Bill Clinton once said "It's the economy, stupid", but it would probably be more accurate to say: "It's the energy, stupid!"

Because when Donald Trump gave his victory speech on election night, he said "leave the oil to me". One of his main messages during the presidential election campaign was "Drill, baby, drill". He is completely indifferent to global climate change. He will extract more. Burn off more. Even if it burns the globe.

With Trump in power, the USA will - again - opt out of the UN climate agreement from Paris. And fuel extra under the fossil energy. That shouldn't be surprising. The USA is today the world's number one fossil superpower. It is the country that extracts the absolute most oil (20 per cent of the world's oil production) and the most gas and LNG gas. A large part of American power, prosperity and competitiveness rests on enormous amounts of fossil energy.

Trump is not alone. Putin has also built his power on fossil energy. For a number of years he made Germany deeply dependent on the continuous supplies of cheap Russian gas. It was part of a geopolitical game for dominance. He started the war when the EU countries were very vulnerable and got 45 per cent. of its gas from Russia.

Fossil energy finances authoritarian regimes

The invasion of Ukraine and the bloody war have changed all equations in German and European politics. Because the war triggered an energy crisis in 2022 that led to increased inflation. It shook the European economies. As during the energy crises of the 1970s, which also created higher inflation, energy can shake and topple governments. Citizens' anger increases with energy prices, which make more and more goods more expensive. Because the goods have large amounts of embedded energy. This also applies to our food. Because industrialized agriculture uses so much artificial fertiliser, pesticides and diesel-powered machinery, 655 liters of diesel oil are used each year to produce a Dane's food.

Two-thirds of the EU countries' gross energy consumption is fossil energy, which is imported for DKK 390 billion. euros per year. This corresponds to 2,7 per cent. of the gross domestic product. And it is also more than the EU countries spend on defence. But then 18 per cent. of the EU countries' gas – despite a string of energy embargoes – still comes from Russia, the money is used to wage war for. It harms our security. It is high time to wake up to the harsh geopolitical reality: As long as we in Europe do not free ourselves from fossil dependence, it is our strategic Achilles' heel. The import of fossil energy funds authoritarian regimes to the east, which threaten our security. We are gambling with our future if we do not quickly free ourselves from fossil fuels.

Power the green energy revolution

Fortunately, there is a solution to the challenge!

Through a targeted and ambitious climate and energy policy, it is possible for the EU countries to completely free themselves from fossil energy within fifteen years. For 95-100 per cent. of the technological solutions already exist. Solar and wind energy are today cheaper than fossils in terms of lifetime costs, and like batteries, they fall rapidly in price. Sales of electric cars have increased significantly, and from area to area the battery revolution is taking hold. It is now realistic to build an electric society that is run by 100 per cent. green power.

We are in a global race towards ever lower marginal costs of energy. It is a green energy revolution driven by rapidly falling prices for solar, wind and batteries. The time when the fossil supremacy of the world topples has moved much closer.

Energy is key to governments' dominance and ability to deliver prosperity. And when it becomes more expensive, inflation, increased social uncertainty, unemployment and stagnation follow. The latter can bring down governments. Anker Jørgensen, Jimmy Carter and many others experienced it. The same could be the fate of Olaf Scholz in Germany next year. Energy is the big X-factor in economics and politics.

China has long since understood how important it is to free itself from the import of the fossil energy that makes the country dependent on foreign powers. Since the financial crisis in 2007/8, the Chinese state has invested massively in scaling up green energy technologies and electrifying society at lightning speed. They are today the world's leading nation in solar cells, batteries and electric cars, and if the EU countries do not wake up soon, the Chinese will also achieve a dominant position in the wind turbine and heat pump industry. We were once Europe's frontrunners in solar cells, but the governments pursued a market liberal policy and after the financial crisis they chose the austerity way out of the crisis. Instead, as China, we could have invested strategically in the industries that will create our future competitiveness. It is high time to wake up to the new economic and geopolitical realities. It's the energy, stupid!

Strategic industrial policy is the key

In Europe, we should pursue a proactive strategic industrial policy, where we purposefully use the state and take out loans to scale up the green industries and technologies that will free us from fossil dependence. It requires a Copernican turn in economic thinking. If the EU got more of its own resources – and e.g. all the money from the carbon trading – the community could take out cheap loans to accelerate the green industrial revolution. But there is still some resistance.

Mainstream economists imagine that it is primarily labor and technology that drive productivity up. In their productivity equation and economic models, energy still plays a relatively marginal role. But historically and over a long period of time, there is almost a 1-1 correlation between the amount of energy that is crammed into the economy and the increase in wealth that is created in society.

Energy is key to governments' dominance and ability to deliver prosperity. And when it becomes more expensive, inflation, increased social uncertainty, unemployment and stagnation follow. The latter can bring down governments. Anker Jørgensen, Jimmy Carter and many others experienced it. The same could be the fate of Olaf Scholz in Germany next year

Energy is the big X-factor in economics and politics. Because as the economist Steve Keen has said: "A person without energy is a corpse, and a machine without energy is a sculpture." Instead of seeing energy as a luxury that is taken for granted, we should understand it as the first and decisive prerequisite for prosperity, well-being and productivity. But what energy should it be? The answer to this question should be the highest priority for all ministers of state and finance in the EU.

EU countries burn 3,8 billion barrels of oil per year, and if the energy content is converted into human working years, it corresponds to 17,1 billion people working 24 hours every day of the year. Denmark is also heavily dependent on fossil fuels. As much as 68 per cent gross energy consumption in the entire Danish economy (including our international transport and activities abroad) is still fossil fuel, and that percentage has been fairly stable since 1968!

Within the framework of the Danish nation-state, 53 per cent of fossil energy consumption. Although clean renewable energy sources have grown significantly, only 13 per cent originate from of our gross energy consumption from solar and wind energy, heat pumps, geothermal energy and hydropower. At best, we have only moved one-sixth of the green transition away from fossils. Less than a fifth of Denmark's energy consumption is electrified. Electrification has stalled and its share of energy consumption has not increased in the last twenty years.

When does Wammen wake up to deed?

Purely in terms of climate and in relation to air pollution, there are only strong arguments for freeing ourselves from fossil fuels. It is essential to solve the climate crisis, where 90 per cent of global CO2 emissions comes from the burning of oil, gas and coal.
But the Danish Energy Agency expects that in 2024 approx. 26 million barrels in the Danish part of the North Sea, and new fields are being opened because the government does not yet dare to confront the fossil burning community. Is it because the Danish economy is still driven forward by the energy from 120 million barrels of oil? Converted to human labor, this corresponds to DKK 540 million. working year.

Organizationally and mentally, it is a huge task to move from a fossil burning society and then create a climate-positive society that is powered by clean renewable energy and green electricity. Many find it difficult to imagine that it could be any different.

Some are desperately clamoring for nuclear power as a quick fix, even though it takes over a decade to build new nuclear power plants, and in terms of lifetime costs, a-power is significantly more expensive than solar and wind energy, even when backed by batteries.

From a purely economic point of view, there are only good arguments for boosting the green transition. In the global fossil energy system, fully two-thirds of all energy is wasted before it reaches the end users and makes real use in the form of work and services. When will Finance Minister Nicolaj Wammen recognize that much greater productivity gains can be reaped by electrifying all sectors of society and phasing out fossil fuels than by screwing up the labor supply or removing St. Prayer day? The obsession with creating a slightly larger labor supply is equivalent to squeezing the lemons at a tea party on top of the Titanic, which is sailing on fossil energy.

Unfortunately, the finance ministers are still holding their hand under the fossil waste economy. According to The IMF amounts to over DKK 7000 billion in direct and indirect state subsidies for fossil fuels globally. dollar per year or around 7 per cent. of the gross domestic product of the world's countries. Without government support, oil, gas and coal will be outcompeted on the market. In the EU countries, the fossils get more than 150 billion. euros in direct and indirect subsidies, if you include the value of tax credits and free allowances. It is organized stupidity that increases both citizens' energy bills and future climate bills.

Clean energy strengthens our competitiveness

There are no longer economic arguments for clinging to the dirty energy of the past. The prices of solar energy and batteries have fallen by over 80 per cent. in the last decade, and offshore wind has fallen by 73 per cent. Today, 56 per cent of electricity is produced from solar cells. cheaper than fossil energy, and onshore wind is 67 per cent. cheaper. It is high time to fully join the green energy race.

All forms of state support for fossil energy should be removed and channeled over to clean energy sources and green power. In Denmark, the fossil state subsidy was DKK 3,6 billion. DKK in 2022 – i.a. because energy-intensive companies and agriculture get large tax deductions when they burn fossil energy. This is almost double what the government will give in total support for solar and wind energy and heat pumps in the entire period from 2022-28! We have to go another way. The fossil subsidies should go completely, because they damage the climate and increase the total energy and climate bill.

We must go all-in on the cheaper renewable energy, also for the sake of future competitiveness. The Draghi report on Europe's competitiveness has shown that a key reason why European companies struggle to compete is that they pay 2-3 times as much for their electricity as their Chinese and American competitors. The best solution is to speed up the decarbonisation of the economy, as the Draghi report points out. We also have to in Denmark.

There is a good green alternative

Green Transition Denmark (RGO) has produced a report that shows that if Denmark increases its production of solar and wind energy ninefold and electrifies much faster road transport, heat supply and industry, we can completely free ourselves from all fossil fuels in 2040 The plan can cut 80 per cent. of Denmark's CO2e emissions in 2030, 90 per cent in 2035 and then reach 100 per cent. reduction in fifteen years. We must also invest much more in afforestation and biodiversity, and our calculations even show that it is a very good investment from a socio-economic point of view to establish a full 320.000 hectares of new forest by 2040 – i.e. more and faster than in the green tripartite.

The report - Clean energy within planetary boundaries in 2040 - shows that with this strategy Denmark can save as much as 2040 million by 207. tons of CO2 more than the government's climate policy. This is equivalent to shaving off five years of greenhouse gas emissions. It has a climate value of DKK 267 billion. DKK, if you calculate based on the Ministry of Finance's expected CO2 price in 2040.

We can also solve three major challenges that are often ignored in Danish climate policy: A) Phasing out the climate-damaging burning of solid wood biomass. B) Decarbonisation of our international air and shipping. C) Strong reduction of the embedded CO2 in all sectors' fossil consumption via a more circular economy.

We must electrify everything that can be connected to green electricity, because it is far more efficient in terms of energy than burning with fossil energy and wood biomass. Electric motors are 3-4 times more efficient than combustion engines. Heat pumps are 3-4 times more efficient than gas boilers. Denmark should be committed to the electrification of all sectors. During next year's Danish EU presidency, we should quickly scale up these solutions throughout Europe. We should waste less time and less money on expensive distractions with CO2 capture, pyrolysis or green hydrogen for industries where it is better to electrify. Virtually the entire industry can be electrified and it will be good business. The future is electric, and it is much more efficient and cheaper to electrify most of our economy than to continue to depend on fossil fuels that harm the climate. And green hydrogen must be produced with renewable energy in local industrial clusters and used in moderation to make e-fuels for aviation and shipping or fossil-free fertiliser.

For the past hundreds of years, Denmark has been a combustion society, where we first got our energy from burning down all the country's forests, and then we burned millions of tons of fossil energy a year to keep the wheels going. But the combustion society has caused climate change to accelerate dramatically, and it is high time to embrace 21st century green and electric solutions.

This is a chronicle by director Bjarke Møller, which was published in Dagbladet Politiken on 18 December 2024.