Budget provides boost to green business development

Date: 5 December 2014

The Danish Ministry of Climate, Energy and Building:

With the unveiling of Budget 2015, the Government, Red-Green Alliance and the Socialist People’s Party have brought Denmark closer to the goal of lowering greenhouse gas emissions by 40% by the year 2020.

The budget contains measures for initiating projects within geothermal energy and heat pumps in addition to a total investment of 551.9 million kr. earmarked for climate initiatives in the period 2015-2019.

The Government, together with the parties behind the Danish Climate Act, has set a goal to reduce Denmark’s greenhouse gas emissions by 40% by 2020 compared to 1990 levels. According to the Danish Energy Agency’s latest figures, we still need reductions of some 2 million tons in 2020 in order to achieve this goal. With the new budget for 2015, the government, Red-Green Alliance and the Socialist People’s Party will put into effect initiatives aimed at bringing Denmark a step closer to that target.

“Climate challenges are serious and require action now. With this latest budget we have created further impetus for Denmark’s transition to a green business model. With the necessary climate funding and concrete action for transforming the energy system in place, we have moved one step closer to a fossil-free society.” says Minister for Climate, Energy and Building Rasmus Helveg Petersen.

Among the initiatives are initiatives which will encourage the initiation projects of large heat pumps in the district heating system. Heat pumps can be used to store energy by using electricity to recover heat from renewable sources when power prices are low due to high production from wind turbines or other sources. This will help balancing the power system in Denmark in a future with more fluctuating power production. A total of 67.2 million kr. has been allocated towards promoting the use of heat pumps.

“Wind energy development in Denmark is going exceptionally well. We must now ensure that the energy system can keep pace with this development. Denmark is in the process of creating a world-class intelligent energy system, and it is in this area that electrically driven heat pumps will play a central role,“ says Minister for Climate, Energy and Building Rasmus Helveg Petersen.

Further to this, the budget will also support the expansion of geothermal energy. There are many places in Denmark where the potential to collect heat from the ground is huge. Unfortunately, drilling is financially risky. Therefore, a geothermal fund is to be established aimed at reducing the exposure of geothermal energy companies to financial risks. The scheme will receive an initial public investment of 60.0 million kr.

In addition to the heating proposals contained in the budget, funds have also been earmarked for the promotion of energy saving and climate initiatives. The years 2015 and 2016 will see a total of 20 million kr. spent on running campaigns offering advice and information on energy conservation as well as the dissemination of information regarding the transition to a fossil free energy system. Further to this, an overall reserve of 151.9 million kr. has been set aside to fund new climate initiatives in the years 2015-2017. The allocation of funds shall be agreed between the parties behind the budget in early 2015. Finally, a total of 400 million kr. is to fund further initiatives in 2018 and 2019. The parties have agreed to ask from the new independent Climate Council which is to be established from the beginning of next year for recommendations on how best to put these funds to use.

Facts about climate measures in the Budget for 2015:
• A total of 55.2 million kr. has been allocated for a scheme supporting projects with large-scale heat pumps over the years 2015 -2016. Further to this, a task force will be helping the local CHP plants with advice for the specific heat pump solutions. All in all, a total of 12 million kr. will be allocated to this task force over the period 2015 – 2017.
• 60.9 million kr. will be allocated to a geothermal fund with the funds being released over a period of 3 years. 60 million kr. of this amount will represent the fund’s liquidity. 0.3 millions kr. will be allocated annually (2015-2017) to fund an expert panel.
• It is estimated that the proposed measures regarding heat pumps and geothermal energy will reduce greenhouse gas emissions by up to 170,000 tonnes of CO2 equivalent by 2020.
• 10 million kr. will be allocated annually in the years 2015 and 2016 for campaigns offering advice and information on energy saving. These activities aimed at reducing energy consumption and promoting energy saving, together with information concerning the conversion of the energy system, are expected to increase public participation and to lead to further democratic debate on the future of Danish energy.
• A total of151.9 million kr. has been set aside for climate initiatives over the period 2015-2017. The funds will be used to finance new initiatives with a focus on cost-effectiveness so as to maximize the impact on the climate. The government, Red-Green Alliance and the Socialist People’s Party will meet in early 2015 to agree the specifics of the allocations of the funds.
• In relation to the agreements on the 2014 growth plan and the cancellation of a proposed new energy supply tax, it has been agreed to set aside 150 million kr. in 2018 and 250 million kr. in 2019 for further climate initiatives. The parties have agreed to ask from the new independent Climate Council which is to be established from the beginning of next year for recommendations on how best to put these funds to use. On the basis of these recommendations a decision will be made on the specific use of the funds.