Denmark’s expensive energy

by Milan on September 2, 2010

in Climate change, Economics, Power plants, Transportation

Jeff Rubin has an interesting piece on the Globe and Mail website about Denmark’s greenhouse gas emissions and energy prices. Famously, Denmark gets about 20% of its electricity from wind power. Less famously, the remainder comes from coal. Rubin explains that: “coal’s share of power generation in Denmark’s power grid is basically the same as it is in China”.

Why, then, have Denmark’s greenhouse gas (GHG) emissions actually fallen during the last two decades, while those in North America have risen by about 30%?

The answer lies not with the source of power, but with the price of power. At 30 cents per kilowatt hour, electricity costs anywhere from three to five times what the average North American would pay. And, not surprisingly, Danish households consume a fraction of the power that we do.

Certainly, conservation is an important part of dealing with climate change, and price signals are one way to encourage it. Danish cars are also heavily taxed: an extra 100 to 180% of the sticker price, depending on horsepower.

In addition to the high price of power, I suspect that at least some of Denmark’s success in reducing GHG emissions is the result of exporting pollution-intensive industries to places with less regulation. Almost certainly, Denmark imports at least some emissions intensive products, like Chinese steel. In the long run, preventing domestic production from being displaced by imports from countries with few climate regulations is an important part of effective climate change policy-making. One key instrument for achieving that could be carbon tariffs. That said, China is actually doing more than most people think when it comes to fighting climate change.

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{ 1 comment… read it below or add one }

. September 3, 2010 at 2:40 pm

“Today as I flew into Copenhagen, I was struck by two very different views of energy production, the large wind turbines off the Danish coast and dotting their farmlands juxtapositioned with the many large smoke stacks surrounding the city. This contrast shows a country in transition, because in Denmark, a significant effort is being made to clean up, retire, and repower dirty old coal units because their contribution to climate change and dirty air is significant and unwanted. In fact, Denmark decided in 1997 (some sources say 1996) to just go ahead and ban the burning of coal in new facilities in the country. Yes, that’s right, the Minister for the Environment banned coal – a dramatic move that seems implausibly beyond reach for America, where our coal seams run deep and cheap, but the Danes have a long history of environmental leadership and few domestic coal interests to lobby against such a measure.”

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