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[Episode #17] – Denmark’s Energy Transition

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In percentage terms, Denmark is the world leader in energy transition, as well as the king of wind power. Wind now supplies 42% of all Denmark’s electricity, and by 2020, the country plants to get fully half of its power from wind. It’s also the only developed country in the world with a serious plan to achieve 100% of its energy – just not electricity, but all energy – from renewables, and plans to do it by 2050. In this episode we talk with energy journalist Justin Gerdes about his new e-book on Denmark’s energy transition, Quitting Carbon: How Denmark Is Leading the Clean Energy Transition and Winning the Race to the Low-Carbon Future.

Geek rating: 2

Guest: Justin Gerdes, independent journalist specializing in energy issues based in the San Francisco Bay Area. His work has appeared at Forbes.com, the Guardian, Yale Environment 360, MotherJones.com, Smithsonian.com, and Ensia, among others.

On Twitter: @JustinGerdes

On the Web:
Forbes

Recording date: April 15, 2016

Air date: May 18, 2016

Chris: So let's bring him into the conversation now. Welcome Justin to the energy transition show.

Justin: Thanks Chris. Thanks so much for the invitation.

Chris: So what prompted you to write this book on Denmark's energy transition?

Justin: So it's kind of a two part. So one very simply is I thought Denmark's energy story really needed to be told and hadn't been told in a kind of a comprehensive way. So I think most people who are kind of vaguely aware of Denmark they know some things that are kind of kind of guideposts you know they know about the bike culture in Copenhagen and they know about the you know ubiquity of wind turbines and occasionally Denmark will make the news when they set a new wind energy record. You know the annual record for electricity production or recently they've had days where they've been exceeding 100 percent of their consumption from wind. And those will make international headlines and it's great that Denmark was in the news but to my mind there hadn't really been in at least in the English language a comprehensive overview of this decades long story in Denmark, really since the mid 70s of what they've done, how they went about it, not just for a general audience but even getting into some particulars of policy details so one was just it was kind of a void there and I really thought I could fill it. And two it was I was kind of uniquely qualified if I can humbly say so to tell that story so in late 2008 I went to work for a publishing house and think tank in Copenhagen called Monday morning. And this was as most of your listeners will know this was in the lead up to COP15 Denmark and Copenhagen we're going to be hosting the international climate negotiations the summit at the end of 2009. So there was really a kind of a ferment of interest in climate change and climate action in Denmark at the time and this publishing house they were really ramping up their coverage of climate change topics and they needed a native English writer and editor to kind of handle their in-house reporting in publications on climate energy. So just sheer by happenstance I saw a posting for this job in Copenhagen and very short notice went and interviewed in Copenhagen and you know within three or four weeks I was in Copenhagen.

Chris: Wow.

Justin: So for you know most of the next 14 months I was working and living living in Fredericksburg which is basically a kind of a suburb surrounded by Copenhagen and working in Copenhagen city centre. So you know I got a really good up front view of what was going on in Denmark and got a good feel for the culture there and political culture especially which I know we'll get into. But for me it was just really fascinating. You know remember the timing of this this was late 2008 this was the run up to the end of that presidential election. You know there was hope for President Obama. Well later President Obama. But you know it also come off of eight years of a oil and gas dominated administration in the United States. You know we were not yet to see what we will later see in 2009 2010 with all the promise of the stimulus funding and the ramp up of utility scale projects the United States so when I got to Denmark it was just so refreshing because the political conversation there was so much different than what I was used to in the United States so I mean on a number of levels it was not just political leaders but it was and I think this is really critical. It was the business leaders. So there was a right of center government in power at the time when I got there in 2008 and the particular culture there is you know you dont have climate change deniers in the right or center parties in Denmark you know across the board they all believe in climate action. So the language I was hearing immediately from the prime minister and from various other ministers was all in support of climate action. And from the business leaders you know you heard the same thing you heard not only did they also believe in climate action but they were lobbying government officials to act faster.

Chris: Well what a what an amazing opportunity and an interesting time to be going over there. So let's go ahead and dive into the whole question of Denmark's energy transition and how they're doing it. So just starting from the beginning when and why did Denmark embark on its energy transition plan?

Justin: Yeah. So it's really interesting so there were some early kind of shoots if you want to call them. So there's a long long long history of Denmark as a wind pioneer and I go into this in the book you know as far back as 1897 there was a gentleman who started a wind energy testing center primitive of course but you know going more than a century there is at least a history of wind energy innovation in Denmark. Fast forward to the mid 50s there was an engineer by the name of Johannes Juul who created a three bladed 200 kilowatt turbine called the Gedser machine which is basically the kind of predecessor the ancestor to today's wind turbines. So there's long been a history in Denmark of innovation especially in wind. But as far as what we think of now as a political framework and this decades long process going up to the present day the trigger really was the oil shocks of the 1970s. Denmark was very very hard hit by those oil shocks. You know at the time in the mid 1970s Denmark was 94 percent dependent on imported oil for its energy consumption. So you know very hard hit. And you know it's so fascinating to speak to Danes today and this is across the board the way that those events entered the national psyche. I mean it really can't be overstated how much it permeated the culture. I can't tell you how many times I talked to Danes and this was even Danes born after those events who would tell me the same story and that was you know that conservation measures that the country had to put in place you know everybody describes the car free Sundays not too long after I was in Denmark I remember listening to a speech by the then prime minister and you know in her speeches she would refer to the oil shocks and the imprint that those events had on the country and you know basically just realizing that they didn't want to be vulnerable like that again. So it was very much we had to firm up our energy security. We had to get off of imported oil. So the trigger was those oil shocks and realizing that they had to diversify.

Chris: You know one of the things that you pointed out in the book that I thought was really interesting about that is that you know the U.S. experienced the same shocks in the early 1970s and particularly the 1973 Arab oil embargo. And while the United States moved on after those initial shocks and when gasoline prices came back down and everything started to flow again. The U.S. really abandoned its energy transition efforts but Denmark did not. And one of the things that was really interesting to me about that was that 1972 73 is when Denmark's part of the North Sea oil field started producing which is one of the biggest oil fields in the world. And even so it continued along with its energy transition plan. It adopted an Energy Action Plan in 76 which among other things called for a switching from oil to coal for power generation. Then it adopted another plan in 1981 establishing energy certificates for energy efficient buildings and then in 85 it rejected nuclear power in favor of developing more wind. And then in 86 it made a push for a small scale combined heat and power systems and so on right on up to the present. And in fact by 1997 it had gone from being 94 percent dependent on imported oil to being a net energy exporter which is just a remarkable turnaround for 20 years so why do you think Denmark continued on with its energy transition strategy since those early shocks in the 70s where the U.S. abandoned it?

Justin: Yeah it's such a great question and you could probably write a Ph.D. dissertation about the topic but I would say it's definitely a complex answer but I'll kind of walk through what I think the answer is. So there is supposed to be this idea of the you know the resource curse of countries that are endowed with oil and gas resources. You know they're going to be hauled out and then they're going to delay and as you said it really wasn't the case in Denmark. And for one thing I think oil and gas did not make Denmark wealthy in the same way as you know say Norway with their 860 billion dollar sovereign wealth fund. But I think also maybe there was the knowledge that... Well for one the there was the gas find in the North Sea in the 70s obviously it took a while to ramp up. So I think that was part of it. There was the delay from the oil shocks. There was defined... So Denmark was already starting to think about needing to move toward energy security even by you know the mid 70s late 70s before that oil and gas production really ramped up. So this process was already kind of rolling before the oil and gas started kicking in. So there was that I think. I think too there was just the legacy of those oil shocks that the country was not going to allow itself to be vulnerable again. And I don't know if there were forecasts that really had it pegged that you know how big the fines were going to be and when that peak was going to hit and how long they could rely on that resource. But you know it really as you point out it really wasn't that long. Denmark became a net energy exporter and it didn't really last a long time. And so I think the latest numbers I saw Denmark is now something on the order of about 89 90 percent self-sufficient with energy. So you know they've they've already seen that they can't rely on oil gas.

Chris: Well that's true as you pointed out. You know it had become a net energy exporter by 1997 but by 2004 the Danish North Sea oil production had peaked.

Justin: Exactly.

Chris: It was only seven years later.

Justin: Right. So already there's the consciousness there that this isn't going to last. You know we've got to put ourselves on a different footing.

Chris: And maybe like you know the U.S. had been the world's largest oil producer in the earliest part of the 20th century so we had in the U.S. this whole institutional memory and this notion of or even an identity of being a big oil province and Denmark didn't really have that same identity I think.

Justin: Yeah I think you're definitely right that Denmark never really became known as an oil export or in a way that Norway was or the UK or obviously OPEC countries. So yeah I don't think it was part of its identity in quite the same way. And so then as far as you were asking about the legacy and the continuation of the legacy of moving forward with the transition I really think there are three pieces to it and all kind of briefly walk through those and then we can go into more detail later. But first I think it's just the political will political consensus in Denmark. So just by the complicated nature of its politics. Denmark traditionally has these coalition governments that it's very very difficult if not impossible for one party to have enough seats in parliament to hold power by itself. So by nature you have to have these kind of fragmented coalitions which breeds an environment where you have to cross party lines to get to get anything done. And especially for there have been a series of these energy agreements that have passed in Denmark usually spaced about I don't know eight or 10 years apart. And so there have been just kind of the stepladders of progress in Denmark where they've agreed to these these energy agreements and the history in Denmark has been that they have enjoyed very broad support across left and right of center parties. And there's a section of the book where I just I try to go into this in a little bit more detail. There was a really good interview that I included in there with a gentleman named Bo Lidegaard. He is a very well known kind of public intellectual. I guess you would say in Denmark. He's now the editor of one of the big papers there but he's also a historian and he was a diplomat and such but he was describing this culture and in saying that because you have this consensus based political system it makes it so that once policy reforms have been into place although you may achieve incremental progress once the policies are in place they are hard to dislodge because you have right and left of center parties agreeing to it. So even if the government shifts a year or two later it's very hard for the party now in power to go against an agreement they had agreed to previously. So I guess just there's by the nature of Danish politics there is stability there. Two something that is coming into place more in the United States recently especially in the last two or three years. And that's the support of large emitters and industry in Denmark. So some of the biggest companies in Denmark and ones I focus on in the book like Danfoss and Grundfos, they are firmly behind the energy transition in fact especially in the case of Danfoss their bills in business is built upon energy efficiency solutions. So you have a difference there were these very powerful business interests their own earnings depend on being able to export these green technologies and then very quickly the kind of last of the legs in the three legged stool if you can call it that is citizens have a stake in the energy transition in Denmark. So not only is there this long history of wind deployment and wind innovation in Denmark but there also is a long history of local ownership of land in Denmark. So you know even from the early 80s there was a tax credit available I think it was 30 percent of the cost of turbines which really jumpstarted the industry. And you had this flourishing of co-ops owning turbines with just local citizens owning shares. So the transition in part rests on the financial support of your common gain and I'm giving it a resiliency that it might not otherwise have.

Chris: That's a great overview of the whole kind of big picture of how it's working and why people feel so supportive of it. And I do have some questions lined up to kind of dig down into each one of those points. So before we go there though let's just kind of outline for people who don't know what the targets are so Denmark's targets now are to get all heat and electricity from renewables by 2035. And to be entirely fossil fuel free by 2050. How do they expect to do this particularly doing away with petroleum products for transportation by 2050?

Justin: Yeah. Yeah that last part of course is going to be the tricky one for everybody is the trend: decarbonizing transportation. So you're right the goals are to be, I should say, there was an energy agreement agreed to in March of 2012. And I described that it's kind of the culmination of this decades long process it's not the end of the process but as far as setting the targets on the horizon then March 2012 agreement that was the one that put in place this 50 percent target for wind power by 2020. And it also included the fossil fuel free target for 2050. So importantly you had those long term targets put in place the sending the signal to the business sector to make investments and the stability going forward. And then subsequent agreements kind of fleshed out fleshed out the details in there were agreements that provided some mid range targets and you're right there was supposed to be coal free by 2030 and then you're supposed to be coal and natural gas free at least in the heating and electricity sectors by 2035. And there are a whole host of ways they plan to go about doing that. So most importantly they are moving away from coal in the power sector. And this has been a process ongoing for years especially ramping up in the last five years or so and the main way they're doing it is by converting the existing coal fired generators to bio mass. And so I talked about several in the book including the large power plants that are kind of coadjacent to the Copenhagen metropolitan area. Each of those units surrounding Copenhagen and the big thermal generators outside of Aarhus the second city of Denmark are all shifting to biomass. So in that way you're pushing coal out of the power mix. They're also trying to basically electrify everything. If I can put it that way so and this is of course especially going to be important in the transportation sector it also applies to the heating sector. So Denmark had put in place a couple of policy measures back in 2013. They banned oil fired furnaces, excuse me boilers, in new construction and then they had a later target to try to phase out oil fired units boilers from existing buildings especially if they could connect to a locally available heat source which in Denmark is mainly district heating systems which we can get into more detail later. And then they're also trying to move to heat pumps electrically powered heat pumps especially in cases again where maybe you're in a rural area and you can't tie up to district heating system.

Chris: So there's a whole lot of different elements to it but it sounds like biomass is going to be a big fuel source for them in the future. Do you have any idea where they intend to get this biomass and how much of it would really be considered sustainable?

Justin: Yeah that's of course a very very contentious and fraught question. I know there've been a lot of recent stories written about it especially in the context of the big Drax plant in the UK that's been importing pellets from the southeastern United States. So I do go into this in quite a bit of detail in one of my chapters the chapter on Copenhagen where I'm talking about the conversion of the units there. I know it is very important to the energy companies and the policy makers in Denmark that the biomass be sustainably sourced. I mean they're stressed again and again. And for Copenhagen what was called Copenhagen energy it's now known by a different acronym. They are in particular stressing that they were going to be trying to rely on a straw and other kinds of waste material that did not need to be dried and pressed into pallets because part of the concern is these imported pellets you're burning energy in some cases to dry them and get them prepared to be put into a boiler.

Chris: That's true.

Justin: So it's it's very much a concern and it's it's good you're asking about it so I know that there was a policy put in place in Denmark in 2015 about sustainably sourcing biomass. I know they're trying to as much as possible rely on biomass sourced locally. So you know there's a very very big ag-sector in Denmark. So they're trying to source as much locally as they can and then try to put regulations restrictions in place on biomass that is imported to Denmark as far as I know the have not been as heavy of importers of biomass material as the UK has been especially from you know the big concern about the biomass that has been imported there is that it's coming from plantations in the southeastern United States as far as biomass that's been imported into Denmark as far as I know most of it has been coming from its Baltic neighbors so countries fairly close by.

Chris: Interesting.

Justin: And then another point I always like to add and I talk about this in the book is a critical thing you have to remember is that the power plants in Denmark are so much more efficient than your typical thermal generator. So because just about every large generator in Denmark is connected and is part of a combined heat and power system. The thermal efficiencies are much much higher. So you know a conventional decades old coal fired power plant you know might have a 40 percent efficiency rate. The best natural gas plants combined cycle you know I have upwards of 55 60 percent efficiency in Denmark because you have combined heat and power in the stations. There's some of the most efficient in the world there are upwards of 90 92 percent efficient. So you're getting so that each unit of biomass burned you're getting a lot more of that that unit of fuel. So in that sense systems in Denmark are much more efficient than you know competing systems in UK or elsewhere might be.

Chris: That's really interesting and it makes all the sense in the world. It also in my mind I've got kind of this niggling question in the back of my mind, was like OK this all sounds great Denmark is really in very many ways kind of a first mover and being comprehensively energy transitioned country or getting in that direction and they can take advantage of all this biomass from places like the Baltics. But if you take all the rest of the countries in Europe and they try to follow that same path there's not going to be enough biomass for them to all do the same thing.

Justin: Yeah no you're right you're definitely right. I do think that most policy makers and you know even if you asked DONG Energy which is the big state owned energy company I do think they think of biomass as a transition fuel long term. And that's because again I think they're looking at Denmark is so blessed and endowed with land that even again in the heating sector there is going to be a transition to electric boilers to kind of to sop that very plentiful surplus wind in the country. And so you know I mentioned this one of my favorite case studies in the book which is the dronninglund solar district heating system one of the guys who runs the plant he was pleading with his chairman to be able to install an electric boiler. So this was in a very very small village. You know I think it was a population of thirty five hundred people wanting to move to electric heating or at least in part. So I think it's very much the idea that because there are questions about sustainably sourcing biomass and because Denmark is so blessed with wind that they're going to try to electrify it as much as possible.

Chris: Because in the long run one would think there actually is enough wind energy and marine energy in Denmark to run the whole country in the long run. They could probably do that.

Justin: Yeah I would agree with that. And that's something that was mentioned in the Danish energy agreement March 2012 again was trying to provide some early seed funding for the wave sector which is you know very very nascent in Denmark. But as you say there is there is definitely promise there.

Chris: All right. So that all makes sense kind of from a big picture perspective. To drill down into the transportation question a little bit obviously it's obviously if they're going to dispense with fossil fuels they're going electric for transportation. There's kind of like unless there's some anti-gravity device out there what else would it be, but I wonder how much of that in their conception is electric cars? How much of it is rail? How much of it is, I mean that's obviously a big bike culture. Maybe they've got some electric bikes in the planning they're like what what do they think the mix of that is going to look like?

Justin: Sure yeah. And I'm glad you followed up with going to transport so. So one for a very obviously as you say there's no getting around that. You know eventually tens of thousands or hundreds of thousands of EV batteries spread across Denmark are going to be not just a great stabilizing tool but the way that at least most passenger vehicles are going to be powered. It's going to be electric but there's no question about that. But critically and in Denmark they are not looking as in just a car centric context. So you're very right you know especially Copenhagen is famous for its bike culture and the idea there is to ramp it up even further. I mean it's hard to conceive of especially in the U.S. context the numbers that they've hit in Copenhagen. So I can give you just my own personal example. You know I mentioned I lived in this basically you'd say a kind of a suburb of Copenhagen called Fredricksburg. I had a 15 minute commute by bike. And so you know I had the opportunity I could have walked to a Metro station and taken the Metro each day. But the you know the metro is very expensive. The metro in Denmark it's the most expensive transport system in the world. So you know I very quickly learned what all the Danes know which is it's much cheaper and it's much faster to go by bike. So that's what I did you know for 14 months. No matter the weather no matter how cold it was I rode my bike in January to work each day and they've achieved remarkable rates. You know the mode share of bike you know people getting to school and to work in Denmark by bike is 45 percent. You know it's it's just it's incredible. So you've got to you've got to go online and see you know there's various sites that taking videos of the morning rush hour commute on the busiest thoroughfares in Denmark and by bike. And it's just you see dozens if not hundreds of bikes queued up at major intersections. You know the route that I took to get to the city center in Denmark, and this was I believe still is the heaviest traveled bike route in all Copenhagen and there's something like you know it's tens of thousands of riders using the system in the early morning hours each hour getting into the city center so it is just incredible. And at least in the Copenhagen context the idea is that we're not going to rely so much on vehicles we're going to try to get people out of cars as much as possible so they're investing money in expanding the already fantastic bike infrastructure in Copenhagen. They are installing what they call bicycle super highways to connect the city center of Copenhagen to the suburbs. So in some cases you've got communities that are on the order of you know say 10 15 20 kilometers from the city centre. They want to make it so that they have these really flat if possible nice level really well paved, well-lit bike paths that give people the incentive to make that trek by bike from an outer suburb into the city centre and it's working. You know I describe one of the first of these built in the book and they're already seeing people shifting from driving to going by bike because they have this new option that is available and it gives them a direct shot to the city center. So they're trying desperately to get more people onto bikes and onto transport. You mentioned it's expensive but they are trying to at least give people more options by expanding this system. So if you traveled to Copenhagen recently much of this city center is a construction site because they are building what they're calling the city ring which is a new line of the metro that's going to open in mid-2019 and it's going open all once. I think there's something on the order of at least a dozen or so stations that are going to come on line. And the idea there is that there's a Danish law that says that the goal is to have basically anyone in the city in Denmark be no more than I think it is 650 metres from a transit station. So once this city ring new subway system goes online Copenhagen won't achieve that. So it's very much making it so that basically anywhere you are in Copenhagen you don't have an excuse not to take the metro or not to go by bike.

Chris: Yeah I've I've seen that bike system in Copenhagen that was almost probably 20 years ago that I was there but I was amazed especially in the morning commute just a phenomenal amount of bike traffic it's truly something to see. But I wonder how much of the country. I mean sort of outside Copenhagen how much of the country's transportation is currently being served by rail or how much of it they think will be served by rail.

Justin: I don't have a good sense of the you know if you're comparing car traffic to the rail traffic I do know there is a very extensive state run rail system that connects to all of the major major cities and you can take rail from Copenhagen to Aarhus or from Copenhagen to Odense or to Aalborg so you know all of the major metro areas in Denmark are reachable by rail. I should also say too that you're talking about disincentives for cars perhaps the biggest one is just the incredible expense of a car in Denmark. So up until very recently there was a 180 percent tax on new cars in Denmark. And so not only was it expensive to buy a car it's very expensive to operate a car because of fuel taxes. So you know I was always amazed and I would always remark to people I mean you really really have to want a car in Denmark because of just the incredible expense.

Chris: That's really interesting you know the North Sea once again is one of the world's most prolific oil provinces. Denmark has 19 oilfields in the North Sea which have been producing since 72. And referring back to as you put it earlier the resource curse I mean one of my principles of energy transition is that countries that have oil and gas will be the last to switch off of it. But Denmark has such a clear exception to that rule. And even though North Sea production peaked in 1999 Danish North Sea production peaked in 2004 and the North Sea is now producing a quarter of what it did in 1999 it's still a very significant resource. And yet Denmark has been aggressively pushing its people away from oil trying to leave oil before oil leaves it. And I just think that's remarkable.

Justin: Yeah. No I completely agree it's kind of almost mentally hard to grasp right because oil and gas are supposed to be this blessing for a country. You know it's something that obviously is fought over. But in Denmark they just don't seem to appreciate it in that way. They don't think of it in that context.

Chris: So we should probably talk a little bit about cost since that's the only thing that critics of energy transition ever seem to care about. I think one of the really interesting things about Denmark's approach is that they not only look at just the cost of doing energy transission but also at the cost of not doing it. And you write how Martin Lidegaard the minister for climate energy and building explain to you that the cost to Danish society of investments in energy efficiency and renewables in 2020 will be about 3.5 billion kroner but that they will save 6 billion kroner by importing less oil coal and natural gas and simply being more energy efficient and producing more renewable energy. Now this seems like an obvious way to look at the costs and benefits but I don't think I've ever heard a single elected official in the US talk about it that way.

Justin: Yeah you're right. It's so encouraging and refreshing right to hear. It's almost a bit tiring to hear about the cost the cost the costs that not to talk about the avoided cost right. The avoided fuel costs by moving to cleaner sources of energy and by you know kicking oil and gas. I should say he's now a former minister. When I spoke to Martin Lidegaard that was just after the March 2012 energy agreement was signed. I happened to be there a few days afterwards and spoke to him in his office. It's interesting. He later went on to be the foreign minister in Denmark in that same government so very well respected. But it's it was very interesting and he put it in those terms because the current government and I and I can go into this maybe a little bit later probably wouldn't be so keen to put it in quite the same way. The current government there was a national election in June 2015. It was a very very narrow win for a center right coalition government and the party that's now in power Venstre just so happened this was the party, the lead party when I was there originally in 2008 and 2009. They are lets say much more focused on current costs and that's because of just the current economic situation in Denmark. So this government is facing deficits and so they are they're more willing to talk about costs than their previous left of center government was as far as looking at the you know the budget line item cost of energy transition.

Chris: In your book you talk about Denmark's buy legal system which I take it is a little different than the buy legal system we have here in Colorado. What is that program?

Justin: Yeah this is fascinating. So this was described to me when I made a reporting trip to Denmark in the fall of 2012. And so I was talking with an engineer with what was then called Copenhagen energy and he was describing we were looking out into the harbor. You can't miss it if you if you've ever flown into Copenhagen there are a line of ten two megawatt turbines that are in shallow water in the harbour. And so when you are in the descent into Copenhagen airport you can't miss you see these turbines right when you're coming in and so we were out looking at this this wind farm and he was mentioning to me how individuals had had purchased shares. So half of those 20 turbines are owned by individuals mostly in the Copenhagen area. And so that was kind of the precursor to this system that the engineer described to me which was passed about a decade later so that the turbine farm in the water in Copenhagen harbour I think came on line in 2001. And this buy legal system came online about 10 years later. So basically what it does is it more formalizes that local ownership. So the idea being you want to give people an incentive to say yes to a project. So even in Denmark you have the possibility of running into NIMBYism you know maybe not in quite the same way as you know parts of the UK or the United States but it's still a concern. So what the idea was is to give people an opportunity again to have an ownership stake in the energy transition. So under this system if you are a developer bringing a project to a municipality you are obligated to offer a 20 percent share of that project to local investors. So you have to you have to advertise it in the local paper. You cannot make a profit on that 20 percent share. You have to provide it at cost and you basically have to offer those shares to local residents within a kind of I think two to four and a half kilometer zone first so they get first crack and then they sell the shares in increments of 1000 kilowatt hours of annual production. I want to say something like 600 or 700 euros to buy a share. So the idea is when they see those turbines adjacent to their town or village they're seeing them not just as a you know an obstacle on the horizon they're seeing it as this is making money for me. I distinctly remember I made a visit on one of my reporting trips to Denmark I went to the island of Samsø so Samsø is probably one of the best known energy transition stories that's needed way outside of Denmark. There's a very very good profile written about Samsø in the New Yorker in 2008 I believe it was by Elizabeth Kolbert. And it just so happened on my trip I talked to the same farmer who is a wind entrepreneur as she did. And you know he put it very well he own several turbines he said each time when I look over at that turbine and I see those those blades turning you know with each rotation I hear you know I hear the cash register sign you know because he's making money and it's true. So I mean it's a small tweak in the way you think about it but when you see turbines as a source of income and it's a very lucrative source of income for for thousands of investors in Denmark tens of thousands of investors. You know it puts it in a different mental framework for people.

Chris: Absolutely and it's something we've talked about on the show before actually you might recall in Episode 4 on the Energiewende that we talked about how the democratization of ownership in solar and wind in Germany is a big part of why so many people in Germany support it.

Justin: Definitely. Definitely. Yes.

Chris: What kind of a return do you think folks are getting for those investments?

Justin: Yeah. So I know I describe in the book in some detail the particular shares for that the middelgrunden wind farm as it's called in Copenhagen harbour. I want to say it was staggered. It was a higher rate of return for the first I want to say it was first eight or so years it was about twelve and a half percent. And then after that it was a stable return of around 7 percent. So definitely of course much better than you can get in a bank account or even you know saving in bonds.

Chris: Especially now.

Justin: I met a lot of people in Copenhagen who bought shares in wind turbines.

Chris: Interesting. Well that would certainly contribute to a lot of sort of popular support. We should talk a little bit about you know the support at sort of a parliamentary and business level so you wrote that Denmark's latest energy transition agreement passed parliament almost unanimously and that it had the full support of the business sector. Why do you think that is and again how would you contrast that with the US?

Justin: Yeah this statistic is so remarkable to me when I think of our current political context in the United States. So that agreement in March 2012 energy agreement it passed with a hundred and seventy one of the 179 members of parliament. I mean it's just incredible. Think about that this is this is left and right of centre politicians voting for a policy that puts in place you know being fossil fuel free by 2050. It's just it's incredible. And you know basically it was one small party that did not vote for it and it's not because they didn't believe in energy transition. As one expert leader put it to me it was more for a kind of tactical budget reasons that they did it.

Chris: Of course.

Justin: I mean you could say it was, it was near unanimous support. So I touched on it but it just gets to the reality in Denmark that it's climate action is not political in the way that we think of it as being political because they they've left behind the ridiculous notion of you know do you believe in climate change or not. You know we have one of our two major parties that is you know basically beholden to the idea right now that not only should we not act on climate but we don't believe in climate change at all. So in that context it's difficult to even try to fathom what the conservative politicians in this country are thinking. But in Denmark at least they've they've left that behind. You know they firmly even right of center politicians believe in climate action. The only real difference you could say between left of center and right of center politicians in Denmark is the scale and the speed of the transition. Again I kind of touched on this but the current government it's the Ventsre party. Interestingly they they were the third biggest party in the most recent election. But again because of the kind of the complex nature that the coalitions in Denmark they were able to put the politician Lars Løkke Rasmussen in the prime minister's office but they had tried to push back a little bit on some of the targets for Denmark most recently. So they still believe in the 2050 fossil fuel free target but they have tried to say well maybe we don't have to necessarily abide by the 2030 and the 2035 targets. No they're trying to look at it more of an economic competitiveness issue. They think they don't want to get too far out ahead of their European peers. So and remember this is just one party among a coalition in the current government. So the political consensus still holds in the country although you know there are some challenges too.

Chris: And what about the business sector though. I mean are they not like in the U.S. or or elsewhere complaining about the high cost of renewable energy putting them out of business and putting them in a competitive disadvantage to other countries and that sort of thing?

Justin: No I mean you you really don't hear about it in the same way I think in part it's because the what we would call the clean tech sector is just so strong in Denmark so I give a couple of examples of statistics toward the end of the book and that is you know it's something on the order of one fifth of Danish exports are from the energy sector. You know these are companies that are providing energy efficiency solutions to export markets. Another stat I include is you know there was one number I came across that 3 percent of Denmark's GDP can be attributed to sales of clean tech equipment and gear. And this is the highest share in the world for that number. So I think it really is it's the clean tech sector is so embedded in Denmark and it is so important especially in the export market that you know think of the leading companies of Denmark. So another obvious example is we haven't mentioned it yet is Vestas you know Vestas for a long time I think there were just recently knocked from the number one slot for the longtime Vestas was the largest turbine wind turbine manufacturer in the world export market is incredibly important to them. They're active you know in markets all over the world and they're very strongly you know pushing the government to keep in place policies that promote climate action at home and abroad. So you don't I mean you do hear some grumbling about the high cost of electricity in Denmark so if you're talking just about electricity rates. Denmark has the highest in the EU. You know it's on the order of 30 euro cents per kilowatt hour. So obviously very high as far as rates go. But you know again it's useful though to talk about electricity rates and talk about electricity bills you know energy bills you know like California has some of the highest electricity rates in the United States but our electricity bills are much more reasonable so I think because Denmark is so efficient electricity bills energy bills are much more reasonable.

Chris: In fact remember Craig Morris made the same point about Germany in episode 4. They pay high rates in Germany but everything is so much more efficient that the actual cost of the consumer is about the same as the U.S. So I guess on the whole the Danes must feel like they're getting a pretty good deal for the money that they've spent on energy transition.

Justin: Yeah I would say that's generally the case. You occasionally hear that they have to rein in costs and again that's mostly coming from the current government. And there've been a few cases where they delayed the timeline for projects because of costs. I describe in the book there were a couple of really big offshore wind farms that are planned. So there's one called Horns Rev 3 that's a 400 megawatt farm that's due to come online I believe in 2020. And then there's another one called Kriegers Flak that's a 600 megawatt wind farm. And that last one was delayed by a couple of years because there was concern about outlays for offshore wind farms. And there is a unit on electricity bills it's called a PSO it's the public service obligation. It's basically a kind of a surcharge and it's attached to every unit of electricity sold. So it's you basically can't really avoid it. So there was some concern that they wanted to rein in the costs for the PSO. So occasionally you'll hear things that we need it to delay projects to save money and actually in recent case delaying actually accrued Denmarks benefit towards the very end of the book I described the Horns Rev 3 project tender went out for it recently and it came in the winning tender was 10.3 euro cents per kilowatt hour which was a third cheaper than the last tender when it went out and that was for a 400 megawatt wind farm that Denmark built called Anholt that went online in 2013. So you know you can see and I think Danish consumers see that the industry is achieving reductions in cost as the offshore wind sector is scaling up costs are coming down. So because I think Danish consumers see at least they have a very concrete example of the cost coming down you know 30 percent just after a few years of tender the last tender that the industry has the potential to keep costs under control.

Chris: I guess that really is kind of what it comes down to is the fact that the local industry or the domestic industry can actually make money from it especially from exporting products can really make all the difference in terms of their political stance. You know sometimes I wonder if we if we had a more vigorous renewable energy industry in this country that was actively exporting products to the rest of the world maybe the business community would have a different perspective on the money that we spend on energy transition.

Justin: Yeah no, an example I love is DONG energy. So DONG energy remember it's the predominantly state owned DONG energy stands for Danish oil and natural gas. But fascinatingly–.

Chris: Oh so it's not a name just designed to amuse the rest of us?

Justin: You know so not only is DONG energy committed to you know the long term. You know moving out of coal and the power sector domestically in Denmark. You know one of the earliest speeches I remember hearing when I arrived in Denmark was by the then-CEO describing how they had this long term goal to flip their generating mix so at the time it was something like 85 percent coal 15 percent biomass and they said of course the long term goal was to shift to 15 percent coal 85 percent biomass and then eventually to kick coal completely. But now when you see the name DONG energy most people think of offshore energy and DONG energy is probably the premier offshore wind builder in the world. You know they've built these incredibly large projects off the coast of the UK and because they have this expertise they are in really high demand around the world. And you know just recently DONG Energy opened an office in Boston because they are very very eager to get into the U.S. offshore wind market. So this is a clear case of this. We see this pattern time and again in Denmark. These companies they were nurtured in the Danish market. They used it as a foothold. They deployed their products or services in Denmark first. They then looked at export markets growth markets and because they have this great expertise they are in high demand across the world. So you know it makes perfect sense that DONG was so much expertise deploying these really complex and until recently recently very risky offshore wind projects are going to be some of the first probably to build the first really big offshore wind farms in the United States.

Chris: That is very cool. And speaking of cool technology I think one of the coolest things about Denmark is its use of district cooling and district heating. They're way ahead of much of the rest of the world in terms of their use of this technology. Tell us a little bit about some of the systems that they are using for that.

Justin: Yeah this is you know to be honest this is one of the reasons why I really wanted to write this book because I'm a big fan of district energy. So you know basically kind of just to put this in context I'm I'm sure most of your listeners will be familiar with this but at least in the United States context this really usually only comes about when you're thinking of college campus or corporate campuses. You'll have a district energy system where you'll have a central power plant and you know connected heating to maybe you know two dozen buildings on a campus. But we really don't have the district energy district heating footprint in the United States certainly that they do in Denmark. So I really think it's one of the best best practices in Denmark that can and should be exported around the world. So you returned to Copenhagen so in Copenhagen 98 percent of the buildings in residential and commercial buildings in the city are covered by the district heating network.

Chris: Wow. 98 percent. I had no idea.

Justin: 98 percent. So this is you know again you got these mid-size thermal generators thermal power plants kind of on the fringes of Denmark. The Amager complex and that the Avedøre complex.

Chris: And again those are CHP plants?

Justin: CHP plants and there's also a really big waste to energy CHP plant that's under construction. Two of the Amager complex. This is the one famously that's going to have a ski slope on top. So the idea there is to use the surplus heat you know normally vented into the into the air but instead harness it and it's directed into sending heat to homes and businesses via insulated pipes that carry either steam or hot water.

Chris: So what about the summertime when you don't want the heat?

Justin: No again they've come up with an ingenious solution for that too. So at the same time that Copenhagen has this incredibly extensive district heating system they are also building a district cooling system. So this is not going to be as ambitious. They don't see it as reaching every home or business like the district heating system. But it's starting in the city center I visited the very first of these district cooling plants at this at Adelgade this was at a former power plant that had been shuttered. And this one very very cool. It has an intake pipe that goes out into Copenhagen harbour. And so it's bringing chilled water from deep under the surface there to pre-cool water that then goes into the district cooling system. So you're using this amazing obviously free resource to boost the efficiency of the system. And so then they're expanding this district cooling network to primarily things like shopping centers or hotels or buildings that have data centers. So that again they don't envision it to be city wide. And that's primarily because you know there's been forecasts for what Copenhagen is going to experience in a world with climate change and they do expect that temperatures are going to increase and so there will be increasing demand for cooling. I mean people really don't think of it that way because this summer is pretty fleeting in Copenhagen but there is still a demand for cooling.

Chris: So are you saying that they're using the waste heat during the summer to run this district cooling system?

Justin: In part yes I was about to get to that. So there's a very cool balancing service there where obviously the heat demand goes down in summer but the CHP plants are operating of course so part of that surplus heat in the summer is redirected to steam powered chillers or the district cooling system. So it's just this great kind of synergy where you can use redirect the waste heat from the CHP plants and direct it to the district cooling system.

Chris: Right. Makes perfect sense. So speaking of cool technology I was particularly intrigued by I guess foreign minister Lidegaard's vision for a super grid that would interconnect the countries around the North Sea. So Denmark, the U.K., the Netherlands and Norway plus some large offshore wind farms in the North Sea and the cost would all be shared by the participating countries. Now that's a pretty ambitious idea. And you know we should be skeptical. We've already seen a few such proposals like the desert tech super grid plan fail do you think this super grid concept around the North Sea is really politically and economically feasible?

Justin: I would say absolutely. Absolutely. In part because it's already happening certainly in Northern Europe. If you're talking continent wide, EU wide, I still think it's going to happen but it's going to take much longer. You know Denmark already has interconnections with Norway with Sweden with Germany and that is how of course it's able to send its surplus wind to its neighbors at times when the incredibly high wind production is exceeding demand in the country but Denmark has very ambitious plans to add additional interconnections. So there's going to be interconnect to the Netherlands. And just last month it was Denmark's grid operator it's called energinet.dk the board of the Danish grid operator they approved plans for two new interconnects. So there's going to be an additional one a high voltage overhead line connecting to Germany. But even more ambitious was a interconnect approved to the UK. So they're going to build a 700 kilometer subsea and land cable called the Viking line connecting the west coast of Denmark to the east coast of the UK. And it's so funny that you look at a map of northern Europe the Scandinavian countries and Denmark you know they really are blessed because you look at the interconnects and where Denmark is placed in they are almost like the perfect center of a wheel with this you know spokes going out to Norway Sweden Germany and the U.K.. And so they really are geographically blessed. You know I was just in Berlin recently on a reporting trip and we made a stop at a an outfit called the renewables grid initiative and had a briefing there. And they were describing very ambitious plans that the EU has for a continent wide grid and this includes of course you know interconnects are the Iberian Peninsula you know the plentiful sun and wind in Spain and Portugal to be able to be taken up into France and beyond. And being able to carry the plentiful surplus hydro from Norway across Denmark and south.

Chris: Which were some people see as potentially the battery of Europe.

Justin: Exactly. Exactly. And so you know this briefing you know there were very extensive plans under way and they're trying to prioritize the best routes to put in place the high voltage DC lines. So you know both planning and funding available resources from the EU to get the system built.

Chris: That's fantastic. I just love that whole idea because you know one of the one of the biggest objections or criticisms or potentially just even a straight tactical obstacle that people talk about in energy transition is the difficulty of running a grid with variable renewables and one of the biggest solutions to that is more interconnection more ability to import and export from other areas because typically in one place the wind isn't blowing but another place it is and if you can ship that power around you can balance things out a lot better. So this is just really a fantastic possibility there. I think that I think it's pretty exciting.

Justin: Definitely.

Chris: Why do you think Denmark has been so successful with its energy transition strategy I mean from the early 70s right up to the present very consistently while other European countries have just been unable to set such ambitious targets as Denmark has or even be as consistent in executing its plans as Denmark has?

Justin: Again it's a great question. You know I've already talked about even in Denmark there have been political challenges and of course you know even in Germany there are obvious political challenges. I mean the the planning of course for the Energiewende they're not only trying to figure out the transport component of that but you know there are obvious challenges to trying to figure out how to shut down economically secure way the lignite industry in that country. So you know there are obvious obvious challenges in each political context is going to be difficult. But again I think I just have to return to I guess I would refer to it as a three legged stool before political consensus, the buy in from industry, and having the citizens as financial investors in the transition. All of those complement each other in Denmark really beautifully and it's just that you know you have time and again really innovative solutions that are coming up in the Danish context which really give me hope that it has staying power so you have these long term targets on the horizon and have the 2050 fossil fuel free target. So you have stability and certainty which you know these companies always so desperately want to have the political stability and to have the policy certainty. And so because of that the entrepreneurs and the innovators in Denmark are free to do what they do best. And so you know one of the favorite examples in the book I have a couple of them that describe these case studies and there's one that's this it's called the Billund bio-refinery. And so this is again it's in a small village but they are building a plant that was basically taking what is normally seen as a waste product wastewater from basically sewage turning it in to power in to heat for the district heating system but the great thing on that is that Denmark has a very strong legacy of not on public private partnerships but also great public sector entrepreneurship. So this bio-refinery it's publicly owned it's it's owned by the local municipality. But these really innovative folks and they find ways to be great capitalists. You know it's funny thinking that because of how Denmark has come up in our own presidential campaign talking about democratic socialism and Bernie Sanders just talked about you know admiring Denmark but I think it misses just how good Danes are at finding these really innovative solutions so in Danish law you aren't allowed to make a profit off of heat. And so.

Chris: Really?

Justin: Yeah it's funny to think of it but it and this happens pretty regularly in the power and heating sector context. So and the solution here was so because you couldn't make profit off of heat this Billund biorefinery they created a spinoff called Billund Energy and that was once that they would be able to make more money from actually sending more power to the grid. But two because this particular model was in such high demand in Denmark and in the EU because of rules about you're not able to send organic material to the landfill. So you're going to have to find a way to either compost or to harness for energy this organic waste so this bio refinery in Denmark this refinery it created this spinoff, and they did it in part because they want to be a consultancy for not only small municipalities in Denmark but for cities around Europe who are looking to them for their expertise. So there is such an embedding in the political and business culture now of these strong green practices of these clean tech solutions that it's almost like Denmark can't and won't go back. You know it's just there's such there's such momentum with the energy transition at this point that it's almost like it's self-reinforcing. You know one reinforces the other because politicians know that green exports are such a strong part of the market and the Danish clean tech entrepreneurs know they have policy certainty. They know that they can take risks and take chances and to continually to push for new markets.

Chris: I mean that's just a fascinating little anecdote but I guess maybe the short version of that would be that it's very much a cultural thing. It has to do with cultural values cultural attitudes the political economy that all has to do with human arrangements fundamentally.

Justin: Yeah well maybe the last point I'll make is this I think there's sometimes a misunderstanding about you know people think of Copenhagen or they think of Denmark and you know they hear about the achievments it's made and they think oh that's just Denmark you know thinking as if it's just Danes by nature are greener or inherently better environmentalists than the rest of us. And I don't really think of it that way from having lived there and I don't think Danes think of it that way. You know I gave the example earlier of the biking culture in Denmark. You know there have been studies done surveys done of commuters in Copenhagen and when they're asked "why do you bike?" it's not because they're not doing it to save the environment they're not doing it to reduce emissions or at least you know those