Environment Picture

Tiny nation’s robust clean energy exports hold clues to remaking Michigan’s economy

MEC Communications Director Hugh McDiarmid, Jr. spent six days in Denmark in October. This is his report.
Copenhagen, Denmark—While policy makers in Washington and Lansing fight tooth-and-nail over how much support to provide clean energy industries, Denmark is charging full-speed ahead with a formidable array of government-backed technology innovations that have buoyed its economy, galvanized its citizens and made it a key exporter of renewable power ideas and hardware.

Whether you admire or distrust the Danish approach that involves extensive government partnership and involvement with its citizens and private industry, one thing is clear: it has made the island nation a formidable global economic force that belies its tiny size.

I reached that conclusion during a six-day visit as part of a Michigan delegation hosted by the Danish Climate Consortium, a public/private partnership formed to promote the nation’s clean technology businesses that are contributing to climate change solutions.

What about Michigan?
What does any of this have to do with Michigan and the United States?

Our state has moved tentatively, but surely, toward establishing policies and incentives designed to nurture burgeoning clean energy industries. They include wind turbine hardware manufacturers, makers of solar energy components, advanced battery technology innovators and energy efficiency systems and products. These policies are vital to helping the state replace some of the automobile manufacturing jobs that disappeared during the last decade and saddled Michigan with a dismal economy and the highest unemployment rate in the nation.

Nationally, Congress is currently debating how best to create good jobs and economic growth with technologies and policies that protect the planet from pollution and heat-trapping greenhouse gasses.

Denmark has been where we are now. The nation embarked on a course toward sustainability and energy independence after the Arab oil embargo of 1973 exposed the weakness that resulted from total dependence on imported fuels. The embargo nearly brought the nation to its knees, and its citizens vowed “never again!”

Renewable Mecca
Today, the country uses renewable energy to power 30% of its electricity needs. At first blush, it’s costly power—among the highest energy rates in the world. But it’s offset by amazing efficiencies that reduce energy consumption without sacrificing comfort or convenience. And it’s been a catalyst for clean energy technology development that leads the world in many key areas and provides nearly full employment for Danes.

The result of this focus on sustainable technology is that Denmark accounts for about 1% of the world’s exports—a share that is about 14 times higher than its proportional share of the world’s population.

 “We are such a large exporter of energy technologies that when you talk about (high energy costs and taxes), we say, ‘OK, we can see a payback,’” said Hans Peter Slente of the Confederation of Danish Industries—the functional equivalent of the U.S. Chamber of Commerce.

The burgeoning renewable energy industry in Denmark extends to companies that service the industry: testing and technological support labs, financing and regulatory specialists, environmental analysts and firms that specialize in connecting the power to the grid.

Danish companies measure their success over years and decades, not based on monthly profits or quarterly reports, we were repeatedly told. “Entrepreneurs here are looking long term,” said Slente. “We have to invest in (clean energy) because you can see that the oil runs out in the future, regardless of what else you believe.”

Worthy of note
Notwithstanding significant differences in scale and political structure—key aspects of the Danish experience, policies and philosophy could help Michigan and the United States chart a sensible course toward energy independence and sustainable growth.

Danes are closer to and more familiar with their power sources, which leads to a greater understanding of where their electricity originates and what it looks like. Small coal-fired power plants are scattered throughout the countryside, serving small towns. Many of the nation’s 5,000 wind turbines serve individual neighborhoods and are owned by small groups of private citizens. Extensive district systems capture heat from industrial facilities and power production to heat individual homes and businesses in Denmark’s populated areas. Individual furnaces in homes or businesses are rare in places like Copenhagen, where the district heating system powers 98% of the market.

A national sustainability ethic is ingrained in citizens. The nation’s five million people are united behind a philosophy that using less fossil fuel is imperative, and conservation of resources is second nature. Even with no curb side recycling pickup, the nation’s residential recycling rate is 45%. Overall, Denmark recycles 65% of its waste stream and burns 25% of it in incinerators that produce heat and energy to homes and businesses.

Tax and surcharge rates are structured to reward decisions that protect the economy and the environment in the long term. For example, the waste disposal fees for Vestfrorbraending, an incineration facility near Copenhagen, are $75/ton (U.S. equivalent) for landfilled waste and $66 for incinerated waste; but goods for recycling are accepted for free. Another example: Extensive taxes on fossil fuels like gasoline help fund an extensive network of public transit that includes bicycles, busses and trains.

The nation’s infrastructure is built to encourage efficiency and smart energy options. An example: Separate, dedicated bicycle lanes with their own curbs facilitate a rush hour with thousands of commuters cycling to work in business suits, dresses and even fur coats. High gas prices encourage the cyclists, but so does high-density development in places like Copenhagen where businesses, shops and homes are close to one another. “It’s just the easiest, fastest way to get around town,” our bus driver told us.

At the same time, the nation is pushing the boundaries of wind, biomass and solar power, it continues to lean on traditional power sources like coal for much of its electric power generation. Opposition to coal plants and facilities like the massive waste incinerator we toured seems muted in comparison to the United States. Why? That remains unclear, but it seems to me that the power companies here are pulling out all the stops to maximize energy efficiency, wind power and other clean resources—a strategy that may give them more cachet when asking to burn coal. At the Dong Energy power plant we toured, the company had committed to burning straw and wood pellets along with coal, and they were in the process of erecting two, 4 megawatt (MW) wind turbines right next to their plant.

The four working days our Michigan delegation spent in Denmark were filled with dawn-to-dusk meetings with power producers, private companies and industries, union officials and government leaders.

The Confederation of Industries had requested particular types of participants for the delegation—and I fit the ticket as the environmental communicator they wanted. The others were Liesl Clark from the Michigan Department of Energy, Labor and Economic Growth (DELEG); Trevor Lauer from DTE Energy; Mary Lou Benecke from Dow Corning; Tom Bowes from the International Brotherhood of Electrical Workers; Gregory Ioanidis from ITC Holdings and Jeff Kart from the Bay City Times.

Everyone agreed there were valuable practices, technologies and lessons worth bringing home to Michigan.

“The Danish citizenry and government are fully supporting—financial, policy wise and promotionally—their nation’s top job clean energy manufacturers to stand up to the challenge of globalization and competition from China and other low-cost labor markets,” said Clark, deputy director of DELEG. “If Michigan and the U.S. are not committed to doing the same, our jobs will move to nations that support their industries.”

Benecke, from Dow Corning, was especially intrigued by the parallels between her company’s work and that of DanfossA/S, a research, development and production firm specializing in heating and cooling systems.

“Danfoss is headquartered in Denmark, but they have operations around the world, including here in the Midwest,” said Benecke. “Their corporate social responsibility commitment focuses on climate issues, sustainable business development and one particular project that I plan to learn more about: ProjectZero. This is an effort to make the city of Sønderborg, Denmark, the first large sustainable and CO2 neutral area in Europe by 2029. The goal is set to be reached via energy-savings and a switch to state-of-the-art energy forms. I think we could modify this program and apply it to Michigan-based ideas—a community college campus, elementary school, neighborhood or business district.”

Will it work here?
The delegation also had concerns about how much of the Denmark financial and governmental structure Americans would be willing to adopt.

DTE Energy’s Lauer praised the nation for maximizing their work toward energy independence, exports, green job creation and low unemployment. But he noted that, “Government influence in the energy sector is pervasive. They—not the marketplace—pick winning and losing technologies. As a consequence, the Danish people pay the highest energy rates and per capita taxes in the world. They seem to have created a collective society that is ‘OK’ with this government influence. The question I pose: ‘Is this system acceptable to the American people?’”

The answer is not simple. Americans have historically been willing to fund collective efforts like public school systems, national defense, the federal highway system, the electrification of almost every home and business.

In Michigan, voters have a strong tradition of funding environmental bond issues that clean up polluted sites and enhance the state’s beauty and natural resources.

Danish citizens grumble frequently about high taxes, but they also see the benefits of their collective investments every day—in strong and safe public transit systems, tremendous export markets, nearly full employment and a standard of living that ranks near the top of European nations.

Up to us
It is up to us—the Michigan Environmental Council and our allies across this state and nation—to show policymakers and citizens the benefits provided by strong public investments in clean energy technologies and other cutting-edge solutions to our economic challenges.

Lessons from Denmark could provide some surprisingly adaptable answers to those challenges.

Denmark by the numbers
1 Denmark’s rank in the University of Michigan’s Institute for Social Research’s World Values Survey [it concluded that Danes are the happiest people on earth]
3.5 Unemployment rate in Denmark [they are very upset that it has become this high]
65 Percentage of waste stream that is recycled [Michigan is less than 20%]
25 Different categories of materials Danes sort at recycling stations
7.35 Cost in American dollars of a gallon of gasoline
30 Percentage of Danish electricity generated from renewable sources [Michigan hopes to hit 10% by 2015]
50 Percentage of electric power Denmark expects to produce from wind turbines alone by 2020
95 Percent of the world’s offshore wind turbines built in Denmark
22,000 Number of Danes employed in wind energy industries

A lesson for Lansing & Washington?
Supportive public policies, incentives shaped world’s top wind industry

Denmark has more than 5,000 wind turbines with a capacity of 3,100 megawatts. They supply 24% of the nation’s electricity needs during normal wind conditions. The Danes employ 22,000 in the wind industry, exporting 30% of the nation’s wind turbines and 95% of offshore turbines. Six key policy and financial incentives that helped the nation of 5 million people lead the world in this technology:
  • Public support for research, development and demonstration of technologies
  • Investment grants for standardized equipment
  • Favorable prices for electricity fed into the public grid
  • Tax incentives
  • A suitable legislative and planning framework supporting local initiatives
  • Agreements between government and the utilities on wind power

Source: Danish Energy Agency
-Hugh McDiarmid, Jr.
RELATED TOPICS: clean energy, wind power
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