COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet Denmark Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Third Report on the State of the Energy Union
Date: 2017-11-23
Institutions: European Commission, Secretariat-General
Subjects: Denmark, climate change policy, competitiveness, economic and social cohesion, energy cooperation, energy policy, innovation, investment, regional cooperation, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.11.2017 SWD(2017) 390 final  COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet Denmark  Accompanying the document  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK  Third Report on the State of the Energy Union  {COM(2017) 688 final} - {SWD(2017) 384 final} - {SWD(2017) 385 final} - {SWD(2017) 386 final} - {SWD(2017) 387 final} - {SWD(2017) 388 final} - {SWD(2017) 389 final} - {SWD(2017) 391 final} - {SWD(2017) 392 final} - {SWD(2017) 393 final} - {SWD(2017) 394 final} - {SWD(2017) 395 final} - {SWD(2017) 396 final} - {SWD(2017) 397 final} - {SWD(2017) 398 final} - {SWD(2017) 399 final} - {SWD(2017) 401 final} - {SWD(2017) 402 final} - {SWD(2017) 404 final} - {SWD(2017) 405 final} - {SWD(2017) 406 final} - {SWD(2017) 407 final} - {SWD(2017) 408 final} - {SWD(2017) 409 final} - {SWD(2017) 411 final} - {SWD(2017) 412 final} - {SWD(2017) 413 final} - {SWD(2017) 414 final}  
 
 
                              Energy Union – Denmark   

  Denmark 

                         Energy Union factsheet1 

1.  Macro-economic implications of energy activities 

Energy and transport are key sectors for the overall functioning of the economy as they provide an 
important input and service to the other sectors of the economy. Together the activity in these two 
sectors2 accounted for 6.7 % of the total value added of Denmark in 2015. Similarly, their share in 
total employment3 was 5.4 % in 2015, of which 5.0% in the transport sector and 0.4 % in the energy 
sector.  

(source: Eurostat) 

The  decarbonisation  of  the  energy  and  transport  sectors  will  require  significant  investments  and 
economic  activity  beyond  the  remit  of  these  sectors  themselves.  The  energy  transition  implies  a 
structural  shift  in  economic  activity.  Energy-related  investment  and  jobs  will  in  part  migrate  from 
traditional  fossil  fuel  based  activities  towards  construction,  equipment  manufacturing  and  other 
services related to the deployment of low carbon and clean energy technologies. At the moment the 
efforts  related  to  the  energy  transition  in  other  sectors  cannot  be  reliably  quantified  and  are 
therefore not included.  

1   The indicators used in this country factsheet largely build on indicators developed for the Commission Staff 
Working  Document  "Monitoring  progress  towards  the  Energy  Union  objectives  –  key  indicators" 
(SWD(2017)  32 
final)  https://ec.europa.eu/commission/sites/beta-political/files/swd-energy-union-key-
indicators_en.pdf 

2   Gross value added and employment in NACE sectors D-Electricity, gas, steam and air conditioning supply 

and H-Transportation and storage 

3   National accounts, Eurostat 

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                              Energy Union – Denmark   

In the case of renewable energy sector, both the direct as well as the indirect effects on employment 
are  being  estimated.  According  to  EurObserv'ER,  in  2015,  the  turnover  of  the  renewable  energy 
industry  in  the  same  year  was  estimated  at  around  EUR  12.76  billion,  the  vast  majority  being 
attributed to the wind industry. 

(source: Eurobserv'Er, 16th annual overview barometer) 

An indication of the level of efforts and challenges encountered by Denmark in the energy sector is 
given  by  the  Gross  fixed  capital  formation  (GFCF)4.  Investments  in  the  electricity  and  gas  sectors, 
which are taken as reference sectors, have steadily been in the range of 0.4-0.6 % of GDP, with the 
exception of two years with higher levels, i.e. 2013 and 2015. 

(source: Eurostat) 

In contrast to most other EU countries, Denmark exhibits a small trade surplus in energy. Denmark 
had  in  2015  a  net  trade  deficit  for  oil,  coal  and  electricity,  while  the  gas  export  showed  a  trade 
surplus. The overall trade surplus in energy products has, however, fallen from about 2% of GDP in 
2005 to 0.04 % in 2015, reflecting declining export and prices of oil and gas. The largest decrease is 

4 Gross fixed capital formation consists of resident producers´ acquisitions, less disposals, of fixed tangible or 
intangible assets. This covers, in particular, machinery and equipment, vehicles, dwellings and other buildings. It 
also includes foreign direct investment (FDI). Steam and air conditioning supply are also included in the figures 
mentioned above as Eurostat reports electricity, gas, steam and air conditioning supply together. 

2 

 
 
 
                                                            
 
                              Energy Union – Denmark   

accounted for by oil, which turned from a surplus of 1.5 % to a slight deficit in the observed period. 
The trade surplus in gas fell by two thirds, from 0.6 % to 0.2 % of GDP. Denmark appears also to have 
moved towards regular trade deficits for electricity in the second half of the period, i.e. as of 2011 at 
a level of about 0.03 % of GDP. 

(source: Eurostat) 

2.  Energy security, solidarity and trust 

2.1. Energy Mix 

In comparison to the average energy mix in the EU, Denmark's energy mix of primary products has a 
much higher share of renewable energy (29.3 % vs 13 %). Denmark does not rely on nuclear energy 
at all, and has also a lower share of natural gas (17.6 % vs 22 %) and solid fuels (10.6 % vs 16.2 %) 
than the EU28. The share of oil in gross inland consumption is 5.4 % points higher in Denmark than 
the average in the EU28, at 39.8 % and 34.44 % respectively. 

 (source: Eurostat) 

2.2. Import dependency and energy security 

3 

 
 
    
 
 
 
                              Energy Union – Denmark   

The share of energy consumption coming from imports is 13.1 %, well below the EU average of 54 %. 
This  is  primarily  due  to  Danish  gas  and  oil  production  in  the  North  Sea  fields,  but  also  to  the  high 
importance of renewable energy in the country's energy mix.  

Nevertheless, the declining production of natural gas turned Denmark into a net importer of energy, 
with the share of energy consumption coming from imports increasing in the period 2005-2015 from 
-49.8 % (i.e. significant net exports) to 13.1 %. At the EU level, import dependency increased by only 
1.8 percentage points over the same period.  

Denmark  only  imports  relatively  small  amounts  of  natural  gas,  for  which  Norway  is  the  most 
important external supplier (82.8 % of total imports from non-EU countries). Norway is also the main 
external  supplier for  crude oil and  NGL  (73.5  %). As  regard  hard  coal,  Russia  supplies  slightly more 
than half of total imports to Denmark.  

 (source: Eurostat) 

The security of gas supply regulation requires that, if the single largest gas infrastructure fails in one 
Member State, the capacity of the remaining infrastructure is able to satisfy total gas demand during 
a day of exceptionally high gas demand. Denmark complies with this requirement. The Danish system 
is well-supplied, including from own production; its security of supply does not depend seriously on 
any  external  (to  the  EU)  sources  or  any  routes  and  is  guaranteed  also  against  disruption  of 
infrastructure.  The  market  is  also  resilient  to  price  changes  of  outside  sources.  These  trends  are 
expected to continue at least until 2030. 

4 

 
 
                              Energy Union – Denmark   

(source: gas coordination group) 

Denmark is still a net exporter of natural gas (and oil), but at much lower levels than a decade ago. 
Denmark  is  currently  exporting  gas  mainly  to  Sweden  and  Netherlands,  while  importing  some 
volumes from Germany and Norway.  

According  to  ENTSOG’s  analysis,  the  basis  Remaining  Flexibility  (RF)  of  the  Danish  gas  system  (i.e. 
without any Project of Common Interests) is 52 % in 2020 and 100 % by 2030; this means that the 
existing system can cover a daily peak demand exceeding the expected one by up to 50 % in  2020 
and by up to 100 % by 2030.  

However,  projections  suggest  that  current  gas  interconnection  points  (with  Germany  in  Ellund  and 
from the North Sea in Nybro) might not be sufficient from the security of supply perspective in the 
longer  term.  Therefore,  various  options  have  been  considered,  notably  two  gas  interconnectors 
connecting Denmark and Poland (known as Baltic Pipe) and Denmark and Norway (known as Tie-in). 
The  Baltic  pipe  is  included  in  the  PCIs  list  and  has  already  benefited  from  CEF  funding.  Danish 
promoters  together  with  their  Polish  and  Norwegian  counterparts  are  also  considering  
interconnections between countries.  

5 

 
 
 
 
 
 
 
 
 
 
 
 
 
                              Energy Union – Denmark   

3.  Internal market 

3.1. Interconnections and wholesale market functioning 

3.1.1.  Electricity 

(source: EC services based on ENTSOE; EC services based on Eurostat;  EC services based on Platts and 
European power exchanges) 

While Denmark has, at 50.6%, a level of electricity interconnection5 well above the 10 % target for 
2020,  available  electricity 
interconnection  capacity  with  Germany,  notably  on  the  DK1-DE 
interconnector, needs to be increased in order to facilitate cross-border trading. Indeed, although a 
2014 study estimated that maintaining a minimum of 1000 MW of cross-border capacity could bring 
benefits  of  around  EUR  40  million  per  annum,  the  average  available  interconnection  capacity 
between West Denmark and Germany was only 250 MW in 2015. Not only does this restrict cross-
border trading, but it can also result in costs associated with curtailing generators in order to manage 
this reduction. 

in  the  electricity  sector  are  those  enhancing  Denmark's  electricity 
The  PCIs  for  Denmark 
interconnections with Germany (three onshore and offshore grid projects), with the United Kingdom 
(subsea link currently known as "Viking Link") and the Netherlands (one offshore project). These are 
long-term projects with commissioning dates foreseen for years 2018 - 2022. Denmark received EUR 
7 million under CEF calls for two electricity PCIs (DK-DE and DK-UK interconnectors). 

Wholesale electricity prices are lower than EU average, and the gap has widened between 2013 and 
2016 (prices decreased 29.1 % in Denmark during this period, compared to 14.8 % in the EU).  

3.1.2.  Gas 

The market concentration index for wholesale gas supply is significantly lower than the EU average.  

At 13.8 EUR/MWh in 2016, wholesale gas prices remain at similar level compared to the EU average.  

5 The interconnectivity level is calculated as a ratio between import interconnection and net generation capacities 
of the country (i.e. the 2017 value is the ratio between simultaneous import interconnection capacity [GW] 
and net generating capacity [GW] in the country at 11 January 2017, 19:00 pm as resulted from ENTSO-E 
Winter Outlook 2016/2017) 

6 

 
 
 
                                                            
                              Energy Union – Denmark   

(source: ACER for the left graph and EC services based on on Platts, gas hubs, ESTAT for the right graph) 

In  addition  to  the  upgrade  of  capacity  at  the  Ellund  interconnection  point  between  Denmark  and 
Germany  (completed  in  August  2016)  several  gas  infrastructure  projects  are  foreseen:  PCI  Poland-
Denmark  interconnection  "Baltic  Pipe"  (feasibility  study  phase),  the  Tie-in  project  connecting 
Denmark and Norway (feasibility study phase). Denmark received EUR 200 000 of funding from the 
Connecting Europe Facility for the Baltic Pipe.  

3.2. Retail electricity and gas markets 

3.2.1.  Electricity 

In 2016, Danish household customers continued to pay the highest electricity prices in EU, due to the 
high level of taxes and levies, which represented approximately 68% of household electricity prices. 
The decrease in electricity prices without taxes has been more than compensated by the increase in 
taxes and levies, leading to a price increase with taxes of 4.7 % between 2013 and 2016.  

The switching rate for electricity customers in 2015 was 7.2 %,6 which is above the EU28 average of 
6.3 %. The phasing out of regulated prices was completed in 2017.  

In 2013, the Danish Energy Agency issued a Regulation for the roll-out of smart meters for electricity 
by 2020. More than 60 % of customers now have smart meters.  

6 Source: Energinet.dk DataHub Markedsrapport 2017-02. 

7 

 
 
 
                                                            
                              Energy Union – Denmark   

(source: ACER) 

(source: Eurostat)  

(source: Eurostat) 

3.2.2.  Gas 

On  the  gas  retail  market,  the  switching  rate  more  than  tripled  between  2011  and  2015,  and  was 
significantly above the EU 28 average (10.1 % vs 7.0 %).  

As  is  the  case  for  electricity  retail  prices,  the  share  of  taxes  and  levies  in  household  gas  prices  is 
significantly higher than the EU average, at 58.3 % in 2016. The household price with taxes decreased 
by  24.2  %  between  2013  and  2016  and is  now  at  0.074  EUR/kWh,  still above the  EU28  average  of 
0.064  EUR/kWh.  In  2016,  the  Danish  Regulator  indicated  that  approximately  90  percent  of  gas 
customers received gas at unregulated prices. 

The  Danish  authorities  continue  to  consider  whether  to  abolish  the  current  system  of  supply 
obligation  licences  in  the  gas  sector,  for  which a  new  supply  obligation  license  period  started on 1 
May 2016 and will run until 31 March 2019.   

(source: ACER) 

(source: Eurostat)  

(source: Eurostat) 

8 

 
 
 
 
 
 
 
 
 
 
 
 
 
                              Energy Union – Denmark   

3.2.3.  Market performance indicators 

According to the periodical survey of DG JUST, Danish consumers are slightly more satisfied than the 
EU average regarding retail electricity and gas services.  

(source: DG JUST survey) 

3.3. Energy affordability  

In  2015  the  share  of  energy  in  total  household  expenditure  in  Denmark  for  the  lowest  quintile  of 
population was above the EU28 average (9.7 % vs 8.6 %). However, relatively few households were 
below the at-risk-of poverty threshold and unable to keep their home adequately warm (12.7 % vs 
EU  28  average  of  22.7  %).  This  is  partly  explained  by  the  purchasing  power  of  households  and  the 
high average energy efficiency standards of residential buildings. 

 (source: ad-hoc data collection of DG ENER based on HBS with the support of Eurostat and national statistics) 

4.  Energy efficiency and moderation of demand 

Since 2005, Denmark decreased its primary energy consumption by 14.3 % to 16.51 Mtoe in 2015. 
Over the same period, final energy consumption also decreased by 10 % to 13.95 Mtoe in 2015.These 
developments have been impacted by a steadily increasing share of notably renewable electricity but 
also a renewed increase in consumption for transport following several years of stagnation and the 
reduction  in  final  energy  consumption  in  manufacturing  industries  and  services  sector  in  spite  of 
economic  growth.  Even  if  Denmark has  already  achieved  levels  of  primary  and  final  energy 

9 

 
 
 
 
                              Energy Union – Denmark   

consumption below the indicative national 2020 targets (17.4 Mtoe in primary energy consumption 
and  14.4  Mtoe  in  final  energy  consumption),  it  needs  to  continue  the  efforts  to  keep  these  levels 
until 2020.  

(source: Eurostat) 

Denmark is one of the least energy-intensive economies in the EU. Its primary energy intensity is 43%  
lower than the EU average and is decreasing at the same pace (-2.1 % on the period 2005-2015). A 
sectoral assessment shows that the energy intensities of Denmark's industry and services sector are 
amongst the lowest in the EU, and they decreased by respectively 2.3 % and 1.6 % between 2005 and 
2015. As regard final energy consumption per square meter in residential sector, Denmark is slightly 
below the EU average. Final energy consumption in households has decreased by 6.5 % since 2006 
and  remained  essentially  unchanged  from  2013  to  2014,  despite  an  increase  in  the  number  of 
households and square metres. 

(source: Eurostat)  

(source: Eurostat)  

  (source: Odyssee database) 

In 2015, transport was the one sector consuming the most energy, with a 35.5 % share of total final 
energy  consumption.  Compared  to  the  EU  average,  the  Danish  industry  represents  a  much  lower 
share of final energy consumption (15.1 % vs 25.3 %). Though the shares of the other sectors in final 
energy consumption are relatively comparable to the EU average, the residential sector's share is 5 
percentage points higher in Denmark than in the EU28. 

10 

 
 
 
 
 
 
                              Energy Union – Denmark   

(source: Eurostat) 

Although  passengers  and  freight  transport  activity  increased  between  2005  and  2015  in  Denmark, 
final  energy  consumption  in  transport  recorded  an  average  annual  decrease  of  0.7  %.  In  the  same 
period, GDP increased at an annual average of 0.7 %. Since 2013, final consumption in transport has 
however increased. 

(source: Eurostat)  

        (source: Eurostat and DG MOVE pocketbook) 

Collective land transport represented in 2015 one fifth of all passengers transport in Denmark. The 
share  of  collective  passengers  land  transport  in  total  passengers'  transport  decreased  slightly 
between  2005  and  2015,  indicating  a  higher  use  of  private  transport  means  in  Denmark  (the  EU 
average being stable on the period).  

11 

 
 
 
 
 
 
 
                              Energy Union – Denmark   

(source: Eurostat)  

Banedanmark  (the  Danish  National  Railway  Agency)  has  launched  a  large-scale  project  for  the 
electrification  of  a  large  part  of  the  Danish  state  railway  network  in  the  years  to  come.  The 
electrification programme will create the framework for a more modern railway system with cheaper 
and  more  stable  operation,  while  the  expansion  of  the  operation  of  electrical  trains  will  reduce 
pollution  and  contribute  to  a  cleaner  environment.  The  project  will  improve  the  reliability  and 
attractiveness  of  the  railways  and  lead  to  clear  benefits  for  passengers,  operators  as  well  as  the 
environment 

The  Fehrman  Belt  Connection,  a  strategically  important  cross-border  infrastructure  project  for 
Denmark,  has  created  concerns  due  to  the  prolonged  and  complex  plan  approval  procedure. 
However, the final approval of the project is expected by mid-2018. It is expected that construction 
works could commence by 2020.  

In  road  haulage,  Denmark  initiated  an  EMS  (European  Modular  System)  trial  in  November  2008, 
which was originally intended to last until 2011, but has since then been extended twice and will now 
be running until 2030. Evaluations of the trial have shown considerable socio-economic benefits as a 
consequence of lower transport costs and lower CO2 emissions.  

5.  Decarbonisation of economy 

5.1. GHG emissions 

Danish GHG emissions were reduced by 27.4 % from 1990 to 2016. Emissions covered by the Effort 
Sharing  Decision  were  reduced  by  19.3  %  from  2005  to  2016,  which  is  a  larger  reduction  than  the 
interim  target  for  2016  of  -  14.9  %.  According  to  the  2017  projections,  Denmark  is  expected  to 
achieve its' 2020 target by a margin of 2.3 percentage points.  

12 

 
 
 
 
 
 
                              Energy Union – Denmark   

(source: EC and EEA)   

Denmark  has  a  considerably  lower  GHG  intensity  in  the  economy  than  the  EU  average,  while  GHG 
emissions  per  capita  are  slightly  higher  than  the  EU  average.  A  relatively  large  share  of  emissions 
comes  from  agriculture  (25.1  %  vs.  12.0  %  in  EU  28).  Emissions  from  agriculture  have  increased 
between 2005 and 2015.  

(source: EC and EEA)   

Preliminary accounts under the Kyoto Protocol for Denmark show overall removals of  -3.9 Mt CO2-
eq. as an annual average in the period 2013-2015. For comparison, the annual average of the EU-28 
accounted  for  removals  of  -119.0  Mt  CO2-eq.  It  should  be  noted  that  in  this  preliminary  simulated 
accounting  exercise,  removals  from  Forest  Management  did  still  not  exceed  the  accounting  cap, 
which was mainly due to shifting from a sink to a source.  

There  are  varying  patterns  of  relative  importance  of  activities.  Removals  by  Forest  Management 
were overall highest in 2013 and 2014, while its contribution to emissions is comparatively small in 
2015.  Removals  by  Cropland  Management  are  important  in  all  years.  Of  lesser  importance  are 
removals by Afforestation and emissions by Deforestation and Grassland Management. Overall,  the 
graph depicts a highly varying pattern with above-mentioned reversals for Forest Management from 
a  sink  to  a  source.  Afforestation  depicts  an  increase  in  removals  while  emissions  by  Deforestation 
also increase over the course of the three-year period. In addition, preliminary accounted emissions 
by  Grassland  Management  and  removals  by  Cropland  Management  depict  varying  patterns  over 
time.  

13 

 
 
 
                              Energy Union – Denmark   

Note: Forest Management credits are capped and presented as yearly averages when the total Forest 
Management credits of the considered period exceed the simulated cap over the same period. 

(source: EC and EEA) 

CO2 emissions in transport and alternative fuelled vehicles 

CO2  emissions  from  road  transport  have  decreased  between  2005  and  2015,  but  were  still  23.3  % 
higher in 2015 than in 1990. Thanks to a strong decrease between 2005 and 2016 (-35.2 % vs -27.3 % 
for  the EU28), the average CO2  emissions  of  new  cars  in Denmark,  which were  higher  than  the EU 
average in 2005, were below the EU average in 2016.  

(source: European Environment Agency) 

The number of electric charging points in Denmark has over the last four years almost quadrupled, 
from 552 units in 2013 to 2 096 units in 2016. 

14 

 
 
 
  
 
                              Energy Union – Denmark   

(European Environment Agency)  

       (European Alternative Fuels Observatory) 

National Policy Frameworks under Directive 2014/94/EU on alternative fuels infrastructure have to 
establish targets, objective and measures for the development of the market of alternative fuels in 
the transport sector and the deployment of the relevant infrastructure. Denmark has submitted its 
National Policy Framework as requested under article 3 of the Directive 2014/94/EU. 

A detailed assessment of the Danish National Policy Framework in terms of its compliance with the 
requirements  of  Directive  2014/94/EU  on  alternative  fuels  infrastructure,  its  contribution  to 
achievement  of  long-term  energy and  climate objectives  of  the  Union  and  coherence of  its  targets 
and objectives in terms of cross-border continuity has been published as part of the Communication 
on  Alternative  Fuels  Action  Plans  (COM(2017)652)  and   the  related  staff  working  document 
SWD(2017)365.  

5.2. Adaptation to climate change 

The  Danish  National  Adaptation  Strategy  was  adopted  in  2008.  Fourteen  sectors  of  priority  are 
identified:  construction  and  housing,  coasts  and  ports,  transport,  water,  agriculture,  forestry, 
fisheries, energy, tourism, nature, health, emergency preparedness, insurance, and spatial planning. 
An  action  plan  for  a  climate-proof  Denmark  was  launched  in  2012,  based  on  the  notion  that  a 
responsible  climate  policy  includes  both  working  in  the  short  and  the  long  term.  To  date,  there  is 
seemingly  no  overall  monitoring  and  evaluation  mechanism  of  climate  change  adaptation,  nor  are 
there clear reports publishing progress on adaptation in different sectors.  

5.3. Taxes on energy and transport 

Denmark uses taxation as part of their climate policy, and has a carbon tax in place. It is a part of the 
overall energy taxation framework and is applied on all fuels, e.g. including heating oil fuels (light and 
heavy), natural gas and coal. High excise duties apply to electricity consumption, whereas biomass is 
exempt in line with the carbon tax framework. In terms of vehicle taxation, both the registration and 
circulation taxes reflect fuel efficiency.  

The overall tax burden on energy and transport (including carbon taxation) in Denmark is nearly 3.9% 
of  GDP,  i.e.  1.5  percentage  points  higher  than  the  EU  average.  It  is  particularly  the  tax  burden  on 
transport  vehicles  that  is  higher  (1  percentage  point)  and  on  electricity  and  heat  (0.9  percentage 
points). The tax burden on fuels is, however, below the EU-average. The overall tax burden on energy 
and transport has fallen since 2007, mainly due to lower tax revenue from vehicle taxation. 

15 

 
 
 
                              Energy Union – Denmark   

(source: Eurostat) 

5.4. Renewable energy  

With  a  30.8  %  share  of  renewable  energy  in  final  energy  consumption  in  2014,  Denmark  already 
attained  its  2020  target of  30  %.  Progress  is  the  most noticeable  in electricity  generation  (biomass 
and wind energy) and in heating (largely biomass).  

The renewable energy share is more than 50 % in electricity generation and almost 40 % in heating 
and cooling.  

 (source: Eurostat-SHARES) 

(source: Eurostat-SHARES) 

16 

 
 
 
 
                              Energy Union – Denmark   

The  main  way  of  supporting  renewable  energy  in  Denmark  has  been  through  the  Public  Service 
Obligation (PSO) scheme financed by a dedicated levy. As from 2017, Denmark is phasing out the PSO 
tax replacing it with revenues from the general State budget. The government based its decision on 
an  evaluation  of  the  PSO  scheme,  which  showed  that  its  impact  on  energy  costs  was  too  high 
compared  to  its  effectiveness  in  promoting  the  development  of  renewables.  In  addition,  the 
European  Commission  raised  competition  concerns  over  the  PSO  tax  scheme,  because  electricity 
producers  from  other  EU  Member  States  exporting  electricity  to  Denmark  did  not  have  access  to 
subsidies  under  the  same  conditions  as  Danish  energy  companies.  For  some  existing  support 
schemes there will be a gradual phase-out from the PSO levy over a 5-year transitional period (2017-
2021) during which the share of State budget financing will be increased each year. 

It is estimated that thanks to the advances of renewable energy, Denmark consumed in 2014 21.6 % 
less fossil fuels and emitted 15.8 % less GHG7.  

 (source: EEA) 

5.5. 

Contribution of the Energy Union to better air quality 

Air  quality  in  Denmark  continues  to  give  cause  for  concern.  For  the  year  2013,  the  European 
Environment  Agency  estimated  that  about  2,890  premature  deaths  were  attributable  to  fine 
particulate matter (PM2,5) concentrations and over 60 to nitrogen dioxide (NO2) concentrations8.  

For NO2, Denmark reported exceedances of the binding EU air quality standard9. For the year 2015, 
Denmark  reported  exceedances  of  the  limit  value  for  NO2  in  1  out  of  the  3  air  quality  zones  in 
Denmark10. 

7 Avoided GHG emissions mentioned here have a theoretical character as these contributions do not necessarily 

represent net GHG savings per se, nor are they based on life-cycle assessment or full carbon accounting.  

8  European  Environment  Agency,  2016,  Air  Quality  in  Europe  –  2016  Report,  table  10.2.  The  report  also 
includes details as regards the underpinning methodology for calculating premature deaths.    
9 Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air quality 
and cleaner air for Europe, OJ L 152, 11.6.2008, p.1-44 
10  Compliance  data  as  reported  by  the  Member  States  as  part  of  their  official  annual  air  quality  report  for  the 
calender year 2015 (available on the European Environment Agency's (EEA) Eionet/Central Data Repository), 
http://cdr.eionet.europa.eu/dk/eu/aqd  

17 

 
  
 
                                                            
                              Energy Union – Denmark   

(source: EEA) 

The  health-related  external  costs  from  air  pollution  in  Denmark  have  been  estimated  to  be  more 
than EUR 3 billion/year (income adjusted, 2010), which includes the intrinsic value of living a healthy 
life without premature death as well as the direct costs to the economy such as healthcare costs and 
lost working days due to sickness caused by air pollution11. 

The  Energy  Union  can  substantially  contribute  to  addressing  these  air  quality  problems  through 
measures reducing emissions of both GHG and air pollutants such as PM and nitrogen oxides (NOx) 
from major contributing sectors such as (road) transport, energy production, industry and residential 
heating (e.g. stoves and boilers)12. 

(Source: EEA. This table reflects only sources of primary PM2,5 emissions.) 

11 See also the EU Environmental Implementation Review Country Report for Denmark, SWD(2017)39 final of 
3.2.2017 
12 National emission data as reported by the Member States to the EEA (available on the EEA's Eionet/Central 
Data Repository), http://cdr.eionet.europa.eu/dk/eu/nec_revised 

18 

 
 
 
 
 
 
                                                            
                              Energy Union – Denmark   

6.  Research, innovation and competitiveness  

6.1. 

Research and innovation policy 

Denmark's particular strength in clean energy research, development and demonstration (RD&D) is 
offshore  energy,  in  particular  wind  energy,  but  increasingly  also  wave  energy  which  benefits  from 
synergies  with  wind  energy  (e.g.  wave  energy  converters  are  integrated  in  offshore  wind  turbine 
farms  within  R&I  projects).  Other  areas  with  significant  RD&D  activity  are  energy  efficiency  and 
heating and cooling technologies.   

The  Energy  Technology  Development  and  Demonstration  Programme  (EUDP), is  the  biggest  clean 
energy research and innovation funding programme in Denmark. The vast majority of EUDP grants 
are allocated to projects within the following fields of technology: biomass technologies, systems for 
transport  and  energy,  wind  power  and  other  renewable  energy  technologies  (e.g.  solar  power), 
hydrogen  and  fuel  cell  technologies,  low  energy  buildings,  energy-efficient  solutions  and  energy-
system 
integration,  energy-efficiency  technologies  for  oil  and  gas,  and  more  efficient  and 
environmentally  friendly  production  in  general  (heat  and  power),  including  carbon  capture  and 
storage (CCS). 

Demonstration activities are funded through the Green Labs demonstration programme, established 
in  2010.  The  Green  Labs  programme,  which  also  aims  at  enabling  more  effective  participation  of 
SMEs,  comprises  nine  large-scale  demo  facilities  for  new  climate  methodologies.  Moreover, 
Energinet.dk,  the  Danish  system  operator,  also  funds  energy  research  through  the  ELForsk 
programme  (financed  through  the  national-grid  tariff).  Denmark's  consistent  and  prolonged  public 
support for wind energy RD&D is also continuing today through Megavind, a strategic partnership for 
the entire Danish wind industry which aims at strengthening public-private cooperation between the 
State,  private  enterprises,  knowledge  institutions  and  venture  capital  to  accelerate  innovation 
processes within several areas of technology. Lastly, clean energy RD&D activities are also supported 
through the Innovationsfonden.    

Denmark  participates  in  only  one  of  the  temporary  working  groups  for  the  implementation  of  the 
integrated Strategic Energy Technologies (SET) Plan actions, the group on offshore wind. 

Regarding  the  Horizon  2020  (H2020)  programme,  Denmark  has  received  so  far  4.4%  of  the  EU 
contribution devoted to the 'secure, clean and efficient energy' part of the programme. About 141 
participations from Danish organisations have been awarded EUR 65 million in Horizon 2020 energy 
projects.  The  biggest  amounts  were  attracted  by  offshore  wind  and  wave  energy  sector,  by  smart 
cities/islands/grids'  projects  and  by  numerous  energy  efficiency  projects.  Non-negligible  amount 
went  to  biofuel  and  biogas-related  projects.  Among  the  most  prominent  projects  with  Danish 
participation is the UPWAVE demonstration project of 1-MW wave energy converter integrated in an 
offshore wind turbine farm (EUR 12 million EU funding for Danish participants). Another important 
H2020 project in Denmark is HyBalance, which will be the first project in Europe to demonstrate the 
complete  value  chain  from  hydrogen  renewable  energy  production  to  end  users  (3  of  6  project 
participants are DK entities). Hydrogen will be produced from water electrolysis and used for clean 
transportation.  HyBalance  is  supported  by  H2020  through  the  European  Fuel  Cells  and  Hydrogen 
Joint Undertaking (EUR 8 million EU contribution). Renewable electricity produced by wind turbines 

19 

 
 
                              Energy Union – Denmark   

stored in the form of hydrogen will support grid reliability, showing the potential of hydrogen in the 
future energy mix. 

Denmark is a founding member of Mission Innovation13. As a result, it has committed to doubling its 
public  funding  in  clean  energy  R&I  under  EUDP  programme,  from  DKK  292  million  (approximately 
EUR  40 million) in 2016 to DKK 580 million (approximately EUR 80 million) in 2020. 

6.2. 

Investments and patents in the Energy Union R&I priorities  

In  2016,  public  (national)  investments  in  the  Energy  Union  R&I  priorities  reached  EUR  99  million 
having  decreased  by  31  %  compared  to  201514.  The  highest  share  of  investments  (37  %)  was 
attracted  by  the  Renewables  R&I priority  of  the  Energy Union,  followed  by  the Smart  Systems  and 
Sustainable Transport priorities (27 % and 18 % respectively). In the period 2007-2016, the maximum 
annual public investment was EUR 174 million, reported in 2010. In 2014, the most recent year for 
which data for most Member States are available, public investment per GDP in Denmark was twice 
the EU average. 

Private investment in the Energy Union R&I priorities in 2013 was estimated at EUR 528 million (3 % 
of  the  private  R&I  investment  in  Energy  Union  R&I  priorities  in  the  EU).  The  focus  was  on 
Renewables, which received 44 % of these investments, followed by Efficient Systems with a share of 
21%. 

In 2013, the most recent year for which complete patent15 statistics are available, 77 companies and 
research organisations based in Denmark filed 220 patents in low-carbon energy technologies (3 % of 
the EU total). The focus was on Renewables (47 %), followed by the Efficient Systems (23 %) and 
Smart System priorities (17 %). 

In 2013, private R&I investments and patents in Energy Union R&I priorities were higher than the EU 
average  when  normalised  by  GDP  and  by  population  respectively.  In  the  period  2007-2013,  both 
private R&I investments and the number of patents in the Energy Union R&I priorities increased on 
average by 12 % and 18 % per year, displaying higher rates of increase than the EU indicators (6 % 
and 15 % respectively). 

13   http://mission-innovation.net/ 
14   The values reported for 2016 are provisional; the respective figure for 2015 was € 144 m, 3% lower than 

2014 

15   In  the  context  of  this  document,  the  term  'patent'  refers  to  patent  families,  rather  than  applications,  as  a 
measure  of  innovative  activity.  Patent  families  include  all  documents  relevant to  a  distinct  invention (e.g. 
applications to multiple authorities), thus preventing multiple counting. A fraction of the family is allocated 
to each applicant and relevant technology. 

20 

 
 
 
 
 
 
 
 
 
                                                            
                              Energy Union – Denmark   

Note:  The  international  comparison  (right)  is  shown  for  2014  (Denmark  had  reported  EUR  149  million). 
Reporting at EU level for 2015 is not as complete, and very few countries have reported for 2016. 

(Data sources: Public investment as available in the International Energy Agency RD&D Statistics database16 for 
codes  relevant  to  Energy  Union  RIC  priorities.  Patent  data  based  on  the  European  Patent  Office  PATSTAT 
database17. Private investment as estimated by JRC SETIS. Detailed methodology available from the JRC18.) 

6.3. 

Competitiveness 

In 2014, the real unit energy costs (RUEC)19 in Denmark were well below those at the EU average (6 
vs  15.3),  but  also  those  in  the  US,  Japan,  China  and  Russia.  The  electricity  prices  paid  by  industrial 
customers with median consumption (annual consumption between 500 MWh and 2 000 MWh) in 
Denmark  were  below  that  of  the  EU  average  in  the  first  half  of  2016.  Gas  prices  for  industrial 
consumers with media consumption (annual  consumption  between 2 780  MWh and 27 800 MWh) 
are below the EU average. 

16 http://www.iea.org/statistics/RDDonlinedataservice/  
17 https://www.epo.org/searching-for-patents/business/patstat.html#tab1  
18 https://setis.ec.europa.eu/related-jrc-activities/jrc-setis-reports/monitoring-ri-low-carbon-energy-technologies  
19   This indicator measures the amount of money spent on energy sources needed to obtain one unit of value 

added. 

21 

 
 
 
                                                            
                              Energy Union – Denmark   

(source: ECFIN) 

                   (source: ESTAT and IEA) 

Regarding the competitiveness in wind and solar energy, Denmark is one of the main exporters in the 
wind sector, where it has a strong comparative advantage in particular for towers, blades, gearboxes 
and  generators.  In  contrast,  the  relative  strength  is  less  pronounced  for  power  electronics.  As 
indicated  by  the  revealed  comparative  advantage  indicator20  below  1,  the  Danish  economy  is,  in 
contrast, not specialised in solar PV. The relative trade balance21 confirms that Denmark is a strong 
net exporter of wind components, clearly above the EU average. The relative trade balance has also 
developed positively since 2005. 

20 The RCA index for product "i" is defined as follows: RCAi =

Xj,i
∑ Xj,i
i
Xw,i
∑ Xw,i
i

 where X is the value of exports, and j is 

the country and w is the reference group, the World economy. 2005 refers in the text to the indicator average 
over the 2000-2009 period, while 2015 represents the average over the 2010-2016 period. The same applies for 
the RTB indicator - see below. 
21 The RTB indicator for product "i" is defined as follows: RTBi =
exports and Mi imports. 

 where Xi is the value of product's "i" 

Xi−Mi
Xi+Mi

22 

 
 
 
 
 
 
 
 
 
 
                                                            
 
                              Energy Union – Denmark   

7.  Regional and local cooperation 

In  June  2016  Denmark  signed  the  Political  Declaration  on  energy  cooperation  between  the  North 
seas  countries.  This  Declaration  has  established  a  High-Level  Group  on  North  Seas  Energy 
Cooperation to give the necessary political impetus to a project which is fundamental to facilitate the 
cost-effective deployment of offshore renewable energy and to promote further interconnection and 
further  integration  of  wholesale  electricity  markets  around  the  North  Sea.  Through  a  coordinated 
approach it will be allowed to achieve market integration and the integration of substantial amounts 
of  indigenous  low  carbon  generation,  at  lower  cost  and  with  an  optimal  use  of  maritime  space 
(avoidance of conflicts with other North Sea users). 

Denmark is part of the Baltic Energy Market Interconnection Plan (BEMIP). BEMIP’s main objectives 
are to develop an internal and regional energy market between the EU Member States in the Baltic 
Sea region and integrating it fully into the EU's energy markets thus increasing security of supplies. 
BEMIP  projects  have  been  part  of  the  European  Economic  Recovery  Plan  (EERP)  and  the  Trans-
European  Energy  Networks  Programme.  BEMIP  projects  have  also  been  funded  through  the  EU's 
structural funds, including the European Regional Development Fund (ERDF) and the Cohesion Fund 
(CF). Many infrastructure projects are supported through CEF co-funding amounting to 534.3 million 
euro. In the framework of the societal challenge for secure, clean and efficient energy of the Horizon 
2020 programme, 16.9 million euro is allocated to participants from the Baltics to stimulate research 
and innovation in this field. 

Denmark  is  also  part  of  Nordic  Cooperation  together  with  Iceland,  Norway,  Sweden,  the  Faroe 
Islands,  Greenland,  and  Åland.  As  part  of  the  modernisation  and  reform  process  towards  a  'New 
Nordic Region', it was decided to commission strategic reviews  of all  sectors. On 27 October 2015, 
the  energy  ministers  agreed  to  commission  a  strategic  review  of  co-operation  in  their  sector.  The 
objective is to ensure effective co-operation now and for the coming 5 to 10 years. The report on this 
was issued in June 2017. 

The electricity markets of Norway, Sweden, Finland, Denmark, Estonia, Latvia and Lithuania together 
form  the  Nordic  and  Baltic  electricity  market.  The  common  electricity  market  combines  the 
wholesale markets in the Nordic and Baltic countries, creating the price signals to produce electricity 
where  the  price  is  lowest.  The  Nordic  Council  tasked  the  Nordic  National  Regulatory  Authorities 
(NordREG)  to  develop  a  truly  common  Nordic  electricity  market.  Many  steps  have  been  taken  to 
transform the nationals market to allow 'Nordic' consumer's access to supplier from other Member 
States.  Recent  measures  include  the  development  and  progressing  implementation  of  the  supplier 
centric market processes and of data-hubs.22 

The Nordic Energy Technology Perspectives 2016 presents technology pathways towards a near-zero 
emission Nordic energy system by 2050. The analysis is presented around the Nordic Carbon-Neutral 
Scenario  which  results  in  85  %  reduction  of  emissions  by  2050  (compared  to  1990  levels).  The 
analysis  is  performed  by  Nordic  Energy  Research  in  cooperation  with  the  International  Energy 
Agency. 

The EU macro-regional strategy for the Baltic Sea Region in which Denmark takes part can be used as 
a basis for regional cooperation on energy. European Territorial Cooperation – 'Interreg' – under EU 

22  

NordREG Report – 2016, Published: 2016-07-29 

23 

 
                                                            
                              Energy Union – Denmark   

cohesion policy also provides further opportunities for cross-border, transnational and interregional 
cooperation, including in the Energy Union areas. 

Cities and urban areas have a key role in the energy and climate challenge. The Urban Agenda for the 
EU,  established  by  the  Pact  of  Amsterdam  in  May  2016,  better  involves  cities  in  the  design  and 
implementation of policies, including those related to the Energy Union. It is implemented through 
Partnerships, in which the Commission, Member States, cities and stakeholders work together on a 
number  of  important  areas,  including  on  Energy  Transition,  Urban  Mobility,  Air  Quality,  Climate 
Adaptation and Housing. 

By 2016, in the context of the Covenant of Mayors, the sustainable energy action plan delivered in 
Denmark  covered  about  2.9  million  inhabitants  (more  than  half  of  the  population)  in  36 
municipalities. Overall, these municipalities committed to reducing GHG emissions by 26.3% by 2020 
compared to the 1990 baseline, somewhat less than the average of all submitted plans. 

In  Denmark,  by  September  2016,  4  cities  (covering  0.68  million  inhabitants)  have  committed  to 
conduct  vulnerability  and  risk  assessment  and  develop  and  implement  adaptation  plans  in  the 
framework of the Covenant of Mayors for Climate and Energy. 

8.  Cohesion policy and EU-supported clean energy investments  

EU  cohesion  policy  makes  a  key  contribution  to  delivering  the  Energy  Union  objectives  on  the 
ground, including investment possibilities to implement  energy policy objectives in Denmark which 
are  complemented  by  national  public  and  private  co-financing,  aiming  at  optimal  leverage.  It  also 
ensures integrated territorial solutions to energy and climate challenges, supports capacity building 
and provides technical assistance. 

Over 2014-2020, cohesion policy is investing some EUR 41 million in energy efficiency improvements 
in SMEs in Denmark. Cohesion policy is also investing significantly in R&I and in SME competitiveness 
in  Denmark,  based  on  the  national  strategy  for  smart  specialisation.  For  Denmark,  the  strategy 
includes  a  focus  on  assisting  SMEs  in  developing  resource  efficient  business  plans,  production 
methods and operations. At this stage, at least EUR 11 million is foreseen for investments in R&I and 
adoption  of  low-carbon  technologies  in  Denmark,  but  this  might  increase  further  in  line  with  the 
evolving content of the smart specialisation strategy. 

24 

 
 
                              Energy Union – Denmark   

Source: DG Regio 

Overall, the EU cohesion policy investments in Denmark over 2014-2020 are expected to contribute 
to an estimated annual decrease of GHG emissions of around 41,000 tonnes of CO2eq. 

For  example,  the  project  "Development  programme  for  sub-suppliers  in  the  windmill  industry: 
Innovation  through  cooperation  in  knowledge"  is  located  in  Central  Jutland  and  runs  from  January 
2016  to  December  2018.  Project  partners  are  Aarhus  University,  the  Danish  Technical  University, 
Aalborg University, and the Danish Advanced Manufacturing Research Center (DAMRC F.M.B.A.). The 
main  objective  of  the  project  is  that  several  small  and  medium-sized  sub-suppliers  to  the  windmill 
industry  develop  new  product  and  process  innovations  through  co-operation  with  knowledge 
institutions, thereby increasing their innovation potential. It is expected that the project results in 15 
new innovative businesses, 70 new jobs, and EUR  16  million additional turnover and EUR 5  million 
additional export revenues. In order to achieve the highest possible synergies, the windmill industry 
is  lead  partner  in  all  three  work  packages.  The  eligible  expenditure  amounts  to  DKR  17.25  million 
(EUR 2.3 million), whereof 50 % from the European Regional Development Fund (ERDF). 

As another example, the "Growth plans in SMEs: We Know How You Grow with Less Energy" project 
is  located  in  Middelfart,  South  Denmark,  just  across  the  bridge  from  Fredericia.  The  project  is  to 
create  several  growth  businesses  for  sustainability  and  energy  efficiency  in  South  Denmark  with  a 
focus on SMEs. The expected results are additional export revenues of 20%, and 10% more jobs for 
the  participating  businesses.  The  activities  concern  among  others  screening  of  and  advice  to 
businesses  for  the  development  of  concrete  growth  plans.  Running  from  December  2014  to 
December 2017,  the projects  represents  eligible  expenditure  of  DKR 14.3  million  (EUR 1.9  million), 
whereof 50 % from the European Regional Development Fund (ERDF). 

Through  its  support  to  sustainable  transport  systems,  the  Connecting  Europe  Facility  (CEF)  also 
contributes to the goals of the Energy Union. Following Danish participation in the CEF – Transport 
2014-2015  Calls,  the Danish  action  portfolio  comprises  22  signed grant agreements,  allocating  EUR 

25 

 
 
                              Energy Union – Denmark   

658.7 million of actual CEF Transport Funding to Danish beneficiaries (state-of-play February 2017)23. 
The transport mode which receives the highest share of funding is rail (92.3 % of actual funding). The 
greatest part of the CEF funding allocated to Denmark is concentrated in implementing the Fehmarn 
Belt fixed link, aiming to construct cross-border railway tunnels between Denmark and Germany.    

Denmark  continues  to  demonstrate  a  strong  commitment  to  the  greening  of  the  maritime  sector, 
developing new technologies and upgrading a number of maritime links through better performance 
of  ships  and  increased  handling  efficiency  of  ports.  In  the  area  of  Air  Traffic  Management  (ATM), 
Denmark  is  involved  through  multi-beneficiary  actions  that  intend  to  develop  and  use  harmonised 
best  practices.  The  actions  include  the  convergence  of  DSNA  and  ATM  Systems  of  the  COOPANS 
(Alliance of  air  navigation  service providers  of  Austria,  Croatia,  Denmark,  Ireland  and  Sweden),  the 
deployment of the Single  European Sky ATM Research (SESAR),  as well as the implementation of a 
harmonised air navigation service within the Functional Airspace Block of Denmark and Sweden.24 

23   Note  that  European  Economic  Interest  Groups  and  International  Organisations  are  excluded  from  the 

analysis. 
24   Source: INEA 

26