I wrote this speech to Danish Minister for Climate, Energy and Building, Martin Lidegaard to be held at ‘EU Towards a Green Economy’ by Confederation of Danish Industry, Copenhagen, Denmark, May 15 2013.
Business friendly climate for climate friendly business
I believe strongly in facts based politics – and so let me start by providing you with a few facts about Denmark:
Denmark is at the top of the lists of Countries Best for Business AND Best Performer on Climate Change.
Excluding tax Denmark has electricity prices below the European average AND we are in the midst of an ambitious transition to a clean energy future with high price certainty and energy security.
Just yesterday, the report “Productivity in Green Business” showed that green businesses in Denmark are more productive than the Danish business average. AND hard facts tell a sobering story:
This transforming is strengthening our global competitiveness. Surprising? Well, not to me. But one might get a bit confused given the messaging that European industry is voicing. The truth is this: The Danish energy transition is not just about saving the Planet for generations to come – although this would seem a rather fair rationale in and of itself.
It is about securing the foundation of our welfare and future growth. Because the economic rationale behind our energy transition is in fact quite clear: By diversifying our energy supply our sensitivity towards price volatility is limited. That is good for our competitiveness. By investing in our energy infrastructure, including cross border connectivity, we open up markets and allow for competition to push consumer prices down. That is good for our competitiveness. AND by investing in energy efficiency and energy savings in our businesses and industry we invest in a lasting improvement of our competitiveness that no tax reduction will ever deliver.
It is as simple as that.
AND my vantage point there is absolutely no doubt that in addition to these very concrete effects, Denmark serves as an inspiration to countries and governments across the globe. From China to South Africa. From Mexico to Vietnam. We are a world leader in the green transition. As a country we are looked to for guidance as others move to embrace the energy future.
My inbox is full of invitation from colleagues across the globe who wants to do what we are doing; who wants to learn from our experience. They want to walk in the footsteps that you have been so instrumental in creating – AND that will lead them to your sales departments. You will have more competition, but you will also be more than a few steps ahead.
The Danish export of energy technology has increased from 2011 to 2012. The European Union is our greatest export market with some 60 percent of total exports AND that market will continue to expand.Latest, the decision of the President Hollande to limit the use of nuclear energy in France by almost one third and replace it with renewable energy will add to the market for Danish energy technology.
I am convinced that you will do more than fine, but there are still barriers to overcome. We need to focus on fully implementing the European Union’s internal energy market. We need to invest massively in our energy infrastructure and grid connectivity. We need to limit the political risk for institutional investors in the energy sector by establishing long term and coherent regulatory schemes. AND we need to explain what we are doing to the public in order to strengthen public support.
The Nordic Electricity Market, Northpool, has brought our energy prices down and shown the importance of good connections to neighbooring countries. Hydropower mixes well with a lot of things, not least wind – and so it helps in tackling the challenge we have in balancing our variable wind resource. But it is not done with better grid connections to Norway and Sweden. We need to develop a smart energy system.
I have enjoyed you support for our new Smart Grid strategy. Thank you for that.
I think the strategy was a good example of how innovative policymaking involves industry and stakeholders. We need your input when we design our future energy system. And we need to think of the consumers. There is no sense in consumers putting up smart meters if it is not followed by a choice of products that makes sense based on the results of the smart meters. They have to be able to change something based on what they see on the meter. The Smart Grid is probably more about coordination and cooperation than lawmaking.
It will put Danish companies in front on a global market estimated to grow three figure billions within the next 10 to 15 years. That is how we create a business friendly climate with climate friendly business!
Just as we have done in Denmark, we also need European industry and consumers, to embrace the transition and work for: better energy infrastructure across borders, less bottlenecks with better integration of energy sources and more choice left to consumers about who they want to buy their energy from and when.
Europe is moving towards a greener and more integrated energy future. Through the Northern European Energy Dialogue – NEED – I am working with colleagues to bring to life infrastructure projects that deliver a socio-economical balance and a balanced distribution of costs and benefits between us. And we are working hard to secure the full implementation of the third energy package.
Developing the Danish energy infrastructure has been a matter of political consensus. Instead of an ideological struggle changing sides at every election, it has been based on socio-economic calculations and financed directly on the consumer’s energy bill.
That stability attracts investors because they know and believe in the long term energy goals and the stable support schemes. In this way we ensure stable investment flows to energy infrastructure at affordable prices. And that is how we create a business friendly climate with climate friendly business!
We face a huge need for investments in new energy infrastructure throughout Europe. Old power plants and grid lines need to be replaced. Investors and industry are tuned in. But no clear political signals are given at the European level. We have agreed on a long term target for a low-carbon future – and the European Commission has delivered a progression path by which we will get there in a cost effective manner. We agree that the Emission Trading System should remain the backbone in the European climate and energy system. AND yet signals to the market remain mixed – most recently demonstrated with the vote on the ETS in the European Parliament.
The price of carbon as well as coal has plummeted, while oil and gas prices remain high in Europe. In the short term coal-fired generation as has become more attractive. But investing in coal driven power plants remains a risky long term investment.
The result is clear: Investments in new energy generation capacity in Europe is held back. The European Union must provide a stable and predictable framework for long-term investments – especially for production capacity and infrastructure. We must do this to reduce the costs of the energy transition that we have embarked on and to lower energy prices in Europe. We are working towards that goal.
BUT, there is no business friendly climate without the customers on board. There is not political stability without the voters on board. AND there is no green transition without consumers on board. The public support for what we do is vital – and so far the numbers are promising: Almost half of the Danish population wants more climate policy action from the politicians – only 20 percent do not. 2 out of 3 Danes want to live and consume more climate friendly products. BUT almost half of the Danish population doesn’t know what to do, which products to buy and how to prioritise their choices.
Those are the conclusions of two surveys by WWF and Concito.
If we are to continue enjoying public support for the energy transition, the public needs something in return: Consumers need a clear and understandable choice of what to buy, what to do and how to do it. They need to know that green energy is not expensive energy. They need to feel that they are a part of the transition.
A final point that I want to leave you with is this: No country is an energy island. No business is a Robinson Crusoe. We won’t get there by ourselves.
That is why the Danish EU presidency with your help got an agreement on the Energy Efficiency Directive that has put the EU back on the energy saving track.
Now our focus is on promoting an ambitious European climate- and energy framework for 2030 containing three binding targets on greenhouse gas reductions, renewable energy and energy efficiency. We need clear political priorities and a coherent and stable regulatory framework.
Our job is to make the European energy transition an obvious choice for investors and consumers: Choosing energy security over foreign sources of fossil fuels from unstable regions of the world. Choosing long term economic growth over short term advantages AND choosing the energy sources of the future over coal
That is how we combine a business friendly climate with climate friendly business!