Note that this is an English translation of the Danish strategy Regeringens strategi for Power-to-X.
The content of the Danish version will be applicable at all times.

2

Contents of the Power-to-X strategy
Introduction ................................................................................................................ 4
What is Power-to-X? .................................................................................................. 7
Power-to-X in the energy system of the future .......................................................... 9Power-to-X can help reduce greenhouse gas emissions ................................... 9
The best use of electricity is direct electrification ............................................. 10
Biogenic and sustainable carbon may become a limited resource .................. 11
Competitive relationship between Power-to-X and other fuels ........................ 14
Denmark can become a global player in Power-to-X .............................................. 16
The Government’s four objectives lay the foundation for the development andexpansion of Power-to-X ......................................................................................... 19
Objective 1: Power-to-X must be able to contribute to the realisation of theobjectives in the Danish Climate Act ....................................................................... 20
Power-to-X must be able to contribute to cost-effective CO2 reductions in
Denmark and globally .......................................................................................... 20
Regulation promotes the use of Power-to-X ........................................................ 24
Objective 2: The regulatory framework and infrastructure must be in place forDenmark to utilise its strengths and allow Power-to-X to perform on market terms in
the long run .............................................................................................................. 29
Power-to-X must be able to perform on market terms in the future..................... 30
Framework conditions, regulation, technological development and infrastructure
must support Power-to-X on market terms .......................................................... 34
Objective 3: The integration between Power-to-X and the Danish energy system
must be improved .................................................................................................... 42
Power-to-X must contribute to an integrated and flexible energy system ........... 43
The proper placement of electrolysis plants is crucial to efficient utilisation of theelectricity grid and interaction with the overall energy system ............................. 45
Objective 4: Denmark must be able to export Power-to-X products andtechnologies ............................................................................................................. 50
Power-to-X can become a new export market for Denmark ................................ 51
The framework conditions for Power-to-X exports need to be established ......... 56
The Government’s vision for Power-to-X ................................................................ 613

Introduction

With the Climate agreement for energy and industry, etc. of 22 June 2020,
the Government reached an agreement with a majority of the parties of theFolketing to prepare a Danish strategy for Power-to-X (PtX) and utilisation ofcarbonaceous products (Carbon Capture and Utilisation - CCU). Since then,developments have proceeded at an incredible pace. PtX projects have beenannounced across all of Denmark, with more on the way. The Government haslaunched initiatives that can contribute to the promotion of PtX through a number ofagreements and proposals.
The adoption and utilisation of PtX technologies requires strategic planning,targeting and prioritisation. With this strategy for PtX and CCU, the Danish
Government is now taking its first major holistic step to create the necessary
framework conditions for PtX in Denmark. These framework conditions areintended to facilitate the contribution of these technologies to the objectives of theDanish Climate Act, the realisation of their commercial potential and theirintegration into the Danish energy system.
The PtX strategy is based on the Danish Energy Agency’s analyses and running
dialogue with the PtX industry. This has resulted in the establishment of theGovernment’s four objectives for promoting PtX in Denmark:1) Power-to-X must be able to contribute to the realisation of the objectives in theDanish Climate Act.
2) The regulatory framework and infrastructure must be in place to allow
Denmark’s
strengths to be utilised and for the Power-to-X industry to operate on market
terms in the long run.
3) The integration between Power-to-X and the Danish energy system must be
improved.
4) Denmark must be able to export Power-to-X products and technologies.
These objectives are inextricably linked, and action will be required on all four
fronts for PtX to become a new green utility sector in Denmark, thereby providing
green solutions that benefit Danish consumers and the rest of the world.
With its electrification strategy, Electrification of society - the road to an electric
Denmark - the Government has put forth a clear vision for the electrified society of
the future. The strategy contains eight specific objectives that the Government
believes are crucial in the transition phase from a fossil-fuelled to an electricpowered society. The scenarios of the strategy show a considerable electrification
potential within a number of sectors, which can become even greater after 2030,
provided that significant technological and market developments occur in relation to4

indirect electrification in particular.
The Government has proposed that Denmark should aim to build upwards of 4 - 6
GW of electrolysis capacity by 2030. This expansion should occur on market terms
to the greatest extent possible while also supporting the realisation of Denmark’sexport and commercial potential in the PtX area. This objective can also contributeto reducing Denmark’s global climate footprint and achieving national andinternational climate objectives.
Additionally, the Government has proposed investing DKK 1.25 billion - through a
PtX tender for operational support of the production of hydrogen and other PtX
products - with a view to supporting the industrialisation and upscaling of PtX
production in Denmark, thereby reducing costs associated with hydrogenproduction. This is envisaged to encourage growth and job creation as well as
Denmark’s commercial and export potential in the PtX area. By providing funding to
the production of green hydrogen, we ensure that all PtX producers can in principle
participate in the tender, as all known PtX technologies entail the production ofhydrogen through electrolysis. This hydrogen can be further converted into other
PtX products such as ammonia, methanol or e-kerosene.
Furthermore, the Government will earmark DKK 344 million for innovative green
technologies via funds from the REACT-EU initiative and the Just Transition Fund.
Additionally, the Government’s strategy for investments in green research,technology and innovation - Green solutions of the future - presents four missions
intended to accelerate the development of groundbreaking green solutions througha strategic and coherent green research effort, from basic research tocommercialisation. One of the missions is focused on green fuels (including PtX)
and contributing to the development of solutions to convert electricity fromrenewable energy into products that can be used to reduce emissions from parts ofthe transport and industrial sector where there are no cost-effective alternatives tofossil energy. Just under DKK 1 billion has been earmarked for the four missions of
the strategy.
Together with a broad majority in the Folketing, the Government has also funded
Danish value chain projects for hydrogen (IPCEI) with DKK 850 million, allocatedroughly DKK 400 million to the development of PtX via the EUDP and Danish
Energy Agency’s energy storage funding pool and finally, allocated DKK 500 million
from REACT-EU to act on the recommendations from the regional growth teams toestablish eight local commercial beacons in Denmark, including a commercial
beacon in South Jutland revolving around green energy and sectoral linking. The
Government’s proposed Denmark can do more I (Danmark kan mere I) reform
envisages allocating an additional DKK 500 million in EU funds towards 2027,
thereby reaching a total of DKK 1 billion for the development of the local
commercial beacons, including the commercial beacon in South Jutland.

5In addition, with its Denmark can do more I reform proposal, the Government has
proposed a DKK 6 billion capital injection into the newly established Danish
Investment Fund, of which 1.7 billion will be targeted for funding companies
engaged in commercial large-scale demonstration projects in fields such as PtX.

6

What is Power-to-X?

PtX is a blanket term for a number of technologies that are all based on using
electricity to produce hydrogen. This hydrogen can subsequently be used directly
as a fuel for road transport or industrial purposes or further converted into otherfuels, chemicals and materials.
This may sound quite advanced, but the idea behind the technology is in fact quite
old. PtX is based on the lightest, simplest and most prevalent element we have:
Hydrogen. Atomic number 1 on the periodic table.
Figure 1 shows the entire production chains from renewable energy to the
production of fuels that can be used for transport and industry.

Green electricity + Water

HydrogenElectrolysis

Shipping

Hydrogen

Heat

Shipping and aviation

Renewable Energy

DistrictheatingIndustry Heavytransport

Plastics and chemicals
Carbon Capture and Utilisation (CCU)

Figure 1. Renewable energy can be used to produce fuels and other products used for transport andindustry. The figure shows how PtX can be used in Denmark.
Source: The Danish Energy Agency

Electrolysis uses electricity to split water into hydrogen and oxygen
The core technology behind PtX is called electrolysis, which uses electricity to split
water into oxygen and hydrogen. The technique has been known for over 200
years. The hydrogen, which is considered ‘green’ when produced with renewableenergy, can subsequently be directly used for industrial purposes or as a fuel fortrucks and other vehicles. At present, Denmark’s consumption of hydrogen isrelatively modest and largely restricted to refineries where it is used to produce
fossil fuels. The hydrogen can also be used as a building block for producing awide range of other fuels and products.
Today, nearly all hydrogen production is based on fossil fuels such as coal (brownhydrogen) and natural gas (grey hydrogen). In Denmark, the focus is exclusively on
producing green hydrogen. Several actors have already announced and launchedplans for large-scale PtX projects that will produce large quantities of greenhydrogen and fuels by 2030.

7

Did you know... that hydrogen is often categorised into colours based on the production method?
Grey hydrogen

Brown hydrogen

Most hydrogen in the world is
produced from natural gas throughthe process of steam reforming,
which emits as much CO2 asburning the natural gas.

Hydrogen can also be produced
from coal or lignite. This processemits as much CO2 as burning thecoal. It also emits more CO2 thangrey hydrogen production.

Green hydrogen
The production of hydrogen throughsplitting water (electrolysis) is a CO2neutral process, provided that theelectricity used in the process comesfrom renewable sources.

Blue hydrogen
CO2 emissions from conventionalhydrogen production based on fossil
fuels (grey hydrogen) can be captured
and deposited underground. Thiseliminates the majority of - but not all the emissions from such processes.

Ammonia can be made from hydrogen and nitrogen derived from air
Hydrogen can be combined with nitrogen to form ammonia. Being the most plentiful
element in Earth’s atmosphere, nitrogen is easily obtained from the air we breathe.
The resulting ammonia can be used as fuel in diesel-like engines on ships in the
future or for producing fertilisers and other chemicals.
Hydrogen and carbon can be synthesised into plastics, aviation fuel and much
more
Hydrogen can be made to react chemically with carbon in large processing plants
under high pressure and temperatures to form a number of fuels and otherproducts such as methane, methanol, gasoline, diesel, aviation fuel and plastics
with the same properties as the fossil-based products. This process is also called
Carbon Capture and Utilisation (CCU).
For example, this carbon can be captured as CO2 from flue gas stemming fromincineration plants or biogas plants. When the carbon has a biogenic origin, i.e.
when it originates from biomass, it is considered climate neutral in the energy
sector according to the UN’s calculation methods, as the emissions are included in
the carbon balance for forests and soils (LULUCF). This means that if biogenic CO2
is used to produce PtX fuels, these fuels can be considered CO2-neutral overall.
CO2 can also be captured directly from Earth’s atmosphere through a process
called direct air capture (DAC). In the long run, this process is expected to be able
to contribute to the green transition, but the technology behind it still needs further
development and to become more cost-effective. Biogenic carbon is a limited
resource, while carbon captured from the atmosphere is essentially an unlimited
resource.

8

Power-to-X in the energy system of the futurePower-to-X can help reduce greenhouse gas emissions
PtX technologies make it possible to use renewable sources of energy to produce
fuels and chemicals that are currently produced from fossil sources. Thus, theutilisation of PtX fuels can contribute to CO2 emission reductions if they replace theuse of fossil fuels or materials (e.g. if e-methanol replaces oil in ships) or if the
production of chemicals replaces conventional production that normally emits CO2.
An example of the latter could be the production of green ammonia for artificial
fertilisers replacing the production of fossil-based ammonia, which emits large
amounts of CO2.
A prerequisite to considering PtX products as CO2-neutral is that the electricity (andcarbon) used can also be considered CO2-neutral. In other words, the CO2 must
either stem from sustainable biomass or directly from the atmosphere. The CO2 canalso be captured from fossil sources and used for PtX, in which case either thefossil emissions or the PtX product can be considered CO2-neutral, but not both.
This means that if the CO2 is captured from a factory that uses a fossil fuel, and theCO2 is used for PtX, only one of the parts can be considered CO2-neutral.
If PtX is to contribute to the achievement of Denmark’s 70 percent target, PtX fuels- produced domestically or imported from abroad - will need to be adopted as a
substitute for fossil fuels in the sectors in Denmark that are included in the country’s
national CO2 balance. If the fuels are exported or used to replace biofuels, this will
not impact the achievement of the 70 percent target, but may contribute to
replacing fossil fuels elsewhere in the world, e.g. in international shipping andaviation. PtX can thereby contribute to reducing CO2 emissions globally in different
ways, as shown in Box 1. The Danish Energy Agency publishes an annual report
called “Global Afrapportering” 1 (“Global Reporting”) on the change in Denmark’s
global emissions.
Box 1
How Power-to-X can help reduce Denmark’s global climate footprint
Fuel exports
Denmark can contribute to reducing global emissions of CO2 if Danish PtX fuels are used to replace fossil
fuels abroad.
Emissions in the value chain
Greenhouse gas emissions decline when CO2-neutral PtX fuels replace fossil fuels. PtX can also contributeto reducing emissions in the value chain associated with the extraction of fossil fuels, land use, etc. for firstgeneration biofuels, refining, transport, etc. The latter are largely not included in the 70 percent target but
included in European and global climate targets and make up part of Denmark’s global climate footprint.

1 Global afrapportering, Danish Energy Agency, 2021

9

International transport
Emissions from international aviation and shipping are not counted in the Danish national CO2 balance,even when ships and aircraft refuel in Denmark. The use of PtX fuels in these sectors will accordingly
contribute to reducing Denmark’s global climate footprint and meeting climate targets at the European andglobal level.
Bringing home production of materials and chemicals
Today, Denmark only has a limited consumption of hydrogen for industrial purposes, as well as a limited
production of chemicals and the like. The production of chemicals such as artificial fertiliser derived fromammonia based on PtX will therefore replace the production of ammonia and other chemicals abroad,thereby reducing emissions associated with foreign ammonia production.

The best use of electricity is direct electrification
The Danish Energy Agency’s analyses have found that when transitioning transport
and industry to fossil-free fuels, direct electrification - e.g. through battery-based
electric cars - is in principle the most cost-effective and optimal way to use
electricity generated from renewable sources. For example, the agency calculates
that around 70 percent of wind energy is converted into propulsion of a batterypowered vehicle, while only around 30 percent of wind energy is converted into
propulsion in a hydrogen-powered car. The technologies for replacing fossil-fuelledvehicles with electric/battery solutions are already well-established and becoming
widespread. The production of fuels via PtX is energy-intensive, which is why PtX
fuels should be prioritised for areas where direct electrification is not possible orassociated with very high costs.
In the Government’s electrification strategy, it is estimated that upwards of 80
percent of national transport can be directly electrified in the long run. This applies
in particular to light road transport as well as large parts of heavy transport, e.g.
passenger cars, vans and lorries driving short distances.
At the same time, however, the Danish Energy Agency’s analyses have found that
it will be difficult to electrify other types of transport such as long-distance flights,
freight shipping and parts of the heavy road transport sector. It is in those areas
where PtX and biofuels can be used to provide the green fuels of the future thatcan replace fossil fuels. There are also parts of the industrial sector that can use
PtX to transition into sustainable energy consumption in cases where electrificationor biogas are not possible or too costly to be a viable solution.
For example, this could include industrial high-temperature processes orparticularly energy-intensive vehicles such as combine harvesters and large
construction machinery. There are some industry processes where the emissions
stem from the process itself and not from the energy consumed in the process,such as when producing ammonia for fertiliser. Naturally, it is not possible to10eliminate emissions through electrification of such processes. In some cases,
however, PtX will be able to replace fossil-based alternatives.
Biogenic and sustainable carbon may become a limited resource
Carbonaceous fuels such as aviation fuel and methanol can be produced throughthe conversion of green hydrogen and carbon. For example, the carbon could stemfrom CO2 from biogas plants, biomass-fuelled CHP plants or incineration of
biological waste. Biogenic and sustainable carbon is, however, expected to become
a limited resource, as the world’s sustainable biomass resources are limited andbiomass is also needed for food, feed and other purposes that contribute to CO2
reductions in the transport, construction and energy sectors.
There will be enough carbon in 2030 - but likely not in the long run
The biogenic CO2 can be used to produce CO2-neutral fuels and materials (carbon
capture and utilisation, CCU) as well as stored in the subsoil (carbon capture andstorage, CCS). The Danish Climate Act states that negative emissions fromtechnological processes such as CCS can contribute to meeting Denmark’s
reduction targets.
In June 2021, the Government presented the first part of its CCS strategy and onthat basis, entered into a political agreement on the framework conditions for CO2
storage in Denmark. On 14 December, a broad majority in the Folketing reached anagreement on the second part of the strategy, which establishes the principles forthe first implementation of the CCUS funding pool and establishes the framework
for capture and transport of CO2.
The Climate agreement for energy and industry, etc. of 2020 included a decision toallocate DKK 16 billion to a CCUS funding pool, which is expected to result in a
reduction of approximately 0.4 million tonnes of CO2 by 2025 and 0.9 million tonnes
by 2030. In addition, the 2022 Finance Act allocates approximately DKK 2.5 billion
to a funding pool for negative emissions, which is expected to result in a reductionof 0.5 million tonnes of CO2e annually from 2025.
A full realisation of the potential for the use of PtX in Denmark presupposes the useof climate-neutral carbon corresponding to around 0.5-4.5 million tonnes of CO2 in
2030 and around 1.5-6.5 million tonnes of CO2 in 2050. The sizes of the estimatebounds depend on how much of the potential can be covered by PtX fuels that do
not contain carbon, such as hydrogen and ammonia.
In comparison, the Danish Energy Agency estimates that there will be around 4.510 million tonnes of CO2 at disposal from Danish point sources in 2030, of which 47 million tonnes will come from biogenic sources, as shown in Figure 2. This
includes a certain reduction of biogas consumption in CHP plants compared to11Annual CO2 emissions,million tonnes per year

present levels. This is being analysed more closely as part of the 2020 Climateagreement for energy and industry, etc.

15

Estimated amounts of CO2 available for capture from point
sources

10
5
0

High
estimate
Lowskøn
estimate
Højt
skøn Lavt

2025
FossilFossilHighestimate
Lowskøn
estimate
Højt
skøn Lavt

2030
Process
ProcesBiogenBiogenicHigh
estimate
Lowskøn
estimate
Højt
skøn Lavt

2040

Figure 2: Estimated amounts of CO2 emissions that can be captured and sequestered/used from Danish
point sources within the waste sector, industrial sector, CHP plants and biogas upgrading plants.
Source: The Danish Energy Agency

In the future, pyrolysis of degassed biomass, sewage sludge, straw and othermaterial could provide additional carbon input for the PtX sector and negativeemissions in the form of biochar for ploughing and carbonaceous gas or oil for fuelproduction.
Biogenic and sustainable CO2 from point sources can thus become a limited
resource in the long run, even though the Danish Energy Agency estimates that
there will be enough to cover domestic needs in Denmark up to 2030.

Did you know... that the Agreement on sustainability requirements for wood biomass forenergy of 2 October 2020 provides greater guarantees that the biomass used in Denmarkis as sustainable and climate-friendly as possible. The rules for sustainability criteria forbiomass used for electricity and heat production entered into force on 30 June 2021. In
addition, political agreements have been reached on the promotion of alternatives to theuse of biomass for heating, such as heat pumps.

Power-to-X fuels without carbon may be the future-proof choice
Sustainable biomass is not an unlimited resource, and increasing demand forenergy, fuels, food and building materials is estimated to put a significant futurepressure on the world’s biomass resources. In the long run, this is expected to leadto rising prices for biofuels and potentially also carbonaceous PtX fuels. The PtX
fuels hydrogen and ammonia do not contain carbon and are therefore - all otherthings being equal - cheaper to produce than those containing carbon, as there isno need to pay for the carbon derived from sources such as capturing CO2 from12

flue gas. Accordingly, these types of fuels do not contribute to heightened demandon the world’s biological resources.
Sustainability, carbon access and economical considerations would indicate thatcarbon-free fuels will potentially be a more future-proof solution for the sectors that
do not need carbonaceous fuels, including shipping in particular. Hydrogen andespecially ammonia are, however, subject to a number of stricter safety
requirements in relation to other fuels, one of the reasons being that ammonia is
toxic in even relatively small concentrations. In addition, ammonia engines are stillin the developmental phase. If ammonia in particular is to become the cheapest
fuel in the shipping sector, those issues will need to be addressed.
Although in the short term, there may still be uses for carbonaceous fuels in the
shipping sector, for instance, this should be seen in light of the fact that enginesthat run on ammonia are still in development and that ammonia is toxic andtherefore comes with a number of other challenges.
How much carbon can we use - and for what?
It is not only in the energy and transport sector that a growing pressure on
biological resources is anticipated. Competing applications for food, building
materials, chemicals, plastics negative emissions and last - but not least - wild
nature and carbon storage in forests is also expected to entail a demand for
growing amounts of biomass and land.
Green and sustainable biomass is, however, a limited resource worldwide.
According to recommendations from the National Bioeconomy Panel, there is notenough biomass in the world to replace the large amounts of fossil resources
currently used for producing products such as plastics, packaging, textiles andchemicals.
In the long run, the development of atmospheric carbon capture techniques - direct
air capture (DAC) - can contribute to solving the challenge of this limited resource.
Even though this technology is costly, partly due to the relatively high energy
requirements it entails, the limited biomass potential is believed to entail that DAC
will eventually be able to supply the remaining amount of carbon that biogenic
sources cannot.

Did you know... that researchers are working on a method for capturing CO2? The
technology goes by the name direct air capture (DAC). The world’s first DAC plant went
into operation in Iceland in 2021 and is expected to capture 4,000 tonnes of CO2 which will
be deposited in the Icelandic subsoil. In addition, there are plans for at least three largescale facilities in the USA, Scotland and Norway, each of which will capture and store 0.51 million tonnes of CO2 annually.

13

Competitive relationship between Power-to-X and other fuels
At present, PtX production entails significantly higher costs than production of fossil
fuels. This is especially due to the cost of hydrogen production through electrolysis.
The majority of the costs for hydrogen production stem from the price of electricity,
electricity grid payments (electricity tariffs) and investing in the electrolysis plant
itself.
Direct electrification is therefore typically cheaper than using hydrogen and other
PtX fuels, as only around two-thirds of the energy from the electricity ends up asenergy stored in hydrogen. However, not all sectors will be able to be directly
electrified, and in some sectors - such as aviation, shipping, heavy road transport
and industry - there will still be a need for fuels.
Figure 3 shows the Danish Energy Agency’s forecast for production costs ofhydrogen and three PtX fuels within the coming decade. The market price forecasts
of fossil fuels and biofuels are also shown for comparison. PtX fuels are expected
to be remain more expensive than fossil fuels and 1st generation biofuels in thenear future. Therefore, the use of PtX fuels will require regulation that creates
incentives for using more climate-friendly fuels or contributes to evening out theprice differences for consumers. This also applies to sectors where PtX fuels are
anticipated to become a cost-effective tool for CO2 reductions in the long term,either in the form of levies and subsidies or in the form of CO2 displacement
requirements or other regulation.
Forecast for production costs for PtX fuels in the near future(DKK/GJ)
350
300

2.g. bio-fuels incl. aviation fuel

250
200

1.g. bio-fuels

150
100

Fossil fuels

50
0

Hydrogen

Brint

Ammonia

Ammoniak

Methanol

Metanol

Aviation fuelFlybrændstof

Figure 3. Forecast of production costs for Power-to-X fuels in the near future. Ranges for market prices
of fossil fuels and biofuels are also shown, where ILUC effects on the price are not factored in.
Source: The Danish Energy Agency

14

In the longer term, a global upscaling and industrialisation of PtX production cancontribute to significantly reducing the price of green hydrogen and PtX fuels.
Box 2
When will Power-to-X become competitive?
The Danish Energy Agency’s analyses have identified significant potential for reducing the cost of hydrogenproduction and PtX products, a conclusion which is echoed by several other actors. This potential lies
especially in the upscaling and mass-production of electrolysis plants as well as adjusted framework
conditions.
Predictions about technological development are subject to significant uncertainty, especially in terms of the
speed and scope of the global rollout and mass-production of electrolysis plants.
Therefore, the strategy takes into account two different forecasts for production costs:•

Costs in the near future, which are expected to be achievable within this decade without a major
adjustment of framework conditions to lower costs.

•

The potential change in costs in the long term after significant upscaling and industrialisation of
production as well as improved framework conditions and expansion of supporting infrastructure.

When and to what extent the costs for PtX will be reduced remain uncertain, however, and depend on
national, regional and global developments, measures and regulations.

The Danish Energy Agency’s analyses show that especially carbon-free PtX
products - due to decreasing costs - are expected to eventually be able to competewith 2nd-generation biofuels. 2nd-generation biofuels will be the primary competitor
to compare with in terms of sustainable fuels, as the use of 1st-generation biofuelsis expected to be limited and potentially fall over the years as a consequence ofnational and international regulation. In some applications - the aviation industry inparticular - there will still be a need for carbonaceous fuels. In that regard,
the Danish Energy Agency’s analyses show that PtX fuels for the aviation sector (ekerosene) will be able to compete with bio-kerosene, as long as there is enoughbiogenic CO2 available, e.g. from upgrading biogas. This is shown in Figure 4,
where the costs for PtX fuels is lower than in Figure 3 as a result of theaforementioned price reduction. A rising demand for biogenic carbon may push up
prices, which the data in the figure does not account for.
In the long term, DAC is therefore anticipated to become a more widespreadsource of carbon. Carbon will be more expensive, but in spite of that, the ekerosene produced from DAC-derived carbon is expected to be priced at aroundthe same level as bio-kerosene or lower.

15

Long-term forecast of production costs for PtX fuels (DKK/GJ)
350
300

2.g. bio-fuels incl. aviation fuel

250
200

1.g. bio-fuels

150
100

Fossil fuels

50
0

Hydrogen

Brint

Ammonia

Ammoniak

Methanol

Metanol

Aviation fuelFlybrændstof

Figure 4. Long-term forecast of production costs for PtX fuels assuming significant upscaling ofproduction, technology development, improved framework conditions and deployment of supporting
infrastructure. Ranges for market prices of fossil fuels and biofuels are also shown, where ILUC effects
are not factored in.
Source: The Danish Energy Agency

Denmark can become a global player in Power-to-X

Denmark has a number of strengths in relation to the production and use of PtX
that create a solid starting point for the country being able to play an important rolein the development of the green fuels of the future. At the time of writing, projects
amounting to approximately 7 GW of electrolysis production by 2030 have beenannounced. A number of these are mapped in the figure on page 16.
Danish companies are strongly positioned throughout the value chain
There are about 70 companies operating in the PtX and CCUS area in Denmark,working with project development, research, technology development, consulting,production equipment and operation and maintenance. The value chain for PtX islarger, however, and includes other actors such as wind turbine manufacturers,
plant owners and developers, producers of electrolysis and synthesis plants,
suppliers of hydrogen infrastructure as well as consumers of green fuels in sectors
such as shipping, aviation and heavy road transport.
A unique PtX knowledge and research environment
There is a generally high level of knowledge on green energy in Denmark, including
PtX. Examples of this include the strong R&D environment for hydrogen and PtX
solutions in Danish universities and knowledge institutions spread out across thecountry, from North Jutland to Zealand. The interaction between research andbusiness in this area is crucial to ensuring that inventions and innovations fromuniversities are brought to market.

16Denmark has considerable offshore wind resources, access to biogenic CO2 and arobust energy system
Denmark has considerable offshore wind resources and the potential to greatly
expand its offshore wind capacity, particularly in the North Sea. Previous analyses
from 2019 determined a capacity of 40 GW of offshore wind energy in Danish
maritime territory, while the Danish Energy Agency’s preliminary assessment is that- depending on the density of wind turbines - there is room for between 17 to 27
GW of offshore wind in the areas currently designated for renewable energy inDenmark’s maritime spatial plan. Denmark already has a high proportion ofrenewable energy in its domestic electricity production, which is only expected toincrease in the coming years.
A broad majority in the Folketing has decided to establish two energy islands,
which in the first phase will supply 5 GW of electricity from offshore wind to theelectricity system, rising to at least 12 GW once fully developed. This electricity canbe transported to the mainland for normal electricity consumption or innovative
activities such as PtX production or energy storage on the islands or close to theislands’ grid connections to the mainland, as well as other purposes. The
production from the energy islands will in itself sextuple offshore wind production in
Denmark in relation to current production levels, thereby potentially constituting amajor resource for future PtX production in Denmark and abroad. With theAgreement on the 2022 Finance Act, renewable energy production will be
expanded by an additional 2 GW of offshore wind by 2030. This corresponds to theelectricity consumption of roughly 2 million Danish households. It has also been
agreed that in connection with its 2022 energy and utilities proposal, theGovernment will present analyses that can form the basis for the potential
tendering of an additional 1 GW of offshore wind energy.
Overall, Denmark’s offshore wind resources provide good conditions for the
production of green hydrogen, which requires large amounts of green electricity.
When it comes to the production of more advanced PtX products that require theuse of carbon, Denmark also has the option to make use of biogas plants andbiomass-fuelled CHP plants to produce biogenic CO2. In addition to large andincreasingly cheap renewable energy resources as well as access to biogenic CO2,
Denmark has a long tradition of coherent planning across the energy system, suchas with the development of power planted heat and district heating in the 1980s, awell-developed gas infrastructure and a strategic geographical position in terms ofexporting PtX products and technologies to countries such as Germany.

17

H2RES (end of 2021)

Green HyScale (2024)

Project consortium: Ørsted, Everfuel Europe A/S, NEL

100 MW electrolysis plant, Skive, fundedby the EU (Horizon 2020)

Hydrogen A/S, GreenHydrogen A/S, DSV Panalpina A/S,

Project consortium: GreenLab A/S, Green Hydrogen

Brintbranchen and Energinet Elsystemansvar A/S

Systems A/S, Energy Cluster Denmark, Lhyfe,

2 MW electrolysis plant, Avedøreværket

Siemens Gamesa, Equinor Energy A/S, DTU,

The Port of Aabenraa (2025)
100 MW electrolysis plant

Project consortium: Linde Gas A/S, Port of Aabenraa

The Port of Aabenraa (2023)

Imperial College London, Quantafuel and Euroquality

10,000 tonnes of methanol per year

Green Fuels for Denmark (2023-2030)

H2 Energy Europe (2024)

Project consortium: European Energy, Re:Integrate

Project consortium: Ørsted, Copenhagen Airport, A.P.

Project consortium: H2Energy, Hyundai, Trafigura

Møller-Mærsk, DSV Panalpina A/S, DFDS, SAS, COWI

and others

Electrolysis plant, Greater Copenhagen
10 MW in 2023, 250 MW in 2027 and 1.3 GW in
2030

Power2Met (opened June 2020)

E-methanol plant, Aalborg University
10-30 MW, funded through EUDP

1 GW electrolysis plant for producing
hydrogen for heavy road transport andother sectors

Eurowind Mariagerfjord(commissioning date unknown)
Two 35-50 MW electrolysis plants

Re:Integrate, Aalborg University, Hydrogen Valley, E.ON,

Project consortium: Eurowind

NGF Nature Energy, Drivkraft Denmark, Rockwool, Process

Green CCU Hub (2024)

120 MW electrolysis plant in Aalborg for
producing e-methanol for heavy road transportand shipping
Project consortium: Re:Integrate, European Energy, Port of
Aalborg, Blue World Technologies

Green Hydrogen Hub (2025-2030)

350 MW electrolysis + hydrogen storage facility
in Hobro/Viborg
Up to 1 GW in the long term
Project consortium: Eurowind, Energinet, Corre Energy

Blue Seal (commissioning date unknown)
Electrolysis plant, Hobro 50 MW
Ballard Power Systems

GreenLab Skive (2022)

Electrolysis plant, Skive
12 MW in 2022 and potentially
up to 250 MW in the longterm. Hydrogen + methanol
for heavy road transport.
Project consortium: GreenLab
Skive A/S, Eurowind Energy,
Everfuel, Eniig Holding, E.ON DK,GreenHydrogen, Re:Integrate, DTU,
Energinet,

HySynergy (2022-2030)

Electrolysis plant,
Crossbridge Energy
Fredericia, 20 MW in 2022,
300 MW in 2025 and up to 1
GW in the long term
Project consortium: EverfuelEurope A/S, Crossbridge
Energy Fredericia, Energinet
Elsystemansvar, TVIS, TREFOR
Elnet, EWII Energi A/S and Aktive
Energi Anlæg A/S

Høst (2025)

1 GW plant by the Portof Esbjerg for ammonia
production for agriculture andshipping
Project consortium: CIP, Din Forsyning,
Esbjerg Havn, Arla, Danish Crown,Mærsk, DFDSREDDAP (2022)

10 MW plant for ammonia production in
LemvigProject consortium: Skovgaard Invest, Vestas,
Haldor Topsøe

100,000 tonnes of e-methanol per year in
Vordingborg
Project consortium: Haldor Topsøe, Biofuel Technology,

Project consortium: Green Hydrogen Systems,

Engineering, Holtec Automatic-Nord and Lillegaarden El

Vordingborg Biofuels (2024/25)

European Energy (2023/24)

6 MW hydrogen plant in Esbjerg. Capacity
may be expanded to 12 MW

Vordingborg Havn

Aalborg (2028)

300-400 MW electrolysis for methanol
production
Project consortium: CIP, RenoNord, Aalborg Forsyning

HyBalance (opened September 2018)
Electrolysis plant, Hobro 1.2 MW

Project consortium: Air Liquid, Hydrogenics, LBST, Neas
Energy and Hydrogen Valley/CEMTEC

CCU biogas (2025)
11x36 MW

Project consortium: Nature Energy, Biogas Clean

The Government’s four objectives lay the foundation
for the development and expansion of Power-to-X
The green transition requires a fundamental transformation of our society. This willentail expanding the tools we already know and use. Accordingly, we will needmore green electricity from wind turbines and solar panels, more electric cars on
the roads and more heat pumps in Danish homes and companies.
With its electrification strategy, the Government plotted a course for the directelectrification of Denmark. With its PtX strategy, the Government aims to boost
indirect electrification so that Denmark can become a climate-neutral society where
sustainable transport by truck, ship and plane is possible.
Technological developments are proceeded at a rapid pace, and PtX is a crucial
technology for a green, CO2-neutral future. Large-scale PtX ambitions have beenannounced across Denmark, from the city of Esbjerg to the island of Bornholm, andmore are expected in the coming years.
PtX holds considerable potential for reducing Denmark’s - and the world’s - CO2
emissions and creating value for the Danish energy system while also providing
significant commercial benefits. While Denmark is strongly positioned in this regard,
there are a number of challenges that need to be addressed for PtX to be rolled out
on a large scale and compete on market terms. This will require a holistic
approach.
Accordingly, the Government has formulated four objectives (see Figure 6) thatcollectively contribute to overcoming the barriers for PtX and plot a course for thedevelopment and expansion of green hydrogen and green PtX products. The
Government is thereby taking the first major holistic step towards a new utilities
sector.

Objective 1Power-to-X must be able
to contribute to therealisation of theobjectives in the Danish
Climate Act

Objective 4
Denmark must be able
to export Power-to-X
products andtechnologies

Objective 2
The regulatory
framework andinfrastructure must be inplace for Denmark toutilise its strengths andallow Power-to-X toperform on market terms
in the long run

Objective 3
The integration
between Power-to-X
and the Danish energy
system must be
improved

19

Objective 1: Power-to-X must be able to contribute to
the realisation of the objectives in the Danish Climate
Act
Partial conclusion: PtX can contribute to the green transition. PtX should primarily
be promoted in sectors where direct electrification is not possible or associated withprohibitively high costs, such as parts of the industrial and heavy road transport
sectors as well as the shipping and aviation sectors. PtX will be competing with
biofuels for the same applications, but PtX is projected to eventually become more
affordable than 2nd generation biofuels.
The Government aims to ensure that PtX can contribute to the achievement ofDenmark’s climate objectives, namely the 70 percent target by 2030, the long-termtarget of climate neutrality by 2050 at the latest and the reduction of Denmark’s
global climate footprint.
Objective 1.
Accordingly, the Government will:•

Push for ambitious, pan-European requirements for CO2 intensity reduction
targets in the negotiations on the EU Commission’s “Fit for 55” package,
including in the shipping sector.

•

Push for higher pan-European sub-requirements for PtX fuels in aviation, as
well as the option for individual Member States to set higher national
requirements.

•

Initiate an analysis of biological resources for the green transition.

Power-to-X must be able to contribute to cost-effective CO2
reductions in Denmark and globally

The Government’s climate programme notes a reduction potential of approximately
9 million tonnes of CO2 if the transport sector transitions to using fuels derived fromrenewable energy. This potential is a technical gross potential and accordingly
does not factor in competing technologies such as electrification.
In many cases, PtX fuels are more costly than direct electrification, although they
are projected to become cheaper than most biofuels in the long run. Thus, PtX
fuels can play an important role in those sectors where direct electrification is notpossible or prohibitively expensive.

20

For some sectors such as shipping and aviation, liquid or gaseous fuels are also
expected to make up the vast majority of energy consumption in the long term, as
only a small proportion of the energy consumption in those sectors can be met
through direct electrification. The extent to which PtX ought to be used for certain
applications in road transport is less clear. The distribution between electrification
and PtX fuels will depend on technological developments and the cost of directelectrification versus PtX fuels.
The Danish Energy Agency’s analyses show that PtX fuels have the potential toprovide the cheapest CO2 reductions in certain parts of a number of sectors. This is
illustrated in Figure 7, which shows the distribution of long-term potential between
electrification and fuels derived from renewable energy, including PtX and biofuels,
based among other things on the scenarios from the 2021 Climate Programme.

Transition potential
Robust potential
Shipping

Aviation

Robust potential of indeterminate
Passenger
Vans
TrucksBuses
Industry, direct firing
Industry, internal transport
Other RE fuels(biogas, biomass,
bio-oils, etc.)

Electrification

Biofuels or PtX

Figure 7: Long-term conversion potential of different segments through direct electrification,transitioning to biofuels or PtX or other fuels such as biogas, biomass or bio-oils. For process heat bydirect firing, high-temperature process heat from solid and liquid fuels in direct firing processes is seen in
isolation.
Source: The Danish Energy Agency

The Danish Energy Agency’s analyses show that in the years between now and
2050, it is likely that PtX will have a significant role in aviation and most of shipping.
In addition, PtX may have a significant role in the industrial sector’s internal heavyroad transport and high-temperature processes, parts of heavy road transport,
refineries and a portion of the Danish Defence’s emissions.

21

For these sectors, however, there is more uncertainty associated with the exact
level of adoption of PtX due to uncertainties about the competitive factors with othertechnologies such as direct electrification. However, there is a robust likelihood thatPtX can play a role in the sustainable transition of all the mentioned sectors.
The Danish Energy Agency has also assessed that it will be possible to increase
the incorporation of PtX fuels such as methanol, e-gasoline and e-diesel in theremaining cars that use internal combustion engines until they are replaces byelectric vehicles. This may prove cheaper in the short term compared to further
promoting the electrification of passenger cars and vans beyond the normal
replacement rate. However, this should be considered a potential transitional
solution that is not the most cost-effective nor climate-friendly solution in the longterm.
In addition, there is significant potential for the use of PtX products in relation to the
production of materials and chemicals such as e-plastics and e-fertilisers, which
can replace fossil-derived alternatives. The production of such products
predominantly takes place outside of Denmark today, however. If the production is
to be converted to PtX-based production and moved to Denmark, it will not
contribute to Denmark’s national reductions. Instead, it will help reduce Denmark’s
global footprint as well as global CO2 emissions in general.
The Danish Energy Agency has assessed the potential for cost-effective CO2
reductions within the transport and industry sectors by 2050. This potential isshown in Table 1. The table also shows the Danish Energy Agency’s calculations of
the potential in the same sectors by 2030. Whether these reductions will be costeffective in 2030 depend on objectives, calculation prices, regulation, etc., as well
as developments in the field of PtX, including which framework conditions the
production and use of PtX fuels are subject to.
In the years between now and 2050, PtX has the potential to provide long-term,
cost-effective CO2 within specific sectors amounting to upwards of roughly 8 million
tonnes of CO2. The national reduction potential by 2050 is upwards of roughly 3.5
million tonnes of CO2, while the remaining reduction potential stems from the green
transition of international ships and flights refuelling in Danish (air)ports withdestinations outside Denmark.
Already by 2030, PtX has a technical potential to provide CO2 reductions in thesame sectors where PtX is forecasted to eventually become cost-effective
amounting to upwards of 4.5 million tonnes of CO2. This includes reductions
counted in Denmark’s national CO2 balance as well as reductions from international
ships and flights refuelling in Danish (air)ports with destinations outside Denmark(and which are therefore not included in Denmark’s national CO2 balance.

22

In Denmark’s national CO2 balance, the use of PtX products can collectively
contribute to a maximum of 2 million tonnes of CO2 reductions by 2030, whichcounts towards the 70 percent target. Part of that (approx. 0.5 million tonnes) will
come from transitional applications that will not necessarily be cost-effective in thelong run.

Table 1: Estimates for the use of PtX fuels in Denmark in sectors where they are forecasted to eventually
become cost-effective
Application

Potential reduction (CO2, million tonnes/year)
2030

2050

Power-to-X for shipping

0.6 - 1.2

1.9 - 2.6

- Of which domestic transport

0.1 - 0.4

0.4 - 0.7

Power-to-X for aviation

0.3 - 2.5

1.5 - 3.0

- Of which domestic transport

0.02 - 0.13

0.08 - 0.15

Hydrogen for light road transport, including vans

0.0 - 0.1

0.0 - 0.4

Hydrogen for trucks and buses

0.02 - 0.4

0.4 - 1.2

Hydrogen for industry, direct firing

0.0 - 0.1

0.0 - 0.5

Hydrogen or e-diesel for industry, internal transport

0.0 - 0.2

0.2 - 0.5

E-fuels for the Danish Defence (aircraft, ships, vehicles)

unknown

unknown

Hydrogen for biofuel production, etc. at refineries

unknown

unknown

Production of chemicals (fertiliser, plastics, etc.)

unknown

unknown

Robust potential

Robust potential of indeterminate extent

Uncertain potential for transitional solutions that are not cost-effective
Methanol mixed with gasoline

0.03 - 0.05

0.00 - 0.01

Mixing e-fuels into diesel/gasoline

0.3 - 0.5

0.0 - 0.1Sum

1.3 - 5.1

4.1 - 8.2

Of which contributes to the 70 percent target

0.5 - 1.9

1.1 - 3.5

Note:
1. ’Robust potential’ is defined here as areas of application where direct electrification is not possible or
expected to be more expensive than adopting PtX fuels.
2. ‘Indeterminate extent’ is defined as the degree of PtX adoption within the area of application being
indeterminate/uncertain. This includes segments with significant electrification potential but where theuse of PtX fuels will be the most cost-effective and practical solution in parts of the segment.
3. The technical gross reduction potential from the 2021 Climate Programme indicates that PtX has thepotential to contribute with domestic CO2 reductions amounting to approximately 9 million tonnes by2030. This table shows the Danish Energy Agency’s calculations of the cost-effective potential. The
cost-effective potential is lower than the technical potential, which is partly due to an overlap between
the use of PtX fuels and electrification, the latter of which is the more cost-effective choice in theindicated technical gross potential in the Climate Programme.
4. Blending e-fuels into diesel/gasoline is not believed to be cost-effective, as it is - albeit withconsiderable uncertainty - not likely to be competitive with 2nd generation fossil fuels.
Source: The Danish Energy Agency

23

Limited amounts of biogenic carbon for Power-to-X fuels
In certain sectors - mainly in aviation - the Danish Energy Agency believes thatcarbonaceous fuels will be a necessity for a number of years to come. In 2050, therealisation of the full potential in the table will require the use of 1.5-6.5 million
tonnes of green CO2 depending on the proportion that can be covered by PtX fuelsthat do not contain carbon. If CO2 is to exclusively be used for the potential in theaviation sector, this will require around 3 million tonnes of CO2 annually. In addition
to this comes the need for fuels for export, chemical production, etc. As noted in thesection on biogenic carbon, biomass and biogenic carbon are expected to become
limited resources in the long term. Tackling this challenge will be crucial to meeting
national and international targets (including Denmark’s EU and UN obligations) as
well as achieving the export-related potential of carbon-based PtX products in thelong term.

Did you know...
that refineries have green ambitions? The refinery in Fredericia, Crossbridge Energy,
aims to be CO2-neutral before 2035 by replacing parts of its crude oil input with biooils and green hydrogen to produce biofuels. The refinery is already investing ingreen hydrogen via the HySynergy project, which has received funding from theDanish Energy Agency’s energy storage funding pool. The project is also in theprocess of receiving funding through the IPCEI programme.
that hydrogen-fuelled taxis are already driving on Danish roads? The car
manufacturer Toyota has, in collaboration with the taxi service DRIVR, rolled out over
100 hydrogen vehicles on the roads of Copenhagen. NEL, Circle K and Everfuelhave also set up refuelling stations for these cars from Esbjerg to Copenhagen.
Hydrogen can thereby supplement electric vehicles where special demands orconsiderations make it difficult to convert entirely to electricity.
that the Danish shipping company Maersk has ordered eight large container shipsthat can sail on climate-neutral methanol? The first container ship is scheduled to set

Regulation promotes the use of Power-to-X

As long as PtX fuels are more expensive than their fossil-based alternatives, theDanish Energy Agency believes that further CO2 reductions driven by PtX will
require regulatory measures. For example, this could include requirements such as
the adopted national CO2 displacement requirements for road transport (seeAgreement on the green transition of road transport from December 2020) and the24upcoming EU regulations in Fit-for-55. At the same time, there is a need for more
knowledge on the long-term challenge of limited amounts of biogenic carbon.
Fit-for-55 can have a major impact on the use of Power-to-X
In July 2021, the European Commission presented the Fit-for-55 package, whichcontains a number of proposals to support the EU’s climate target of achieving atleast a 55 percent reduction of greenhouse gas emissions by 2030, including
proposals for a new European regulation of the transport sector (including shipping
and aviation). The package will be subject to negotiations before the rules canenter into force, which is why the final contents of the Fit-for-55 package remain
uncertain.
Box 3
The European Commission’s proposal for regulating transport and industry in Fit-for-55
Generally for the transport sector (revision of the Renewable Energy Directive II)
With the revision of RED II, the European Commission has proposed setting a requirement for a 13 percent
GHG intensity reduction target in the transport sector by 2030. The Commission has also proposed a specificblending requirement for advanced biofuels (2.2% in 2030) and PtX fuels (sub-target of 2.6% by 2030). It will
be up to the Member States to enforce the directive to ensure the obligations are met. These are only minimum
requirements, which can be raised at the national level and phased in by 2030.
Shipping in the EU (Fuel EU Maritime)
For the shipping sector, the Commission has proposed a new regulation which sets out a specific CO2
intensity reduction target requirement that will rise to 6% towards 2030 and increase to 75% in 2050, where
the targets can be achieved with renewable fuels (including PtX), but not traditional first-generation biofuels.
The proposal will entail total harmonisation at the EU level, which means that stricter national requirements
will generally not be possible.
Aviation in the EU (ReFuel EU Aviation)
With regards to the aviation sector, the European Commission has proposed a general requirement forblending in 2% renewable energy fuels into aircraft fuels by 2025, rising to 5% in 2030 and 63% by 2050,
where 1st generation biofuels will no longer be counted towards the renewable percentage. The Commission
has also proposed a specific requirement to blend 0.7% PtX fuels into aircraft fuels by 2030, rising to 28% in
2050. This proposal will entail total harmonisation at the EU level, which means that stricter national
requirements will generally not be possible.
Additional elements (AFI regulation and CO2 standards for passenger cars and vans)
In addition to the above, the package also contains new rules for establishing hydrogen filling stations aswell as a further tightening of existing CO2 standards for new passenger cars and vans. The effects of AFI
are difficult to quantify, but the Danish Energy Agency expects that it may generally support the adoption ofhydrogen fuels in heavy road transport.
Industry
The package contains a proposal for a national sub-target of at least 50% renewable energy in the industrial
sector’s hydrogen consumption by 2030. As Denmark’s present hydrogen consumption is low, this will
primarily contribute to reductions abroad, potentially with hydrogen produced in Denmark.

25

The Danish Energy Agency’s analyses show that the proposals in Fit-for-55 will
create a major demand for PtX fuels in Denmark and the EU in general. Due to theFit-for-55 package, the consumption of PtX fuels by 2030 will be able to displace up
to 0.5 million tonnes of CO2 annually in the Danish transport sector, although thisdepends on whether the implementation of the requirement for PtX fuels will resultin the displacement of fossil fuels or biofuels. If the requirement ends up primarily
displacing 2nd generation biofuels, it will only result in minor emissions reductionsin the value chain.
The requirements can also be met by reducing emissions from international
maritime and aviation refuelling in Denmark, which will contribute to theachievement of international targets. However, these reductions are not included in
the national CO2 balance and do not count towards the 70 percent goal. The extent
to which the reductions arising from Fit-for-55 will contribute to Denmark’s climate
objectives is therefore uncertain.
The Government will push for ambitious requirements in the Fit-for-55 package,
including in the aviation and shipping sectors. These requirements will result in ahigher national and international demand for PtX products through fundamentally
uniform framework conditions across the EU which will contribute to promoting
the use of PtX where it has viable long-term applications.
National CO2 displacement requirements for road transport promote green fuels
The Danish Energy Agency’s analyses show that some of the bio-based fuels
blended into gasoline and diesel in the Danish market can lead to significant CO2
emissions in the value chain. The latter are not covered by the 70 percent target tothe extent that they occur abroad, but they are part of Denmark’s global climate
footprint.
This is because first-generation biofuels are produced from crops which can requirelarge tracts of agricultural land in Denmark or abroad. Increased consumption ofthese biofuels therefore increases the risk of claiming additional land that waspreviously uncultivated via deforestation and drainage. This is referred to as
Indirect Land Use Change (ILUC) and impacts the climate through the removal ofareas that store large amounts of carbon. New land being claimed for cultivation
also comes with a high risk of negatively impacting biodiversity.
Denmark has introduced a new regulation of renewable energy fuels for vehicles
starting from 2022, based on CO2e-displacement requirements. This will help
promote climate-friendly fuels. At the same time, a political decision has been madeto incorporate ILUC values (or similar values) into the national fuel regulation by2025 at the latest. The European Commission has also proposed that Member
States should not be able to include first-generation biofuels in relation to meetingthe specific Fit-for-55 requirements for shipping and aviation.

26

The use of PtX fuels as an alternative to biofuels could thereby help limit the overall
consumption of biomass for energy as well as limit emissions associated with the
production of biofuels which in a number of cases is located outside Denmark. The
production of PtX fuels is better able to be scaled up than the production of
biofuels, depending on the expansion of renewable energy and access tosustainable CO2. The Danish Energy Agency accordingly expects that hydrogenand other PtX fuels will play a key role in the transition of the overall transport
sector together with direct electrification.
A need for further analyses on biomass and biogenic carbon
With the Agreement on a green transition of Danish agriculture, the Government
has laid the groundwork for pyrolysis technology being able to contribute negativeemissions in the agricultural sector through carbon sequestration in the form ofbiochar. In addition, the agreement on the CCS strategy between the Government
and Folketing includes conducting an analysis of the framework conditions forpromoting DAC technologies and making them more affordable. In addition, theGovernment will initiate an analysis of biological resources for the green transition.
The aim of the analysis will be to create a comprehensive overview of the biologicalresources that are available to the green transition as well as synergies between
primary production, different refining technologies and areas such as capture,storage and use of CO2, pyrolysis, biogas, PtX, etc.
The Government will work to promote the green transition in the transport andindustrial sectors. With the Roadmap for a green Denmark, the Government isplanning to present a number of strategies and proposals in 2022 and 2023 forsectors in which PtX can potentially play a major role in the long term:
•
•
•
•
•

A strategy for rolling out propellant infrastructure for heavy road transport
A proposal for the green transition of air traffic
A green industrial sector proposal
A proposal for a green energy and utilities sector
A proposal on sustainable fuels for road transport and shipping

27

The Government has already promoted the use of PtX fuels:•

Agreement on allocation of funding pool for green transport: A funding pool
totalling DKK 50 million in 2022 for subsidising purchases of green trucks.
The parties behind the agreement also agreed to allocate DKK 72 million in
2021 to co-financing of green fuel infrastructure for commercial transport.
The funding pool is aimed at filling and charging infrastructure for vehicles
such as taxis, vans, trucks and buses that run on alternative fuels such ashydrogen.

•

Agreement on the green transition of road transport It is planned for ILUC
values (or similar values) into national regulations by 2025 at the latest. In
2023, a political decision will be made on potentially tightening the CO2
displacement requirement as well as specific requirements for renewablefuels such as PtX from 2025.

•

Climate agreement for energy and industry, etc.: Approximately DKK 16
billion DKK has been earmarked for a CCUS pool, which via the agreementon the second part of an overall CCS strategy has been divided into twophases. The first phase aims to realise CO₂ reductions of 0.4 million tons
annually starting in 2025. Experiences from the first implementation offunds along with market developments will allow funds to be implemented
as appropriately as possible in the second phase, where reductions are
expected to reach 0.9 million tonnes per year towards 2030. In connection
with the second implementation of funds from the CCUS pool, the ways inwhich using CO₂ can contribute to the climate objectives will also be
reviewed.

•

A roadmap for capture, transport and storage of CO₂: With the second
part of the CCS strategy, it was agreed to initiate an analysis of theframework conditions for promoting and cheapening DAC technologies.
The captured CO₂ could also be used in carbon-based fuels produced via
PtX.

•

Agreement on the green transition of Danish agriculture: Among otherthings, the agreement earmarks DKK 196 million for pyrolysis in 2023-2024
in addition to the DKK 200 million in 2021-2022 earmarked via the Danish
Finance Act of 2021, amounting to a total of DKK 396 million earmarked fordeveloping brown bio-refining processes such as pyrolysis. The funds
allocated via the Agreement on the green transition of Danish agriculture
are planned to be provided through the Just Transition Fund.

28

Objective 2: The regulatory framework andinfrastructure must be in place for Denmark to utilise
its strengths and allow Power-to-X to perform onmarket terms in the long run
Partial conclusion: In the future, PtX will be able to compete with other fossil fuelalternatives. However, this will require establishing the right regulatory frameworkfor PtX production, transport, storage and utilisation as well as a hydrogen
infrastructure that allows PtX to perform on market terms. In addition, theGovernment plans to support technology development and upscaling as a way tosignificantly contribute to the industrialisation of PtX.
The Government will work to ensure that Danish hydrogen and PtX products caneventually compete with biofuels and foreign PtX products on the market.
Accordingly, the Government will create the appropriate economic and regulatory
framework for ensuring that the production and use of PtX products can eventually
perform on market terms. The Government will also establish the framework
conditions for a hydrogen infrastructure in Denmark that can support flexible
operation of the PtX plants and transport hydrogen over long distances.
Objective 2.
Accordingly, the Government will:•

Invest DKK 1.25 billion towards operating support for the production ofhydrogen and other PtX products. The purpose of the PtX tender is tosupport the industrialisation and upscaling of PtX production in Denmarkand thereby reduce the costs associated with hydrogen production. This isenvisaged to encourage growth and job creation as well as Denmark’scommercial and export potential in the PtX area. These subsidies will be
granted as a fixed price subsidy for a 10-year period.

•

Enter into dialogue with the European Commission on allocating DKK 344
million of REACT-EU funds and the Just Transition Fund to establish anational investment funding scheme for innovative green key technologies
with a particular focus on PtX and hydrogen, including green production
and demonstration projects.

•

Initiate a 360-degree review of Denmark’s legislation in relation tohydrogen.

•Develop a national regulation for a Danish hydrogen market.

29•Give Energinet and Evida the possibility to own and operate hydrogen
infrastructure.

•

Act on the recommendations from the South Jutland growth team toestablish a commercial beacon for green energy and sectoral linking.

Power-to-X must be able to perform on market terms in the
futureThe Danish Energy Agency’s analyses show that Danish-produced PtX fuels canpotentially become competitive alternatives to fossil fuels in a number of sectors.
This applies to biofuels as well as PtX fuels produced in other countries.

The cost of PtX processes will have to be reduced before PtX can perform onmarket terms, as shown in Figure 8. The figure shows the forecasted production
costs for four PtX products compared to the market prices for fossil fuels andbiofuels. For PtX fuels, the forecasted production costs are shown for the near andlong term with the assumption that the costs will be lowered as outlined in thesection on competitive conditions. It will also be necessary to create the appropriate
framework conditions for production, transport, storage and use of hydrogen andother PtX products, and to be able to document the green value of PtX products
and have that value reflected in the market price.
This is underlined by the fact that the actors behind most of the PtX projects(amounting to up to 7 GW) announced so far are advocating for adjusted
framework conditions and transparent regulation rather than public sector funding
as a precondition for carrying out the projects.

30

Forecasted production costs for PtX fuels in the longer terme(DKK/GJ)
350
300

2.g. bio-fuels incl. aviation fuel

250
200
150
100
50
0

1.g. bio-fuels

Fossil fuels

Hydrogen
Brint

Ammonia
AmmoniakDennærmerefremtidNear
term

Methanol
Metanol

Aviation fuelFlybrændstofPålængereLongterm sigt

Figure 8. Forecasted production costs over this decade (near term) and the long term following
upscaling of production, technology development, improved framework conditions and implementation of
supporting infrastructure for each of the four PtX fuels. Ranges for market prices of fossil fuels andbiofuels are also shown, where ILUC effects are not factored in.
Source: The Danish Energy Agency

Technological development and upscaling can lead to cheaper Power-to-X plants
Danish companies are primed to gain a strong market position in the industrial
expansion of a global market for green fuels (PtX). According to the OECD,
Denmark has a technological lead in the field of PtX, as Danish companies havedeveloped and possess key technologies that are necessary for establishing large
and efficient PtX production plants (see Figure 9, which shows a relativetechnological lead within hydrogen technologies, 2004-2008, compared to 20142018).

31

Note: The data shows patent applications submitted under the Patent Cooperation Treaty (PCT) in thefield of green hydrogen technologies. The number of patents is based on the submission date andcountry of the patent submitter, indicated by fractional numbers. The tally only includes countries thathave submitted more than 20 hydrogen technology patents in the period 2014-2018. Translated
internally from the OECD’s working paper “Innovation and Industrial Policies for Green Hydrogen”
Source: OECD, STI Micro-data Lab: Intellectual Property Database, http://oe.cd/ipstats, Juni 2021.

If Danish companies are to succeed with developing large parts of the production of
key technologies in Denmark, framework conditions for the companies’ investments
in development activities are needed that support the increased industrialisation of
the entire production chain for innovative green key technologies for PtX
production. Several actors have stated that upscaling and industrialisation of
production facilities is the next step in further developing the technology andmaking PtX production less costly. Electrolysis plants, which make up a significant
part of the costs for hydrogen production, are modular units comprised of manysmall elements (electrolysis cells) that are connected. As with solar panels andbatteries, these cells can be mass-produced, and scaling up production is expected
to have major potential in relation to lowering production costs. PtX plants will
thereby not only become more affordable to build the bigger they get; they will also
become more affordable to build as more get built.
Accordingly, the Government is already supporting research, development,
innovation and major demonstration and scaling projects that can contribute to
reducing the production costs of key technologies - e.g. electrolysis - that can, inturn, help make large-scale PtX plants more competitive. This strategy entails
additional funding to a new investment support scheme focused on scaling up thenecessary green key technologies.

32

In hydrogen production, the biggest cost comes from electricity consumption
In addition to the costs of the electrolysis plant itself, the costs of purchasing
electricity and paying tariffs to the public electricity grid make up about 2/3 of thecosts of producing green hydrogen in Denmark, according to the Danish Energy
Agency's forecast. A potential reduction of these costs thereby offers significant
potential for lowering the price of hydrogen and other PtX products.
The market prices for electricity - the so-called spot prices - fluctuate by the hour,depending among other things on the supply of cheap renewable electricity and thedemand for electricity within the price range. If an electrolysis plant is sufficiently
flexible, and the purchaser of the produced hydrogen can accept fluctuatingproduction levels, electrolysis plants could simply choose to produce hydrogen
during the hours of the year where electricity is cheapest. Often, however,hydrogen purchasers will want a steady supply of hydrogen. This challenge can betackled with access to hydrogen infrastructure, including hydrogen storage facilities.
Finally, hydrogen transport in pipes is an effective way of linking consumption to
production. A hydrogen infrastructure system based on pipe transport and largescale hydrogen storage could thereby prove valuable for PtX production in
Denmark.
Expanding Power-to-X and renewable energy go hand-in-hand
It is generally expected that the green transition will give rise to increased demand
for green electricity in the future, including for PtX production. There is alreadyconsiderable interest in PtX in Denmark, and the announced projects - from private
actors up to 2030 - have a collective electrolysis capacity of up to 7 GW. While
there is some uncertainty about the actual production capacity that will be realised,
the figure exceeds the level of capacity expansion upon which the Danish Energy
Agency’s current projections are based. The announced projects and initiatives thatfurther promote PtX can therefore be expected to contribute to an increased
demand for green electricity in the future.
A need for robust and transparent regulation
Production, transport, storage and use of hydrogen and other PtX fuels requirerobust and transparent regulation in a large number of areas concerning safety, theenvironment, planning, market regulation, etc. For a future hydrogen market tofunction, especially across borders, it is necessary to ensure that the green value i.e. climate neutrality - of both hydrogen and other PtX fuels can be documented.
This documentation must be credible and harmonised across the EU. Finally,hydrogen pipe transport entails a monopoly in practice, and establishing ahydrogen infrastructure therefore requires effective and appropriate market
regulation with a view to ensuring equal access to the system and low prices for
consumers of PtX products.

33

Framework conditions, regulation, technologicaldevelopment and infrastructure must support Power-to-X
on market terms

Since 2019, the Government has invested around DKK 400 million via the EUDP
and Danish Energy Agency’s energy storage funding pool. In 2021, theGovernment, together with other parties in the Folketing, also allocated DKK 850
million to the development of the green fuels of the future through the panEuropean project on green hydrogen (IPCEI). The Government will also invest DKK
1.25 billion via a PtX tender, and in the agreements on the allocation of theresearch reserves for 2021 and 2022, the Government and parties of the Folketing
prioritised just under DKK 1 billion to four green missions aimed at contributing toresearch and development of green technologies, including a mission on green
fuels for transport and industry (PtX, etc.). These missions will be carried out by
mission-driven partnerships that include relevant knowledge institutions,companies, public authorities and private actors collaborating on joint research andinnovation efforts over several years. Innovation Fund Denmark is responsible forestablishing these partnerships. These are important measures that support thetechnological maturation and industrialisation of hydrogen and PtX in Denmark, andwhich are thus expected to lower the costs of PtX production.
However, there are additional measures that can help make PtX more competitive:
Coherent legislation in Denmark and the EU that establishes a clear framework andsupports the green value of PtX, the establishment of a Danish hydrogen
infrastructure that links production to consumption and facilitates storage, andfinally, tariffs that better reflect real costs, which can help lower the costs ofhydrogen production. The Government’s approach to making PtX products lesscostly is illustrated in Figure 10.

Electrolysis

Electricity atmarket priceElectricity tariffs

Figure 10: The three biggest elements in the production costs for green hydrogen can be reduced
through the Government’s proposed changes to framework conditions.
Source: The Danish Energy Agency

34

Robust regulatory framework that supports the expansion of Power-to-X
In recent years, there has been a marked development in the maturation ofhydrogen and PtX technology. This means that current legislation is not presently
able to accommodate the rapid developments taking place in the field of hydrogenproduction.
Approval procedures and safety approvals are complicated and can make it moredifficult to establish PtX production plants as well as transport and storage facilities
for hydrogen and other PtX products. The complex legislation also means that bothPtX investors and authorities are uncertain about the framework. This can create
further delays to the construction of PtX plants. When PtX actors are seeking tobuild PtX plants in Denmark, national regulations should make that process as
simple and fast as possible. A clear and transparent regulation creates a secureframework for investors.
In addition, work is underway in the EU to determine how PtX producers that
produce hydrogen for the transport sector through using electricity from the public
electricity grid can document that the hydrogen they produce is based on
renewables. A revision of the Renewable Energy Directive II (Art. 27 of thedelegated act) is currently underway. The method, which must ensure that the
production of green hydrogen does not result in greater electricity production basedon fossil fuels, will be crucial to a future valuation of hydrogen produced in
Denmark when it is traded across EU borders. Currently, there is also no
documentation system for when carbon-containing PtX products can be
categorised as green, depending on where the carbon used in the production
comes from. In December, the European Commission will publish a communication
on sustainable carbon cycles, which is expected to contain an action plan for
promoting carbon farming and developing a legislative framework for a certification
system for CO₂ uptake. This will require a harmonised system that can document
the origins of carbon with regard to storage and use.
Recent research suggests that hydrogen is a relatively potent greenhouse gas, and
it is accordingly important to ensure that future hydrogen regulation also takes that
aspect into account.
The Government will-Enter into dialogue with the European Commission on allocating DKK
344 million of REACT-EU funds and the Just Transition Fund toestablish a national investment funding scheme for innovative green key
technologies with a particular focus on PtX and hydrogen, including
green production and demonstration projects.

35-Initiate a 360-degree review of legislation in relation to hydrogen with aview to identifying barriers to the development of a hydrogen market andestablishment of a hydrogen infrastructure that can make it easier for
Danish and international companies to produce and use PtX.

-

Develop a national regulation in consultation with the PtX industry toensure transparent market conditions for hydrogen infrastructure while
also creating opportunities for existing methane gas pipes to beconverted to transport hydrogen.

-

Work nationally and at the EU level to create clear and uniform rules forcertification of PtX products produced from renewable energy andsustainable carbon, thereby ensuring the green value of PtX while notdelaying Danish and European projects.

A Danish hydrogen infrastructure must enable the transport and storage ofhydrogenDenmark has no pipeline infrastructure dedicated to transporting hydrogen overlong distances. Parts of Denmark’s existing gas system can, however, be
converted to transporting hydrogen (see the Green gas strategy). However,converting gas pipelines for new purposes will require extensive planning andstrategic choices. At present, it also appears that there are only a few pipelines
capable of being repurposed in the short term.
Box 4
Hydrogen infrastructure
Denmark does not currently have a hydrogen infrastructure, i.e. gas pipelines and gas storage facilities fortransporting and storing hydrogen. Establishing the pipeline infrastructure will entail either converting andreusing parts of the existing gas system or establishing a dedicated hydrogen infrastructure.
The Danish gas system consists of a transmission system (owned and operated by Energinet), a distribution
system (owned and operated by Evida) and Energinet’s two underground gas storage facilities in Lille Torup(North Jutland) and Stenlille (Zealand). These storage facilities are used to store surplus gas and even out
seasonal variations in gas consumption, thereby providing flexibility for the entire gas system and its actors.
From a socio-economic perspective, it can make good sense to convert electricity to hydrogen, which issubsequently handled in the gas system, where both transport and storage is simpler and cheaper thantransporting and storing electricity. Storing hydrogen in pipes and gas storage facilities allows it to be stored
for periods where renewable energy production is lower than electricity consumption.
Energinet and the Danish Energy Agency have been in dialogue with a total of 19 market actors based in
Denmark and abroad who have expressed interest in Danish hydrogen infrastructure. This dialogue has
provided more clarity on aspects such as the value of hydrogen infrastructure for the market actors as wellas when it would be relevant to establish such infrastructure. Several market actors believe that they will
initially be able to do without hydrogen infrastructure, but that it will eventually become a necessity toachieving full commercial scaling.

36Energinet has determined that one of the two gas pipelines currently connecting theDanish and German gas system between Egtved and Ellund can be converted toexport pure hydrogen, thereby contributing to linking Danish PtX producers to a
European hydrogen infrastructure. Additionally, parts of the gas distribution system
could potentially be reused as gas boilers for home heating are gradually phasedout.
The majority of the gas system is able and likely to remain in service for many
years to come, partly due to political decisions having been reached to expand
biogas production. This means that the gas system will be used to transport andstore biogas for at least another 20 years. In addition, the upcoming Baltic Pipe
connection will transport large quantities of gas through Denmark to Poland until atleast 2038. Accordingly, it would not appear possible to convert significant parts ofthe existing gas system to be used for other purposes such as hydrogen. This isshown in Figure 11.
Expected investments inmajor electrolysis plants

Baltic Pipe contracts
end in 2037

Subsidy commitments
to biogas plants end

Figure 11. Overview of the Danish gas system and conversion possibilities over time. Red: No possibility
for conversion, yellow: Some possibility for conversion, green: Good possibilities for conversion. Notethe pipeline in South Jutland which can potentially be converted to hydrogen export in the medium term.
Source: The Danish Energy Agency

In order to support the long-term establishment of a Danish hydrogen infrastructure,
the Government will work towards removing the key barriers and ensuring that
there are clear rules for the establishment of infrastructure, safety, etc.
In connection with the launch of its gas and hydrogen package in December 2021,
the EU is presenting a proposal for how competition regulation for hydrogen should
be designed at the European level. This means that pan-European rules forhydrogen will only be implemented in Danish law at the end of 2025. However,Denmark is already today in need of a form of competition regulation to ensure fairterms of competition in relation to hydrogen pipeline transport.

37

The Government will-

Create the necessary framework in legislation and the purpose provision
to ensure that Energinet and Evida can own and operate hydrogen
infrastructure. This will allow Energinet and Evida, which already havecompetencies in operating gas infrastructure, to allocate funds todevelop hydrogen infrastructure projects such as market needs analyses
and preliminary studies on par with other relevant market actors within
the EU.

-In 2022, address the organisation of the Danish hydrogen market andhow to ensure that relevant actors are brought into play in relation toownership and operation in the hydrogen market-

Conduct an analysis on the availability of new fuels in Danish ports,based on the 2035 Infrastructure Plan, as Danish ports can play a keyrole in the transition of Danish shipping towards sustainability. For
example, the ports can rent out vacant areas to private companies thatwant to produce PtX, assuming the production requires a location close
to a port or the areas cannot be rented out for port-related activities.
Additionally, the Government considers the availability of electricity andinfrastructure for refuelling at Danish ports a prerequisite to enabling theshipping sector’s green transition from fossil fuels to green fuels.

Tariffs that better reflect real costs can help reduce costs for Power-to-X
With the current transmission tariffs, tariff payments amount to around 1/3 of thecosts of hydrogen production. Tariffs that better reflect real costs, including
geographically differentiated consumption tariffs, make it possible to reducehydrogen production costs by making it attractive for PtX plants to be placed inappropriate locations in relation to the electricity grid’s capacity. Tariffs that reflect
real costs are aimed at ensuring more efficient use of the electricity grid andpotentially reducing the need for grid investments, but they can also help make PtX
more competitive and thereby able to perform better on market terms. The
Government’s specific proposal in relation to tariffs is described in more detailunder objective 3.
Most large electrolysis plants are expected to be connected to the so-called
transmission net, which is known for the large high-voltage lines that transport
electricity around Denmark. This part of the electricity grid is owned and operated
by Energinet, and payments include a network tariff and system tariff.
Energinet has developed two proposals for new tariff products that would betterreflect the real cost of transporting electricity in the transmission grid and system
operation. The first proposal is to revise the system tariff, which makes up around38

half of Energinet’s overall tariffs. The proposed revisal will entail a change from atariff based entirely on consumption to a fixed subscription payment combined witha low consumption-dependent system tariff. This could benefit Denmark’s biggest
electricity consumers. The other proposal entails a reduced grid tariff for large
flexible electricity consumers such as electrolysis plants. The condition for lower
payments would be that the consumers can face electricity supply interruptions
during times where the grid has insufficient capacity.
Overall, these tariff proposals could reduce the costs of hydrogen production in theDanish Energy Agency’s forecast by up to around 25 percent. All changes of tariff
methods must be approved by the Danish Utility Regulator. This would be inaddition to any effects from the Government’s further proposals, which aredescribed under objective 3.
South Jutland could become a commercial beacon for green energy and sectoral
linking
In May 2021, the Government’s regional growth teams presented their proposals
for how the Government can invest optimally in local strengths and potential around
Denmark with a view to promoting future growth and employment across thecountry. The regional growth teams recommended the establishment of eight local
commercial beacons that would build upon Denmark’s strengths in the coming
years.
South Jutland holds special potential for rapid transition and development inrelation to PtX solutions. The region has especially favourable conditions due to its
geographical location in the electricity grid, good infrastructural conditions withlarge gas pipelines going from west to east - and towards Germany - as well as thepresence of a number of major green businesses. The growth team accordingly
recommended the establishment of a national centre for green energy and sectoral
linking in South Jutland, along with a push to adapt, attract and train workers for the
future wave of green jobs.
PtX will also become important to the commercial beacon in North Jutland, which
has ambitions for developing CCS and CCU solutions, as well as Bornholm, whichis also pursuing PtX projects.
The Government has allocated DKK 500 million from the so-called REACT-EU
initiative to acting upon the recommendations from the regional growth teams. Allaround Denmark, local and national actors have come together in local consortia tocollaborate on applying for funds to develop the regional commercial beacons. As
part of the Denmark can do more I reform proposal, the Government has allocatedan additional DKK 500 million from the Just Transition Fund as well as the EU’s
Structural Funds, bringing the total up to DKK 1 billion allocated to the developmentof the local commercial beacons in the coming years. The Government will also
enter into partnerships with the local consortia, inter-municipal business incubators

39

and Denmark’s Business Promotion Board to support and further develop the
potential of these regions.
The Government will-

As outlined in the Denmark can do more I reform proposal, allocate an
additional DKK 500 million in EU funding to develop the eight local
commercial beacons in addition to the DKK 500 million from REACT-EU
funding which has already been allocated to act on therecommendations from the regional growth teams.

-

Enter into partnerships with local consortia in Denmark’s eight local
commercial beacons, including in South Jutland, thereby contributing to
the development of the local commercial beacons in the coming years.
These partnerships will form the framework for the Government’s
running dialogue with actors in South Jutland on how PtX can function
on market terms.

The Government has supported the market introduction of Power-to-X:•

With the agreement on Allocation of the research reserve, etc. in 2021,
approximately DKK 700 million was allocated to the four green research
missions, including the mission for green fuels for transport and industry.
Innovation Fund Denmark will decide how the funds are to be allocated at
the end of 2021. Approximately DKK 195 million has been allocated to the
PtX mission.

•

With the agreement on Allocation of the research reserve, etc. in 2022, anadditional DKK 295 million has been allocated to the four missions from theGreen Research Strategy, including the PtX mission.

•

With the agreement on Danish participation in an “important project ofcommon European interest” (IPCEI) regarding hydrogen, the Government
has invested DKK 850 million in Denmark's participation in important
projects of common European interest, which aims to support large,transnational development projects that can benefit the entire EU.

•

PtX companies have become the first to qualify for a test scheme for green
solutions: In May 2021, the Danish Energy Agency granted Greenlab Skive
and Brande Brint the status of a regulatory test zone, exempting them froma number of rules and regulations in the field of energy. The companies,
both of which focus on production and development of green hydrogen, are40

thereby free to gain practical experience that may potentially be useful inimproving legislation on the area.
•

EUDP grants and the Energy Storage Funding Pool: In total, theGovernment has invested around DKK 400 million into research,development and demonstration of PtX solutions, including approximately
DKK 300 million via the general EUDP grant and PtX special funding poolas well as DKK 128 into an energy storage funding pool, which the projects
HySynergy and GreenLab Skive have received grants from.

41

Objective 3: The integration between Power-to-X andthe Danish energy system must be improved

Partial conclusion: PtX can work alongside the electricity, heating and gas systems
in an integrated energy system, where its integration with the electricity system inparticular will be crucial. Electrolysis plants can play a key role in the electricity
system by consuming large amounts of green electricity when the wind is blowing
and electricity rates are typically low and shutting down when the wind isn’t blowing
and electricity rates are typically high. This would require the plants to be able torun flexibly. Flexible operation can result in a higher settlement price for renewableenergy facilities during the hours the electrolysis plants are in operation, as well as
during hours where there is a lot of renewable energy production and typically low
electricity rates. Under special conditions, electrolysis plants that are flexible andappropriately located can help reduce or postpone the need for reinforcement andinvestments in the electricity grid and support the settlement price for renewableenergy facilities during hours of overproduction.
The Government will work towards creating a framework that ensures that PtX cancontribute to an integrated and flexible energy system where PtX is integrated into
the system so that it works in harmony with the electricity, gas and heating sector.
The Government will accordingly strengthen the basic conditions for ensuring thatPtX plants are located in places around Denmark where they can create value forthe electricity system by offering flexibility and reducing the need for grid expansion
and reinforcement.
Objective 3.
Accordingly, the Government will:•

Provide the option for geographically differentiated consumption tariffs,
giving Energinet and grid companies the option to differentiate
consumption tariffs for large electricity consumers based on theirgeographical location and thereby ensuring that the tariffs reflect the true
cost of electricity to a greater extent. This can provide a financial incentive
to choose appropriate locations in the electricity grid for PtX plants andthereby contribute to more efficient use of the electricity grid.

•

Create an application-based scheme for establishing direct links between
major electricity consumers and electricity producers, e.g. between a PtX
plant and a wind farm/solar park, when deemed socio-economicallybeneficial to do so.

•

Act on the recommendations from the South Jutland growth team toestablish a commercial beacon for green energy and sectoral linking,including links between PtX and district heating.

42

Power-to-X must contribute to an integrated and flexible
energy system

PtX plants consume large amounts of electricity to produce green gases or liquid
fuels for the transport and industrial sectors. This process generates large amountsof surplus heat. PtX plants can thus contribute to a more integrated and flexible
energy system, as illustrated in Figure 12.

Electricity grid

Value

Heat

Electricity
Renewable
Energy

Value

PtX

Value

PtX products
Figure 12. PtX can create value for electricity supply and the electricity grid, provide heat for district
heating and produce green fuels for transport and industry.
Source: The Danish Energy Agency

Power-to-X and its interaction with the electricity system
Denmark’s electricity supply is increasingly based on renewable energy, primarily
wind energy. This places considerable demands on the development of theelectricity grid as well as the rest of the electricity system.
Electrolysis plants, which are the core component of PtX, are able to run flexibly,
and PtX plants can therefore to a great extent turn their production of hydrogen up,
down, off and on as needed. This allows electrolysis plants to turn their electricity
consumption up or down depending on electricity prices, which are largely
contingent on how much renewable electricity is available in the grid. On an autumn
day where the wind is blowing, the electrolysis plants will typically be in operationand producing green hydrogen. On windless days, where the electricity prices are
typically higher, PtX plants can choose to reduce their production of hydrogen or
shut it off entirely. This is illustrated in Figure 13, which shows the operation of anelectrolysis plant over a month with fluctuating electricity prices. During periods
where the electricity grid is near or over capacity, the PtX production can also be
turned down or shut off entirely, lowering electricity consumption. Provided that theelectrolysis plants are placed in appropriate geographic locations, they could

43therefore contribute to effective use of the collective electricity grid and potentiallyreduce or postpone the need for grid reinforcement.

Electricity prices

Operating pattern for electrolysis plants over one month

1

3

4

6

7

9 10 12 13 15 16 18 19 21 22 24 25 27 28 30 31
Day

Operating pattern
Driftsmønster

Electricity
ElprisMaximum electricity
price
for plant operation
Maksimalelpris, hvoranlægget
kører

price
Figure 13. Illustration of the operation of an electrolysis plant over a month with fluctuating electricity
prices (blue curve). The electrolysis plant will be in operation when the electricity price is below the greyline, and the blue fields show the periods where the plant is running and producing green hydrogen. The
grey lines represent an electricity price that optimises the production cost of hydrogen.
Source: The Danish Energy Agency

Efficient use of renewable energy through Power-to-X
The expansion of renewable energy continues to increase as the years go by. This
will lead to lower electricity prices during periods of high renewable energy
production. These periods also lead to higher exports at very low electricity prices
or even periodically forced shutdowns of production. Exporting electricity at low
prices does not benefit the Danish market in isolation, although it may benefit theelectrification and green transition of other countries. Periodically forced shutdownsof renewable energy production, however, does not benefit the electricity market
nor the green transition.
Large electrolysis plants with flexible operation are excellent partners for largescale renewable energy production. Electricity can be diverted to these plants,
thereby increasing its value and settlement price during periods where there is a lotof electricity in the grid. This would allow PtX to support the continued expansion ofrenewable energy in Denmark without increased funding despite a rise inrenewable energy capacity.
Utilising surplus heat
The surplus heat generated from PtX plants could, depending on local conditions,either be used in the local district heating grid or as process heat in the value chain
and in industrial contexts. The value of surplus heat depends greatly on the44temperature of the heat and how often it is available. If the temperature issufficiently high, the heat can be used directly. Otherwise, a heat pump is required
to raise the temperature, which adds to the cost of heating. The temperature of thesurplus heat depends considerable on the type of electrolysis technology, althoughwith the technology at present, temperatures will typically not be high enough forthe heat to be used directly. In addition, it depends on whether the hydrogen is toundergo further conversion, which requires higher temperatures. If the temperature
is high enough, and the heat is available for a large part of the year, the plant may
potentially be of value to a district heating grid. If, on the other hand, it is only
available for a limited part of the year, the district heating company would need toestablish other production plants anyway. This can often be the case for PtX plants,
as it is expected that they will have a flexible operation that fluctuates withelectricity prices.
The value of using the surplus heat therefore greatly depends on local factors. The
socio-economic value of using the surplus heat will typically be lower than thesocio-economic value of an appropriate geographical location in relation to theelectricity grid. Therefore, the most sensible approach would be to set up theframework conditions to reflect that.

Did you know… that surplus heat from electrolysis under favourable conditions - anddepending among other things on the type of electrolysis technology - can reduce theoverall cost of hydrogen production by 5-10 percent? Copenhagen Infrastructure Partners
expects that the surplus heat from the production of green ammonia and marine fuels
based on 1 GW of electrolysis can supply up to 15,000 average homes in Esbjerg and
Varde with green district heating.

The proper placement of electrolysis plants is crucial toefficient utilisation of the electricity grid and interaction
with the overall energy system
Geographically differentiated consumption tariffs sends an important signal to major
electricity consumers
The Danish Energy Agency’s analyses show that a key precondition for electrolysis
plants being able to work in harmony with the electricity grid is that the plants areconstructed in geographically appropriate locations. It is crucial for electrolysis
plants to be placed in locations where a new and major electricity consumption canbe integrated into the existing grid. As a general rule, these are areas dominated bylarge amounts of electricity production and not areas already dominated by a highlevel of electricity consumption. Such areas are illustrated in Figure 14.

45

Did you know... that payment for the use of the public electricity grid is charged in theform of so-called consumption tariffs via the electricity bill? Energinet and the gridcompanies collect the tariffs within a framework set out in the Danish Electricity Supply
Act. The Danish Utility Regulator must approve the tariffs beforehand. At present, it is notallowed to differentiate tariffs based on the geographical location of electricity
consumption. If such differentiation is allowed, Energinet and the grid companies will
have the possibility to charge lower tariffs from major consumers placed in areas withadequate grid capacity on the one hand, and charge higher tariffs from consumers basedin areas where the grid capacity is under more pressure. This can reduce the need for

The figure shows the Danish electricity grid as it is expected to look in 2030.
Provided that new and large renewable energy facilities are connected inconsumption-dominating areas such as Zealand, transforming them fromconsumption-dominated to production-dominated areas, it would also beappropriate to place PtX plants in those areas.

Production-dominated
ConsumptiondominatedFigure 14. Capacity map of the Danish electricity grid. In order for the PtX plants to create value for theDanish electricity grid, large facilities would typically have to be placed in the production-dominatedareas.
Source: Energinet46

At present, it is not possible to make a geographical differentiation of consumption
tariffs under the Danish Electricity Supply Act. This prevents tariffs that reflect thereal geographically determined grid costs. The use of geographically differentiatedconsumption tariffs can create socio-economic value, as it would encourage new
major electricity consumers to locate their operations appropriately in relation to theelectricity grid and thereby help ensure the grid capacity is used more efficiently.
This can reduce the need for investments in the electricity grid.
The Government wants to provide the option for geographically differentiatedconsumption tariffs for major electricity consumers such as electrolysis plants. It is
expected that this measure would result in the development of new tariffs that could
increase large electricity consumers’ incentive to establish themselves inappropriate areas with respect to available capacity in the electricity grid. This willencourage greater co-location of electricity consumers and producers, benefiting
the public electricity grid while also strengthening the integration between PtX andthe energy system.
Geographically differentiated consumption tariffs also support the Government’s
objective that PtX must be able to perform om market terms, as tariffs that betterreflect real costs - as determined by geographical locations - can make it cheaper
to produce hydrogen via electrolysis.
Direct links can connect renewable energy facilities directly to Power-to-X plants
A direct link is an electricity connection between an electricity producer and anelectricity consumer. For example, this could be a wind farm and a major electricity
consumer - such as a PtX plant - that are directly connected without using the
public electricity grid. Depending on the specific final formulation of the rules forestablishing direct links, the electricity consumer can save on the tariff payments forthe electricity supplied through a direct link from the producer to the consumer andwhich therefore do not put a load on the public grid. The reduced tariff payment canincrease incentives for co-location of producers and consumers of electricity andreduce the need for expanding the electricity grid. Direct links can also lower the
production costs for PtX plants that apply for and are granted permission to build a
direct link according to the established criteria. The costs associated withestablishing direct lines are paid by the constructor
The Government will grant major electricity consumers such as PtX plants-

The option for Energinet and the grid companies to use geographicallydifferentiated consumption tariffs.

-

The application-based opportunity to establish direct links between
electricity producers and consumers, e.g. between a wind farm and PtX
plant, when deemed socio-economically appropriate.

47

The possibilities for granting permission for geographically differentiatedconsumption tariffs and direct links have been analysed in more detail in a separate
analysis. The specific tariff models will be developed by the grid companies andEnerginet and subsequently undergo review for approval by the Danish Utility
Regulator.
Utilisation of surplus heat can result in socio-economic benefits
The placement of PtX plants near a district heating grid is a prerequisite for utilising
the surplus heat generated from the plants. The Danish Energy Agency’s analyses
note in this regard that the socio-economic value of appropriate placement of PtX
plants in relation to the electricity grid will often be superior to the socio-economic
value of utilising the surplus heat from the plants. This is because locations close to
the district heating grid are often in consumption-dominated areas, which are notnecessarily good locations to place a PtX plant.
If, however, the placement of a PtX plant makes it possible to utilise surplus heat in
an economically sensible way, as may be the case in Esbjerg for example, it isimportant to ensure that the surplus heat can be used for the benefit of heating
customers, the PtX operator and the green transition. The political agreement topromote the utilisation of surplus heat in the district heating, which the Government
and a broad political majority in the Folketing entered into in September 2021,
provides good opportunities for utilising surplus heat from PtX plants in the district
heating sector.
The Government has supported flexibility and sectoral linking through:-The agreement on utilisation of surplus heat and reduction of theelectricity heating fee: In September 2021, the Government and a broadpolitical majority in the Folketing reached a new agreement on promoting
the utilisation of surplus heat in the district heating sector, which is
expected to enter into force in 2022. Along with the relaxation of theelectric heating levy and abolition of the surplus heating levy forelectricity-based surplus heating, the new agreement provides good
opportunities for utilising surplus heat from PtX plants in the district
heating sector.

-

The Just Transformation Fund: Denmark stands to receive DKK 663
million in a stream of awards in the period 2021-2027 from the EU’s Just
Transformation Fund. Part of the Denmark can do more I reform
proposal entails prioritising at least DKK 100 million from the Just
Transition Fund to act on the recommendations from the Government’s
regional growth teams as part of developing the local commercial
beacons envisaged in the business development proposal.

48

-

Agreement on stimuli and green recovery: A decision was made toestablish seven regional growth teams as well as allocate DKK 500
million from the so-called REACT-EU initiative to act upon theirrecommendations to establish 8 local commercial beacons around
Denmark. In addition, in connection with the allocation of the EU’s
Structural Funds from 23 June 2021, it was decided to prioritise DKK
400 million to the development of the recommended local commercial
beacons. PtX plays a central role for the South Jutland commercial
beacon. PtX will also become important to the commercial beacon in
North Jutland, which has ambitions for developing CCS and CCU
solutions, as well as Bornholm, which is also pursuing PtX projects.

49

Objective 4: Denmark must be able to export Power-toX products and technologies

Partial conclusion: Exports of Power-to-X products and technologies made in
Denmark can create growth and jobs, benefiting the country and its businesses
while also contributing to CO2 reductions beyond Denmark’s borders.

The Government will work to ensure that Denmark contributes to the realisation of
the EU’s reduction targets for 2030 and 2050 as well as those of the Paris
Agreements, while at the same time exploiting the commercial and export potential
for Danish businesses by enabling an upscaling and development of the Danish
PtX industry across the entire value chain. Foreign investors can make a significant
contribution in that regard, and promoting investments can further help towards
achieving that goal. At the same time, a focus on innovation can contribute topromoting future Danish exports and attracting foreign investment.
In addition to the investment support scheme that will contribute to the upscaling
and development of PtX technologies (see objective 2), the Government will
therefore strengthen the framework for 1) creating access to financing for major
demonstration projects such as PtX plants, 2) ensuring that Danish companies canexport certified green hydrogen and green PtX fuels and 3) establish a hydrogen
infrastructure in Denmark that can eventually be used to export hydrogen to other
European countries.
Objective 4.
Accordingly, the Government will:•

Propose that Denmark should aim to build upwards of 4 - 6 GW ofelectrolysis capacity by 2030.

•

Support the export of hydrogen and PtX products by creating theframework for a hydrogen infrastructure that can eventually be linked to acommon European hydrogen infrastructure.

•

Improve access to venture capital, including Danish businesses’ access toexport financing, with a view to supporting the commercial development of
PtX technologies and products both in Denmark and abroad.

•

Support Danish businesses’ exports of hydrogen and PtX technology andwork to attract foreign investment in Danish PtX projects.

•

Work to create clear and uniform rules in connection with European
certification for green hydrogen and biogenic sustainable CO2.

50

Power-to-X can become a new export market for Denmark

Green hydrogen and other PtX products, including the technologies and plants that
produce PtX, are expected to play a significant role in the green transition oftransport and industry globally in the future. Accordingly, significant increases in
global hydrogen consumption are expected along with the current consumption which is almost exclusively sourced from fossil-based hydrogen - being converted
to hydrogen produced with lower or zero emissions.
In July 2020, the European Commission presented the EU’s hydrogen strategy.
The strategy outlines three phases in the expansion of hydrogen production andinfrastructure:1) From 2020 to 2024, the EU’s electrolysis capacity will grow to at least 6
GW.
2) From 2025 to 2030, the EU’s electrolysis capacity will grow to at least 40
GW.
3) From 2030 to 2050, the goal is for the technologies for the production ofgreen hydrogen to be mature and rolled out. In addition to this comeparallel targets on the import of green hydrogen from third countries,
amounting to as much as 40 GW by 2030.
In parallel with the launch of the EU’s hydrogen strategy, a number of European
countries have presented national hydrogen strategies that set national targets forthe establishment of electrolysis capacity. As shown in Figure 15, the EU Member
States have collectively announced an electrolysis capacity target of around 28 MW
by 2030, 12 GW short of the EU’s 40 GW target for 2030.
The EU’s strategy - as well as most of the national strategies - identify greenhydrogen as the ultimate goal, although certain national strategies identify bluehydrogen as a transitional technology. Blue hydrogen is based on natural gas,
where most of the emitted CO2 is captured and sequestered in the subsoil.

51

European targets for hydrogen production, 2030 (GW)
Italy; 5

Flanders; 0.5
Outstanding in
EU hydrogentargets; 11.8

Poland; 2
Spain; 4
Portugal; 2Netherlands; 3France; 6.5

Germany; 5UnitedKingdom(including
Scotland);
10

Figure 15 The EU’s hydrogen strategy sets a target for 40 GW of electrolysis capacity among the EU
Member States by 2030. A number of countries have announced national electrolysis capacity targets,leaving the current capacity shortfall at 12 GW in relation to the EU’s target. In addition, the United
Kingdom and Scotland have announced hydrogen production targets adding up to 10 GW.

In other words, there is considerable interest in PtX and especially green hydrogenabroad, and several countries in Europe such as Germany, the Netherlands andBelgium are aiming to import hydrogen and other PtX products and technologies.
Germany, the Netherlands and Belgium already have a large consumption of fossilderived hydrogen in their industrial sectors, which can be replaced by greenhydrogen and thereby reduce the CO2 emissions from their domestic industries.
The export of Danish PtX products and technologies can prove valuable toDenmark while also contributing to the global green transition.
The Government has proposed that Denmark should aim to build upwards of 4 - 6
GW of electrolysis capacity by 2030. This expansion should occur on market terms
to the greatest extent possible while also supporting the realisation of Denmark’sexport and commercial potential in the PtX area. This objective can also contributeto reducing Denmark’s global climate footprint and achieving national andinternational climate objectives. A Danish electrolysis capacity of between 4 to 6
GW will, given a number of assumptions, be able to provide reductions amounting
to 2.5-4.0 million tonnes of CO2 by 2030, including up to 2 million tonnes that counttowards the 70 percent target.
Did you know... that Germany’s hydrogen strategy allocates DKK 15 billion to establishingenergy partnerships for importing hydrogen and other PtX products? Among other national
partners, the German hydrogen strategy mentions the North Sea countries as potential
producers of green hydrogen for the German market. The German energy consultant
Agora Energiwende expects that hydrogen will primarily be traded between neighbouring52Danish Power-to-X products can compete with foreign Power-to-X products
Denmark has large renewable energy resources, high security of supply and anelectricity system that is well-connected to neighbouring countries. In addition,
Danish companies possess expertise within all parts of the PtX value chain. In lightof that, Denmark is potentially well-positioned to becoming an exporter of greenhydrogen and PtX products at competitive prices.

Did you know... that Denmark is well-positioned to export green energy to ourneighbouring countries? In 2020, Denmark’s net export to Germany amounted to 3 TWh.
Denmark will also in the future export electricity when prices abroad are high. Exporting
electricity benefits the climate, as it reduces the need for power plants in other countries.
However, there are major challenges in moving electricity further south in Europe.
Exporting hydrogen would thereby make it possible for Denmark to export more green
energy.
The Government will work towards ensuring that Denmark can export green energy in the

The Danish Energy Agency’s analyses show that the short-term production costs
for green hydrogen in Denmark are on par with production costs for greenhydrogen in Morocco, a country which is often used as a benchmark for largehydrogen deliveries to markets in Northern Europe due to the country’s
considerable solar and wind power potential. When factoring in the transport costs
for the hydrogen, Denmark has an advantage through its geographical proximity tomarkets such as Germany and the Netherlands, and the short-term costs are
overall at a level that would be competitive with hydrogen from Morocco.
This development is illustrated in Figure 16. The figure shows a comparison of thecosts for producing and transporting green hydrogen from Denmark to the markets
in northwestern Europe as well as the corresponding costs for green hydrogen from
Morocco. The costs of hydrogen production in Denmark as well as transporting it tocountries in northwestern Europe can potentially be brought to a level below the
production and transport costs for hydrogen produced in Morocco as a result of
upscaling, industrialisation, adjustments to framework conditions, etc. (seeobjective 2).

53Forecasted production costs for hydrogen (DKK/GJ)
180
160
140
120
100
80
60
40
20
0

Denmark
Danmark(near(nærmere
future)fremtid)

Elektrolyseanlæg
Electrolysis plants

Denmark
Danmark(long term)(længere
sigt)
atElElectricity
til markedspris
market price

MoroccoMarokko(near(nærmere
future)fremtid)
Electricity
Eltariffer
tariffs

MoroccoMarokko(long term)(længere
sigt)

from
El Electricity
fra dedikeret
VE
dedicated

Transport
Transport

Figure 16. Forecasted production costs for green hydrogen in Denmark and Morocco as well astransport to northwestern Europe. The costs in Denmark are indicated for the near future as well as in
the long-term, assuming a significant upscaling and mass-production of the technology, establishment of
a hydrogen infrastructure, market regulation, etc. It is also assumed that electricity in Denmark would
come from the electricity grid, while electricity in Morocco would come from dedicated renewable energy.
The relative costs for electrolysis plants are higher in Morocco than Denmark due to fewer annual
production hours from solar energy.
Source: The Danish Energy Agency

Large market for Power-to-X technology can benefit Danish companies
It is not only PtX products that can be exported. Danish companies possess
expertise within PtX as well as CCUS, with approximately 70 major and small
enterprises working with those technologies (see Figure 17).
PtX technology includes the export of physical elements such as electrolysis units,
further conversion plants, hydrogen pipelines, ammonia engines for ships,hydrogen trucks and consulting services in sectoral linkage, infrastructure, etc.
Danish companies can both export PtX technology as well as provide consulting
services to PtX actors abroad.
A report published by Rambøll shows that Danish exports of PtX technology canaccumulate to between DKK 100-410 billion up to 2035. This forecast is based on
Rambøll’s assumption that the Danish market can make up 3 percent of the
expected global market. In addition, Danish exports of CCUS technology canaccumulate to between DKK 90-190 billion up to 2035, if one assumes that theDanish market will make up 1 percent of the expected global market. Danish
exports of PtX and CCUS technology can become an important export area for
Danish companies and Danish business in general, creating value for Denmark.

54

RE

Electrolysis plant

Fuel cells(hydrogen/methanol
to electricity)

Hydrogen infrastructure

Plant owners/developers

Interest groups

Further conversion(’X’)

End users

Advisors

Universities, knowledge centers, industrial hubs etc.

Figure 17. The PtX value chain in Denmark. This list is not exhaustive.

Did you know... that Danish PtX projects can apply for funding via the EU’s Innovation
Fund? In 2019, the European Commission set up an Innovation Fund to support largescale demonstration projects of new groundbreaking energy technologies within thefields of renewable energy, energy storage, industrial processes as well as the capture,storage and use of CO2. The Commission has estimated that the fund will have around
EUR 25 billion at its disposal during the period 2020-20301. The final amount depends
on the quota price, which has increased significantly in recent years. From 2021-2030,
the fund will be financed by proceeds from auctioning approximately 450 million
emission allowances from the EU’s emissions trading system as well as any excess
funding from the NER300 programme.

The Government will improve opportunities to co-finance commercial large-scaledemonstration plants within Power-to-X, among other technologies. The
Government’s Denmark can do more I reform proposal includes establishing theDanish Investment Fund (DIF) by merging the Danish Growth Fund, the Danish
Export Credit Agency and the Danish Green Investment Fund into one.
Furthermore, the Government has proposed a capital injection of DKK 1.7 billion
to the fund, which can be used for funding companies engaged in commercial
large-scale projects within fields such as PtX. With its Denmark can do more I
reform proposal, the Government’s aim is to scale up Danish PtX technology andplants, lower the cost of them and turn them into global exports.

55

The framework conditions for Power-to-X exports need tobe establishedHydrogen infrastructure is a prerequisite to Danish exports of hydrogen
The Danish Energy Agency’s analyses show that a key precondition for being able
to competitively export Danish hydrogen to countries such as Germany is that
Danish hydrogen infrastructure is connected to a planned and future European
hydrogen infrastructure (see Figure 18). Parts of the existing infrastructure for gas
transport in South Jutland may potentially be able to be used as a Danish export
pipeline. This will make it possible to sell Danish-produced hydrogen in Germany
and other importing countries in northwestern Europe.

Figure 18. Danish hydrogen pipeline connected to European hydrogen pipelines paves the way forhydrogen exports to Germany and other North European countries.
Source: The Danish Energy Agency

The Trans-European Networks for Energy (TEN-E) regulation opens up the
possibility for cross-border projects for converting natural gas pipelines to transport
green hydrogen to be financed through EU funding via the ‘Connecting Europe
Facility’ (CEF). In the period 2021-2027, approximately DKK 44 billion has been
allocated to support the development of European energy infrastructure.

56

The Government will create the framework conditions for allowing hydrogen
infrastructure to play a key role in the export of hydrogen. With objective 2, theGovernment has put forward the ambition of a strong Danish hydrogen
infrastructure that can be established either by laying new gas pipes or reusing
existing gas pipes. However, the Government will also work to establish acommon European hydrogen infrastructure so that Denmark can export greenhydrogen to neighbouring countries via connections to countries such as
Germany, Sweden, the Netherlands and Belgium.
Certification of hydrogen and carbon
It is expected that in the short and medium term, green hydrogen will coexist withfossil-derived hydrogen with or without carbon capture (so-called green and bluehydrogen). Even though blue and green hydrogen are sometimes placed in thesame category as low-emission hydrogen, blue hydrogen production has higher
CO2 emissions. Therefore, the green added value of Danish-produced greenhydrogen should be safeguarded through certification. Green hydrogen certification
should reflect the climate benefit of using green hydrogen. The Danish Energy
Agency’s and Energinet’s market dialogue indicates that there will be adeed value
associated with a certification that hydrogen is based on renewable energy.

Did you know… that Energinet has launched ElOprindelse, a prototype system which
can help provide better documentation of green electricity consumption? ElOprindelse
is a new premium standard of documentation of green electricity consumption, where
electricity consumption data is linked to offshore/onshore wind or solar energy
production and thereby able to display how much green electricity one consumes onan hourly basis. This will solve one of the problems associated with the present
guarantees of origin, namely that the electricity consumption calculation only occurs
on an annual basis.
PtX processes rely on being able to document that they use green electricity in orderfor them to be considered genuinely sustainable and CO2-neutral. Thus, ElOprindelseoffers potential benefits for green energy consumption, sectoral links and PtX.
Energinet has market-tested the prototype in 2020 with over 50 actors, which showeda demand and willingness to pay. Additionally, there has been considerable
international interest in ElOprindelse, both in relation to forming the basis for aninternational standard under EnergyTag and in dialogue with the EU Commission.

Carbonaceous PtX fuels, such as methanol and aircraft fuel, require carbon. The
overall CO2 footprint of such fuels will, however, depend on the carbon source.
Certification of carbon can therefore also become crucial to ensuring transparency

57

for buyers, which according to the Danish Energy Agency’s market dialogue will
become an increasingly important competitive factor for both producers and buyersof PtX fuels as the green transition progresses. Certification of green hydrogen andcarbon is discussed under objective 2.
The Government will push for clear and uniform rules for the certification ofgreen hydrogen and carbon across national borders. In connection with Article
27 of the Renewable Energy Directive II, the Government will push for fair panEuropean rules for green hydrogen and PtX fuels so that green hydrogen and
PtX fuels produced from renewable energy in Denmark get a high valuation
when traded across European national borders, thereby benefiting Denmark andDanish companies.
Common EU rules and certification of green hydrogen are insufficient on theirown, however. As the production of carbonaceous PtX products for aircraft andships grows in the future, it will become necessary to ensure the carbon used isbiogenic and sustainable. The European Commission is in the process ofdrafting a legislative proposal on a certification system for CO₂ emissions, whichis expected to be presented by the end of 2022. The Government will work toensure the development of a harmonised European system that can document
the origin of carbon.
Green hydrogen based on renewable energy sources and sustainable carbon
are key competition factors that the Government will support for the benefit ofDanish companies.
Global climate targets and transnational cooperation
Some of the sectors where PtX has particularly high potential - shipping andaviation in particular - are subject to international competition. This means that weneed ambitious and global climate targets and rules that can promote thedecarbonisation of these sectors not only in Denmark, but in the rest of the world as
well.
The Government will push for a climate-neutral shipping sector by 2050 at thelatest. At COP26, the Danish Government, the Marshall Islands, USA, United
Kingdom and a number of other countries presented a joint declaration on
climate-neutral shipping by 2050 at the latest. The Danish shipping industry
already has a goal to become climate-neutral by 2050, and the Government will
work in collaboration with some of the world’s other major maritime nations to
support this ambition by pushing to make it a global target via the UN
International Maritime Organisation (IMO). In so doing, the Government willcontribute not only to achieving the objectives of the Paris Agreement, but also
ensuring the best possible framework for commercial investments in green
shipping both today and in the future.

58

A prerequisite to PtX becoming an important export market for Denmark andcontributing to the European and global climate efforts is good collaboration withother countries. Denmark is involved in a number of partnerships in this area,
including the international public-private Zero-Emission Shipping Mission, which
also includes the USA and Norway as well as the Denmark-based Mærsk McKinney Møller Center for Zero Carbon Shipping.
The Danish Energy Agency collaborates with authorities in a number of countries,
including Germany, the UK, the Netherlands, the USA, Japan, China, South Korea
and Australia, all of which are active within the field of hydrogen and PtX. One of
the focus areas for these collaborations is to improve the framework conditions forgreen investments in more established technologies such as offshore wind, district
heating and energy efficiency, boosting the green transition as well as Danish
exports. There is also an increased demand for joint development and mutual
knowledge exchanges between national authorities regarding regulation of newtechnologies such as PtX and CCUS, which is also included as a focus area inseveral bilateral cooperation agreements.
The Government is supporting the international promotion of Power-to-X
through:•

Mission Innovation: Denmark has been the driving force behind the
preparation of the Shipping Mission for climate-neutral shipping, which
was selected as one of the missions of the new Mission Innovation 2.0.
A Power Mission and Hydrogen Mission will be launched alongside the
Shipping Mission. In June 2021, the Government launched the ZeroEmission Shipping Mission, a collaboration between Denmark, the USA,
Norway and two major private sector actors, namely the Global Maritime
Forum and Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping.

•

The Danish Ministry of Foreign Affairs’ Trade Council, innovation centres
and Invest in Denmark The Government has a focus via the Trade
Council to help Danish PtX companies enter new markets. Invest in
Denmark is also engaged in attracting foreign PtX actors to Denmark.
The Danish innovation centres prioritise collaborations on Power-to-X togain new knowledge and thereby in the long run contribute to raisingfunds for PtX projects as well as further developing and commercialising
PtX technologies.

•

Green Hydrogen Compact Catalogue: The Green Hydrogen Compact
Catalogue is a Danish initiative launched in connection with the UN
Energy Summit in September 2021. The goal is to bring together anumber of different actors, including governments, internationalorganisations, private enterprises and other stakeholders to support

59

international and cross-sectoral collaboration on the development ofgreen hydrogen.
•

The Danish Energy Agency’s bilateral collaboration with individual
countries on PtX as part of its collaboration with other national
authorities in the field of energy. The field is also included in several
formal collaboration agreements.

•

World Leader Summit Statement on the Breakthrough Agenda –Hydrogen. In connection with COP26, Denmark joined an initiative for
global collaboration on developing green technologies, includinghydrogen, with a view to making hydrogen affordable and available
globally by 2030. This collaboration will fall under the Clean Energy
Ministerial as well as under the auspices of Mission Innovation, LeadITand Mission Possible, and the efforts will be based on status reports
published by the IEA and IRENA.

•

LeadIT Summit Statement. Danish endorsement of the declaration on
industrial transition with a focus on national action plans that involve all
public and private sector actors; a market for green hydrogen with a netzero target for 2050, financing and infrastructure.

60

The Government’s vision for Power-to-X
Today, Denmark produces large amounts of green electricity from wind turbinesand solar panels, transported through cables across the country. Yet Denmark has
the potential to produce even more green electricity in the future. This electricity will
be used directly in households, companies and for transport, but will also be
converted to hydrogen and other PtX products that can displace fossil fuels in theheaviest forms of transport and industry where electrification is not feasible.
The strategy sets a number of objectives for rolling out PtX in Denmark while alsoestablishing key framework conditions for the Government’s further work with PtX.
The Government’s vision for Danish Power-to-X
Denmark has considerable PtX potential, and in the present strategy, theGovernment has presented four objectives that collectively set the course for its
work with promoting the development, expansion and adoption of hydrogen andother PtX products.
The Government’s Power-to-X strategy sets a course aimed at ensuring:•That Power-to-X can contribute to achieving the objectives of theDanish Climate Act, including the 70 percent target in 2030 and the longterm climate-neutrality target by 2050 at the latest, as well as international
climate targets that Denmark has committed to meeting within the EU and via
the Paris Agreement. The Government will therefore push for ambitious
requirements in the Fit-for-55 package (including within the aviation andshipping sector), initiate an analysis of biological resources for the green
transition and invest DKK 1.25 billion through a PtX tender aimed at operating
support for the production of hydrogen and other PtX products.

•

That the regulatory framework and infrastructure is in place forDenmark to utilise its strengths and allow Power-to-X to perform onmarket terms in the long run. The Government will therefore initiate a 360degree review of regulations related to hydrogen, create a regulation for anational hydrogen market and give Energinet and Evida the option to own andoperate hydrogen infrastructure. The Government will also carry out ananalysis of opportunities and needs in relation to the role of Danish ports asgreen transport hubs and act on the recommendations from the South Jutland
growth team on establishing a commercial beacon for green energy andsectoral linking.

•That the integration between Power-to-X and the Danish energy system
is improved. The Government will allow for geographically differentiatedconsumption tariffs for major electricity consumers (such as PtX plants),
61

incentivising them to seek geographically appropriate locations based onelectricity grid loads. The Government will also provide the application-based
option to establish direct links between actors such as major electricity
consumers and renewable energy producers when deemed socioeconomically appropriate, thereby allowing them to pay lower tariff payments
to the public electricity grid or avoid them entirely.
•That Denmark can export Power-to-X products and technologies. The
Government will therefore support the export of hydrogen and PtX products
and technologies that can contribute to the achievement of international
climate targets while also promoting Danish businesses’ commercial
opportunities by establishing the framework conditions for a hydrogen
infrastructure, as well as increasing access to venture capital, including
Danish companies’ access to export financing. The Government will also
propose that Denmark should aim to build upwards of 4 - 6 GW of electrolysis
capacity by 2030. In addition, the Government will work with the Danishbusiness community to revise the Energy Export Strategy from 2017 with aview to creating a partnership-based approach to supporting the export of PtX
products and technologies.
Towards 2025, the Government will - as stated in the Roadmap for a Green
Denmark - present several strategies and proposals that will detail the path
towards the Danish Climate Act’s objective to reduce Denmark’s greenhousegas emissions by 70 percent by 2030:
In 2022, the Government will present:••••

An energy and utilities proposal
A green industrial sector proposal
A strategy for rolling out propellant infrastructure for heavy roadtransport
A proposal for the green transition of air traffic, a green industry and agreen energy and utilities sector

In 2023, the Government will present:•

A proposal on sustainable fuels for road transport and shipping

In 2024, the Government will:•

Consider future mission-driven research efforts as well as cross-cutting
efforts to accelerate the development of green solutions, as well as how

62the prioritisations can be optimised to support the goals of the Danish
Climate Act.
In 2025, the Government will present:•

A proposal for a climate action plan

63

Danish Ministry of Climate, Energy and Utilities
Holmens Kanal 20, DK - 1060 København K
Phone: +45 33 92 28 00
E-mail: kefm@kefm.dk