VZCZCXRO3920
PP RUEHAG RUEHLN
DE RUEHCP #0169/01 0851218
ZNR UUUUU ZZH
P 251218Z MAR 08
FM AMEMBASSY COPENHAGEN
TO RUEHC/SECSTATE WASHDC PRIORITY 4161
INFO RUEHBS/USEU BRUSSELS
RUEHNY/AMEMBASSY OSLO 5489
RUEHHE/AMEMBASSY HELSINKI 3825
RUEHRK/AMEMBASSY REYKJAVIK 0417
RUEHVL/AMEMBASSY VILNIUS 1621
RUEHTL/AMEMBASSY TALLINN 1514
RUEHRA/AMEMBASSY RIGA 0834
RUEHWR/AMEMBASSY WARSAW 2066
RUEHLN/AMCONSUL ST PETERSBURG 0307
RUEHAG/AMCONSUL HAMBURG 0033
RUEHNE/AMEMBASSY NEW DELHI 0104
RUEHBJ/AMEMBASSY BEIJING 0597

UNCLAS SECTION 01 OF 02 COPENHAGEN 000169 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: KGHG SENV ENRG SENV EUN DA
SUBJECT:  NEW DANISH ENERGY POLICY BOOSTS RENEWABLES 
 
¶1.  (SBU) Summary:  After more than a year of political 
negotiations, Denmark's government has reached agreement within 
parliament to meet the EU's energy targets and boost its renewable 
energy share to 30 percent by 2020, from the current level of 16 
percent.  The new policy formalizes Denmark's commitment and is one 
of several initiatives to show leadership on climate change issues 
in the run-up to hosting the UN climate summit (COP-15) in 
Copenhagen in December 2009.  Prime Minister Rasmussen's recent 
climate-focused trip to India was another.  End Summary. 
 
¶2.  (U) On February 21, the Danish government reached agreement with 
seven political parties in Parliament (all except the minor Unity 
List party) regarding energy policy.  The settlement mainly covers 
the period corresponding to the Fogh Rasmussen government's tenure 
through 2011; some initiatives have a longer horizon. 
 
¶3.  (U) The policy's stated objective is to reduce Denmark's 
dependency on fossil fuels (currently at 83 percent of total gross 
energy consumption) for environmental and energy security reasons, 
with an ultimate goal of independence from fossil fuels in the long 
term.  The policy incorporates measures addressing renewable energy, 
energy savings and efficiency; and transportation. 
 
Renewable Energy Boosted 
------------------------ 
 
¶3.  (U) In addition to stating that it will meet the target agreed 
by the EU (most likely 30 percent renewable energy by 2020 for 
Denmark), the Danish policy targets an interim increase to 20 
percent by 2011.  To do so, Denmark will increase its subsidies for 
wind power production and mandate compensation by wind turbine 
owners to property owners whose property values decline due to 
installation of new wind turbines.  Two new 200 MW offshore wind 
parks are planned to open off the Danish coast in 2012. 
 
¶4.  (U) Besides wind, Denmark has focused on increasing the use of 
biomass in power plants, mainly by increasing subsidies for 
electricity generated from biomass.  Funds to implement other 
renewable energy sources, such as solar and wave technologies, will 
also be increased, by approximately $5 million annually.  Finally, 
all renewable energy legislation will be merged into a single 
comprehensive framework. 
 
New Energy Efficiency Goals 
--------------------------- 
 
¶5.  (U) The new policy extends current efforts to increase the 
energy efficiency, mandating a reduction of gross energy consumption 
by 2 percent by 2011 (from a base year of 2006) and by 4 percent in 
¶2020.  Energy efficiency requirements for newly constructed 
buildings will be tightened gradually through 2020.  Denmark will 
also establish a new energy savings information center and increase 
government funding for research, development and demonstration of 
more efficient energy technologies.  Danish CO2-taxes will be 
increased and a new NOx-tax will be imposed starting in 2010. 
 
Transportation 
-------------- 
 
¶6.  (U) The transport sector currently generates 31 percent of 
Denmark's CO2 emissions, but is not included in the EU emissions cap 
and trade system.  The new policy mandates an increase in renewable 
energy fuels for transport to 5.75 percent (from close to zero 
today) by 2010 and 10 percent by 2020.  The new fuels are not 
specified, but must be "adequately socio-economically competitive 
and environmentally sustainable."  Hydrogen-powered cars will be 
exempt from taxes and the sunset date for the current tax exemption 
for electric cars will be extended by three years to 2012. In the 
fall of 2008, the Minister for Transport Carina Christensen is 
charged to present a more detailed strategy outlining how to reduce 
CO2 emissions in the transport sector. 
 
Industry Reacts Cautiously 
-------------------------- 
 
¶7.  (U) The Confederation of Danish Industries (DI) welcomed the 
political agreement, while expressing concern over implementation. 
Helle Juhler, DI's special advisor on energy and climate matters, 
declared "the current scheme, in which many of the costs are put on 
the businesses, is not sustainable in the long run.  It will be a 
 
COPENHAGEN 00000169  002 OF 002 
 
 
big challenge to come up with a model that can finance the 2020 
energy and climate targets."  Lars Aagaard, Deputy Director of the 
Danish Energy Association (representing the power company 
interests), said "the agreement reached has much to recommend it, as 
it eliminates large parts of the gap between Danish and European 
energy and climate policies.  This agreement means that far more 
will need to be saved on energy, and that the energy companies will 
be at the heart of this effort.  We are ready to negotiate the 
implementation with the government." 
 
Spreading the Energy Gospel 
--------------------------- 
 
¶8.  (U) Energy and climate issues are very high on the political 
agenda in Denmark, with Denmark preparing to host the COP-15 climate 
summit in December 2009.  Eager to position Denmark for success at 
the summit, Prime Minister Anders Fogh Rasmussen and Minister for 
Climate and Energy Connie Hedegaard are stepping up Denmark's 
climate diplomacy efforts abroad, spreading the Danish gospel that 
economic growth can be decoupled from energy consumption.  They cite 
statistics demonstrating impressive economic growth, with hardly any 
increase in energy consumption. 
 
¶9.  (U) Minister Hedegaard actively promoted Denmark's role as host 
of COP-15 while in Washington on March 4-6 for the WIREC conference. 
 Hedegaard spoke at the Joint Ministerial-Stakeholder plenary 
"Straight Talk" Session and hosted an official Danish side event 
about renewable energy technology deployment.  The Danish Minister 
also conducted bilateral meetings with U/S Dobriansky, CEQ Chair 
Connaughton and NSA Price, Senator Boxer and DOE A/S Karsner. 
 
¶10.  (U) Shortly after assuming her post in November 2007, Hedegaard 
declared that Denmark's role as the host of the COP-15 at the Bali 
meetings will be to push governments to commit to an agreement in 
Copenhagen, but also to seek broad agreements and to join forces and 
interests.  The minister's main priority is to get the U.S. on board 
as an active participant, she said, expressing optimism that China 
might be willing to move ahead faster than expected and "show big 
surprises," and said Denmark also intended to closely with India, 
Mexico, Brazil and Argentina.  To bolster Denmark's presence 
overseas, Hedegaard has announced plans to appoint Danish climate 
attaches in five key countries, most likely including in the U.S., 
China and India. 
 
But Treading Lightly with India 
--------------------------- 
 
¶11.  (U) During a February visit to the Delhi Sustainable 
Development Summit, PM Rasmussen stressed the importance of 
recognizing the need for including developing countries in a new 
global climate agreement to be penned in Copenhagen in December 
¶2009.  Rasmussen publicly recognized that developing economies like 
India's might contribute under an international agreement by 
concentrating on making efficiency gains in lieu of capping their 
energy consumption.  Indian PM Singh reportedly pledged that India's 
per capita greenhouse gas emissions would never exceed Denmark's. 
 
Comment 
------- 
 
¶12.  (SBU) The government's efforts to burnish its green credentials 
abroad are popular at home, but have not been cost-free.  The 
opposition has accused Rasmussen of overselling his government's 
responsibility for Denmark's long term progress, begun under the 
previous government.  They charge that under the Rasmussen 
government Danish CO2 emissions and energy consumption have begun to 
rise, and new wind power deployment has been largely frozen. 
 
¶18.  (SBU) Perhaps to answer this criticism, the government recently 
established an advisory climate commission composed of prominent 
energy and climate experts and economists.  The commission, headed 
by Amcit Katharine Richardson of Aarhus University, is charged with 
suggesting further ways to eliminate Denmark's dependency on oil and 
coal in line with the government's long term targets.  We will 
engage with Richardson and continue to follow Denmark's preparations 
to host COP-15 closely. 
 
CAIN