GREEN GROWTH: FROM RELIGION TO REALITY - Sustainia

Chapter 4IntroductionIn 2006 the Danish Prime Minister presented the ambitiousgoal of eliminating fossil fuels from the Danish energymix. The recently published “Energy Strategy 2050”sets a target date of 2050 for achieving that goal andoutlines a roadmap for getting there. What has enabledDenmark to pursue a strategy of eliminating fossil fuelsfrom its economy without sacrificing growth? And whydid Denmark adopt that objective? The answer to thefirst question is that a stable coalition between industry,civil society and government was formed following theoil crisis in the 1970s, and in a concerted effort it drove arelatively coherent transformation of the Danish energysector over the following 30 years – today enabling thepursuit of fossil-fuel independence. The answer to thesecond question is that the emergence of a Danish cleantechsector, coupled with the building global awareness ofdisruptive climate change and related emerging clean techmarkets, linked the policy objectives of energy security,economic growth and climate change mitigation underthe overarching goal of realizing a fossil-free economy.This paper will divide the story of Danish energypolicy into four phases and argue that the policies of thefirst two periods fostered the industry, infrastructure andenergy mix that, combined with domestic political pressureand international developments, caused the policychange that enabled the fourth, emerging period.The first part of the story – covered below in “greengrowth part I: energy security” – emerges in response toa highly oil-dependant economy shocked by the oil crisesof the 1970s. This led to the first explicit formulation ofDanish energy policy. This first phase of the story is characterizedby the primary political objective of achievingenergy security, thus insulating the economy from futureenergy price shocks and sustaining economic growth.The second part of the story – covered below in “greengrowth Part II: The Auken years” – emerges from the electionin 1993 and is characterized by the increasing importanceof environmental priorities pursued by the newminister for energy and the environment, Svend Auken– not as a substitute for energy security, but as a layer ontop of it. The policies pursued during the first two partsof the story had the derivative effect of decoupling emissionsand economic growth.1 As such we characterize thisperiod as green growth in the sense of growth compatiblewith emissions reductions. The third part of the story –covered in “green growth part III: liberalization” – is a sortof intermezzo in the overall story of Danish energy policy.It emerges from a combination of EU liberalization pressureand the 2001 election of a right-wing governmenteager to further this liberalization agenda. The fourth andcurrently emerging part of the story – covered below in“green growth part IV: The fossil-free economy” – is initiatedby the same right wing government’s sudden shift inenergy policy in 2006 toward elimination of fossil fuelsfrom the energy mix. This emerging phase is characterizedby the political objective of moving away from a fossilfuel-based economy, with the explicit objective of supportinga green export economy. As such, we characterizethe emergence of this fourth part of the story as growthdriven by emissions reductions.Throughout the story, economic growth and energysecurity can be considered the primary policy objectives.Throughout the story, economic growth and energysecurity can be considered the primary policy objectives.But where emissions reductions are a derivative effect inthe first parts of the story, they are seen as a vehicle of theprimary objectives in the final part of the story.1 Green growth part I: energy security(1973 – 1993)1.1 Initial policy driversThe first Danish energy plan of 1976 emerged in thecontext of an economy highly dependent on oil, a civilsociety highly supportive of wind energy and critical ofnuclear energy, and the limitations and opportunities inherentin Danish geography and existing infrastructure.Its primary objective was to achieve energy security foran economy highly dependent on imports of oil, in orderto insulate the economy against any future shocks like theone caused by the oil crises of the 1970s. In other words,energy security was seen as a prerequisite for economicstability and growth.1 Emissions in this case arecomputed according to the IPCCmethod, which does not reflectthe emissions “hidden” in theoutsourcing of heavy industries toAsia, etc., as a result of globalization.For a discussion of this issuesee Wang and Watson (2008).This caveat of course applies to allwestern economies.32