation projects across the country.

The agreement will provide financial incentives to private landowners to encourage forest planting and maintenance, making it more attractive for them to contribute to this green transition. But as CO2-the tax on agriculture is set very low, and farmers also receive large base deductions, land prices will remain high, and it will be expensive to buy up land for increased forestry.

The T2040 scenario also calls for even more afforestation, but the level of ambition is much higher. As the climate tax for agriculture is increased more, land prices will be lower and it will be cheaper to take land out for forestry. The scenario recommends that 290.000 hectares of new forest be established by 2040 – i.e. in addition to the 27.000 hectares that the climate projection expects – because it is one of the best and safest ways to ensure both biodiversity and climate. In addition to providing a lot of recreational value and greater natural wealth, forests act as a carbon sink, where trees absorb CO2 from the atmosphere and stores it in the biomass and soil.

Today, there is a total of 202 million tons of CO2 in the forest's carbon stockHowever, increased afforestation can help absorb and store even more CO2, which is essential to achieve net zero emissions. This could bring Denmark's total forest area up to 22 percent of the country's area, and in 2040, Danish forests will absorb 3,3 million tons of CO2 extra out of the atmosphere compared to what is included in the government's climate projection.

From a socio-economic perspective, it would also be a cheap way to achieve a positive climate effect. Green Transition Denmark has calculated the figures, and it is socio-economically profitable to plant an additional 290.000 hectares of forest in addition to the 27.000 hectares already included in the government's climate projection.

It is assumed that you can buy land at an average land price of 200.000 DKK/ha, and what it costs to raise a forest of normal quality, while also taking into account the positive side effects of increased carbon storage in the soil, lower CO2e-consumption in connection with less mechanical use, reduced leaching into the maritime environment, increased recreational values ​​and more biodiversity.

The present values ​​are calculated to be between 7,2-13,9 billion. DKK, where the low figure is for state afforestation, and where the high figure is a model where half of the afforestation is left to private individuals. This takes into account that the state gives private landowners 90.000 DKK per hectare to establish new forests. The positive present values ​​mean that it is economically profitable to carry out the afforestation in both scenarios. If the aforementioned positive side effects in terms of climate, biodiversity and recreational values ​​are not included, the CO2-shadow price 1431 DKK/ton CO2 at 100 percent state afforestation, and 986 DKK/ton CO2 in a model where half of the afforestation is done by private landowners. But when the positive natural benefits are taken into account, the shadow price is even negative, i.e. society gets more value out of it than the money that has to be invested in the afforestation. In the state model, it is -169 kr/ton CO2 and the model with 50 percent private afforestation, the price is down to minus 325 DKK/ton CO2. [78]

CO2-catch is also brought into play

Since 2020, a number of political agreements have been made to promote the development of CCS (Carbon Capture and Storage) and this CO2Carbon capture and storage is today considered a key element in Denmark's strategy to become CO2-neutral. Over 38 billion DKK has been allocated to ensure that CO2-capture and storage, and over 8 billion DKK has already been given to CO2-fishing at Ørsted's biomass plants at Avedøre and at Asnæs.

Green Transition Denmark has previously criticized the fact that such large amounts of support are given to CO2-capture plants – and storage, because it would be more efficient to invest this money in more renewable energy, energy efficiency improvements, heat pumps and electrification, which provide much greater and faster climate benefits.[79] Especially CO2-capture at CHP plants that use solid wood biomass is problematic, as the positive climate effect only occurs after 20-30 years, when the biological stock in the forests has been rebuilt. In addition, CO2-capture plants are very energy-intensive, and they do not capture the 95-99 percent of emissions that are otherwise assumed, but often much less. The Council's recommendation has been to wait until later in the 2030s to invest in CO2-catch when the technology is more mature.

However, since there is a large majority behind the CCS policy, the T2040 scenario assumes that there is still a political will to continue this line. This scenario is based on the climate projection for 2023, where it was expected that CCS could reduce CO by 2030.2emissions by 3,2 million tons of CO2. But already in the climate projection for 2024 this figure was reduced to 2,9 million tons. The thing is that there are still significant uncertainties associated with the technology. Both about capital investments, return requirements, CO2-the allowance price, the possible capacity and the costs throughout the value chain.

In the long term, the T2040 scenario expects that there will be slightly more CO2capture. However, it is important to dose it correctly, as it is still a very expensive and energy-intensive technology. However, the scenario does not envisage long-term storage of captured CO2, but rather than CCS, the focus is more on CCU (Carbon Capture Utilization).

In the transformation scenario, some CO may be needed2-capture to reach net zero by 2040 and to provide enough carbon for international transport. Some is captured at Ørsted's already operational biomass plant, and some CO is also expected2-capture at the remaining waste-to-energy plants, which together secures almost 1,5 million tons. It is also assumed that Aalborg Portland will need to capture some CO2 both from the process and energy-related emissions, respectively 0,75 and 0,51 million tons. In addition, in connection with the production of 42,3 PJ upgraded biogas, 1,27 million tons of CO are captured.2.

However, this cannot cover the demand for liquid fuels in the T2040 scenario. Therefore, it appears that there will be a need for CO2-catch of an additional 1,65 million tonnes, which is assumed here to come from Direct-Air-Capture (DAC) in the years around 2040. See table 46.

However, the large additional costs for DAC contribute to the increase in the T2040 scenario. If Denmark does not want to use DAC, there will be a shortage of approximately 19 PJ of CO2-neutral aviation fuel if the growth in air transport is to be covered with e-fuels alone. Alternatively, stricter behavioural regulations can be introduced. If energy consumption for international air transport is reduced by around 27% compared to today, rather than being increased by around 61% as in the reference scenario, we can manage without DAC.

There may also be a technological path. For example, if greater direct electrification of industry and international air and sea transport can be ensured – including through faster scaling up with larger batteries – the need for DAC and e-fuels will be reduced accordingly. It will not be until the 2030s that there will be greater knowledge about which of these technological solutions will be cost-effective towards 2040 and what the right mix is, and it is therefore recommended that investments in DAC be delayed until the mid-2030s.

Financially realistic plan

It is technologically and economically realistic to follow the ambitious roadmap set out in the T2040 scenario. Even with very conservative assumptions about future CO2prices, low expectations for further price declines for solar and wind energy, and very high estimates for traffic growth until 2040, the transformation scenario is not significantly more expensive than the cost of the current climate and energy policy.

The transformation scenario is DKK 5,4 billion more expensive in 2045 than the reference in the government's climate projection, if the effect of the additional requirements contained in the Fuel EU Maritime regulation is included. The amount is affordable. In comparison, a broad compromise in the Danish Parliament – ​​Infrastructure Plan 2035 – allocated almost DKK 4 billion annually for the construction of new motorways and roads each year from 2022 to 2035.

You can also say it another way: The annual cost of creating fossil-free Danish energy consumption and accelerating the green transition of the energy system is less than half a year of state support for agriculture. Access to sufficient amounts of cheap, clean, sustainable and fossil-free energy is crucial for maintaining Denmark's competitiveness in the future, and it can ensure much greater value creation and productivity gains than by maintaining business as usual in a highly intensive and industrialized agriculture, which has been shown to have very large negative costs for the climate, nature, biodiversity and marine environment. Today, large amounts of fossil energy are embedded in industrial agriculture, but the industry can only be operated in its current form because it receives over 11 billion DKK in state support and does not pay the real costs of the major climate and nature damage.

There are many ways to finance the transition plan, but the lion's share of the investments will be in private households and private companies that replace fossil plants and machinery and will have to buy heat pumps, make energy renovations, buy electric cars and electrify the machinery fleet. Overall, both households, industry and service industries will earn it back within a few years through significantly lower operating costs. Through high political demands and ambitious regulations, these necessary initial investments can be accelerated.

However, it would be wise if the state simultaneously supported the green transition through an active business policy and supported the green energy solutions that have the greatest climate impact. Be it solar and wind energy, energy efficiency improvements and electrification. Stricter green requirements should also be set for public procurement, so that early demand is created in Denmark for new green service solutions and technologies that can be scaled on the market.

At the same time, through requirements and additional support, it is possible to promote the development of Danish production of e-fuels that can ensure full decarbonization of international transport. The money can be found in several ways. For example, one could reprioritize some of the significant funds allocated to new infrastructure and use the money to promote Danish production of green e-fuels or a faster expansion of solar and wind energy. This is particularly relevant in the first start-up years, when a stable demand for the new e-fuels has not yet been created.

But the additional costs of producing e-fuels for aviation should be covered by the polluters themselves in 2040, i.e. ultimately by the passengers who choose to fly.

The additional costs of DKK 9,39 billion for the production of aviation e-fuels in 2040 can be financed through increasing aviation taxes. Assuming an increase in air traffic of 60 percent towards 2040, and if politicians choose to impose the tax on international air passengers from Denmark, the tax on each flight ticket abroad should be DKK 470. This must be said to be affordable.

The state has significant free green funds that could be used more actively. In the period from 2022-2028 alone, the state is expected to earn DKK 16,2 billion from the sale of CO2quotas, and these ongoing revenues are fully reinvested in a green transformation of the energy sector. Here, the majority of the money should be allocated to solutions with the greatest possible climate impact.

In purely socio-economic terms, there will be large potential additional benefits from investing massively in a faster phasing out of fossil fuels and in planting much more forests in Denmark for the benefit of biodiversity, the aquatic environment, etc.

The transformation scenario can save over 245 million tons of CO in total.2 on the journey towards making Denmark completely fossil-free by 2040, compared to following the government's current course. Based on the Ministry of Finance's expectations for CO2-price in 2040 at 1289 SEK/ton[82], the value of this additional climate benefit is over DKK 315 billion. This is an additional reason why politicians should seriously consider accelerating the pace of the green transition.

Climate Council has previously documented that the socio-economic costs are relatively modest if a comprehensive effort is made to benefit biodiversity and the aquatic environment, and it can even yield greater climate benefits than if an isolated climate effort is pursued.

Calculations made by Professor Peter Birch Sørensen and a group of economists at the University of Copenhagen have also shown that Denmark's economic activities now have such large negative side effects that at least 10 per centof the gross domestic product due to, among other things, air pollution, biodiversity loss, greenhouse gas emissions, pollution of drinking water and the sea. This annual loss will clearly be limited if Denmark phases out all fossil fuels in its economy, as it is the driving factor behind many of these negative environmental externalities. Nature also provides us with a number of free ecosystem services with clean air, clean water, arable land, raw materials and a livable climate that are worth taking with you.

If you include the additional positive side benefits that the T2040 scenario provides in the form of increased biodiversity, greater recreational values, lower air pollution and resulting lower health costs, there is much evidence that this roadmap will be cheaper for society overall. At the same time, it will strengthen the business case of green Danish companies when they have to sell green solutions and technologies abroad, as Denmark has become a green frontrunner nation that has shown in practice how to create a fossil-free economy.

Chapter 7: Perspective – A vision of the future for Denmark in 2040

Imagine a Denmark in fifteen years, where the noise from the heavy diesel trucks is gone, and all Danes drive electric cars, take the electric bus or use the electric bike on the cycle paths that have been built to bring people safely from their homes to work. It is a Denmark where you can hear the birds singing and the bees buzzing everywhere in the landscape. Butterflies and insects thrive again in the herb gardens of the detached house, in the planted field boundaries and in the forests. You will have greater nature experiences in the many new extensive forests that have been planted in Denmark, and several of the forests are wild forests. 30 percent of nature is protected, and biodiversity is flourishing again.

Denmark no longer stands as the country that back in the early 2020s had Europe's lowest biodiversity, and where 60 percent of the area was cultivated by agriculture, drinking water was threatened and oxygen depletion in coastal waters led to sea death. At that time, up to 80 percent of agricultural land was used to grow feed for the approximately 200 million animals on large farms, and the use of artificial fertilizers and pesticides had taken over. But here in 2040, Danes eat far more plant-based food in a varied diet that follows the food pyramid, but there is also some quality meat with good taste every now and then. There are 70-80 percent fewer cows and pigs, so they have the opportunity to go to pasture.

Animal welfare is no longer talked about, because it is a natural thing on individual farms. Some farmers have completely switched to making meat and milk in petri dishes, and they are using modern biotechnology and molecular biology. They are occupying much less land, they have received subsidies to plant some extra forest, and they are also earning extra money from the solar cells and wind turbines they have set up on their old production land.

All municipalities held citizen meetings in the mid-2020s and in collaboration with professional developers, all municipalities had solar cell systems and wind turbines installed within a few years, which they are now proud of and delighted to see. For every KWh that these renewable energy systems have harvested from the wind and from the sun's rays, part of the profit has flowed back to the local community, which has been used for new daycare centers, schools and sports halls.

More people have moved into the villages out in the countryside, which were otherwise dying out after many years of industrialization of agriculture and centralization in Denmark. People are happy to get cheaper and locally produced electricity and heating for their houses, and new jobs have been created in these areas, because access to cheap energy proved to be crucial for where companies located during the 2030s. Many new jobs have also been created in organic and regenerative farms, which no longer spray pesticides. They occasionally fertilize the soil with e-ammonia produced at Danish power to X factories.

All Danish factories are electrified, and this has saved a lot of money on energy bills. The shareholders are also pleased that earnings have increased because there are far fewer machine stops and repair costs in the new electrical systems. On construction sites, the noise from the heavy diesel machines has disappeared, and they have saved up to 50 percent of their energy bills by using electric cranes, excavators and trucks. Many houses have been rebuilt and energy-efficiently renovated.

In the cities, large green parks have sprung up in many places where there used to be wide asphalt roads, and millions of trees have been planted in Danish cities. So it's not just in the countryside that CO is being absorbed.2 out of the atmosphere. Cities have become more pleasant to live in, even though climate change has made summers hotter. There are solar panels on every roof, and there are charging stations at every property so people can charge their electric cars at night. They can also enjoy cheap green electricity from Denmark's many new tall onshore wind turbines and the large offshore parks that were built in the late 2020s and early 2030s.

The electricity grid no longer suffers from sudden outages, as artificial intelligence and smart meters are used to optimize the grid, and prices are flexible minute by minute, so consumers refrain from charging their cars or starting their washing machines during periods of peak load and high prices. Security of supply and power adequacy are among the best in Europe, as Denmark has invested in new thermal storage facilities and installed large battery containers around the country. The batteries can quickly send extra power into the grid if the wind is not blowing and the sun is not shining, and then they are recharged when the electricity price approaches zero.

Denmark has gradually gained a nice surplus of renewable energy, but the marginal costs of producing more energy are very low, so it is just an extra safety net. Part of the extra green power is sold to our neighboring countries, which also helps us get extra energy when the wind dies down for several days at a time. Thousands of new jobs have been created at the Danish Power-to-X factories, which utilize the cheap renewable energy to produce e-fuels for airplanes and ships. They also help clean the local wastewater and their surplus heat is sent into district heating, so that the energy is not wasted.

The Danes have saved a double-digit billion because they no longer import oil from abroad. And historians write books about the time when, without thinking about it, people wasted up to two-thirds of fossil energy before it ever provided any benefit to businesses and households.

Greater Copenhagen and many other Danish cities have followed in the footsteps of Aarhus and Holbæk and are extracting stable geothermal heat from the underground, allowing them to completely free themselves from burning solid wood biomass or gas in power plants. The country's district heating plants have switched to electric boilers and have installed industrial heat pumps powered by green electricity from the solar cell systems and wind turbines that have been set up in the local area. Denmark has stopped shipping over 3 million tons of wood from the Baltic countries, Russia and North America each year to burn it in the power plants' large furnaces.

In the mid-2020s, the government realized that burning solid wood biomass emitted millions of tons of greenhouse gases into the atmosphere every year. This led to a decision to accelerate the electrification of the heating supply. It was part of a large electrification package, which removed the electricity tax for 10 years and gave industry extra incentives to invest in electric machines, vehicles and heat pumps. At the same time, all the old deductions and indirect state support for fossil fuels were removed. And they turned up the CO2-tax, so that including the European quota prices it reached over 2030 DKK/ton CO in 15002.

Within a few years, Danish companies managed to electrify their entire production, achieving significant operational savings. It was an added bonus that they were able to deliver goods with a low CO2 -prints, for which there was increasing demand abroad.

A few years before 2040, Denmark became a climate-positive society without greenhouse gas emissions, and at the same time succeeded in bringing Denmark within a safe trading space in relation to planetary boundaries. The government decreed that a new national climate holiday was introduced each year to celebrate the day when Denmark reached the net zero target. This would never have happened without a national effort and strong political leadership. In the second half of the 2020s and in the 2030s, over 320.000 ha. of new forest were planted, absorbing several million tons of CO2 out of the atmosphere. Part of this forest area had grown on its own because nature had been allowed to spread in fixed 25-meter strips outside the planted areas.

Many of the forests are today sustainable and well-managed production forests, and in several places space has been made for tall 10 GW wind turbines, and the forests supply wood to both the furniture industry and construction, so their CO2 embedded in the materials.

Farmers have become skilled at carbon farming, which has also received extra support in the EU's new agricultural policy. The new European quota trading system for agriculture, introduced in 2033, had made it economically attractive to reduce CO emissions.2 and methane and nitrous oxide in agriculture. Completely new bioindustries have also sprung up in Denmark, which are skilled at capturing CO2, and who make big money exporting these bio-solutions to the rest of the world. The bio-industry has become a new business adventure in line with the windmill and pharmaceutical adventure that had made Danes richer for several generations.

Delegations from many countries around the world are making a pilgrimage to Denmark today to see how the Danes managed to eliminate all fossil fuels in just 15 years in a country where two-thirds of the gross energy consumption in Denmark and for Danish ships and aircraft would have been fossil fuels by 2024. The visiting guests also hear about the special Danish ability to move quickly and transform an entire country through close cooperation across political boundaries, different industries and social groups. Several of them are curious about how the cooperative movement, the labor movement and the broad agreements in the Folketing have changed the country at record speed. In recent years, many emerging energy communities and thermal networks around the country have also flourished and have drawn nourishment from close and trust-inspiring cooperation.

The transformation would hardly have happened so quickly if the Prime Minister had not made the green transition of Denmark's energy consumption one of his main missions. Energy policy became major politics in 2025, when Denmark also took over the EU presidency and made the green transformation of the energy system its main agenda. The goal was not only to create a new Green Deal 2.0 through a strong European industrial policy, but also to make the EU more independent of fossil energy from authoritarian powers that threatened the security of the community.

That same year, the Danish government established a Green Energy Council, where top politicians, representatives from business, trade unions and green organizations were tasked with drawing up a clear plan for how to phase out fossil fuels in all parts of the economy. They were also tasked with coming up with proposals for a new wave of energy efficiency improvements.

A new Minister of Economy and Energy took the lead in rebuilding the economic calculation models so that energy, resources, the environmental balance and the well-being of citizens became the decisive benchmarks for how prosperous Denmark is. In 2026, the Ministry of Finance began using a green reform model 2.0 to manage it. In 2030, a high socio-economic shadow price of DKK 2000 per ton of CO was set.2. This proved necessary to achieve the new 100 percent reduction target in 2040 and net negative emissions in 2045, which had been adopted after a broad compromise in the Danish Parliament. Through these ambitious green reforms, politicians paved the way for a major wave of investment that put extra pressure on the green transition in Denmark. The great polarization of society, which had caused concern in the early 2020s, has now been overcome, and no one talks about Outlying Denmark anymore. Now citizens feel more like part of Outlying Denmark. An enormous urge to act and drive has spread throughout the country, and association life has flourished like never before. Many historians have even begun to draw comparisons with the cooperative movement that changed Denmark in the late 1800th century.

The report was published in September 2024 and prepared by the Green Transition Denmark.

Analysis and preparation: Bjarke Møller (responsible), Erik Tang, Anna Fenger Schefte, Jens Dahlstrøm Iversen, Jeppe Juul & Julie Bangsgaard

Research and data analysis: Jeppe Guldbæk Hannibal

Graphic Design: Anne Sofie Bendtson

Figure layout: Sidsel Lauritsen and Benjamin Buch-Andersen

Green Transition Denmark is an independent non-profit environmental organization that has advised on the green transformation for more than three decades. Like a green solution tank we will deliver concrete, realizable and ambitious solutions that can accelerate the transition to an absolutely sustainable society.