COPENHAGEN, Denmark -- Denmark could become one of the first countries in the world to completely stop using oil, gas and coal by 2050 if it boosts wind production by as much as six times and hikes taxes on fossil fuels tenfold, a government-appointed commission said.

Denmark should increase its wind power capacity to between 10,000 and 18,500 megawatts in 2050 -- most of it by installing offshore turbines -- from the current capacity of slightly more than 3,000 megawatts, the Danish Commission on Climate Change Policy said in its report. At the same time, the country should impose a tax on fossil fuels that would rise from 5 Danish crowns per gigajoule next year to 50 crowns by 2030.

"My government will study the recommendations very closely and will present a road map setting a date for freeing ourselves from fossil fuels," Danish Prime Minister Lars Løkke Rasmussen said at a conference this week in Copenhagen. "It will be one of the first road maps in the world on how to become fully independent of fossil fuels. A plan for a transition like this will touch every part of society and every corner of politics. We are facing tough choices."

The commission, established in 2008 by the government, was composed of 10 independent experts from universities and the Organisation for Economic Co-operation and Development (OECD). It was tasked with researching how Denmark could cut greenhouse gas emissions by 80 to 95 percent by 2050 and its consumption of fossil fuels from 80 percent of current energy demand to zero.

The commission said renouncing fossil fuels requires "a total conversion of the Danish energy system." That means the change must be gradual, but needs to begin now so that new infrastructure investments can be made as old infrastructure wears out, thus minimizing costs. The commission said 2050 was a realistic target year because most of the necessary technology is already known today and the current power plants will in any case become too old and need to be replaced by then.

The commission said going fossil fuel-free would reduce Denmark's greenhouse gas emissions by 75 percent compared with 1990 levels. To achieve a reduction of 80 percent or more would require additional efforts, mainly cutting emissions in agriculture.

Concerns about jobs and debt
"It is possible to achieve, but we must balance a number of priorities such as employment and the debt," the prime minister said at the World Climate Solutions conference. "This can't be achieved today or tomorrow, but I know that we need to get started. We already have one of the most energy-efficient economies in the world. Growth and prosperity are possible without increasing energy consumption. We want to expand the use of green energy on a massive scale, making it the cornerstone of a green economy."

Between 40 and 70 percent of Denmark's energy consumption will need to be met by electricity in 2050, compared with 20 percent today, the commission said. Fluctuating power because of the prevalence of offshore wind means the country will need to install intelligent electricity meters, time-controlled recharging ports for electric cars and heat pumps that would supplement heat storage systems.

International interconnectors will have to be expanded so electricity can be exported easily when the wind blows too much in Denmark and imported when it doesn't. The country already does that now using water reservoirs from hydro power plants in Sweden and Norway as virtual batteries to store excess wind electricity, but will need to do much more of it.

"The challenge is to making these technologies work together to get the energy when it's needed and where it's needed," said Katherine Richardson, the commission's chairwoman.

A network of electric cars powered by batteries that can be easily replaced could also serve as storage for fluctuating wind power. DONG Energy, Denmark's biggest utility and also its biggest carbon dioxide polluter, is working on a pilot program with Better Place to test the concept. By next fall, the first cars and battery replacement stations will operate in Denmark and Israel.

"The report is very much in line with what DONG has decided a couple of years back as our company strategy -- turning away from coal and using wind, biomass and gas," the company's CEO, Anders Eldrup, told the conference. "We share the view that more of society will become electrified."

Renault is building the cars for the Better Place program in Turkey. They will be tested in Israel and Denmark to see how the battery operates in hot and cold climates.

"In the beginning, it will be rather limited numbers," Eldrup said. "The plant can produce 100,000 cars a year, but that won't be the case in the first couple of years. We don't know how many people are going to like the car, so there's a risk. The consumer will decide."

A proposed ban on oil furnaces
DONG is also the world's largest operator of offshore wind turbines, currently building a 400-megawatt farm in Denmark and the 1,000-megawatt London Array behemoth in the United Kingdom with partners E.ON and Masdar. According to Eldrup, Denmark could lift its wind power consumption from 20 percent currently to 50 percent by 2050, as envisioned by the climate change policy commission.

"If we build 200 megawatts each year, that's not impossible to handle," he said. "It's nice to have a target for 2050, but it's not enough. We will have to have short-term milestones. And it will be costly in the short term, but in the long term, fossil fuel is only going to get more and more expensive."

But no amount of wind power will wean Denmark off fossil fuels if energy consumption in homes, offices, transportation and industry doesn't get more efficient, the commission said. Houses with have to be heated to the same temperature using only half the energy used today. Overall, the country must cut energy consumption by 25 percent through efficiency measures.

"We need to use our energy more effectively," Richardson said. "We use over 40 percent more energy that we need."

The report says switching to electric cars would by itself be a huge leap in energy efficiency, but notes that electric vehicles and especially their batteries are still insufficiently developed and cannot yet serve as a valid replacement for gasoline and diesel vehicles.

Some of the efficiency gains will have to be forced on citizens by the government. The commission proposed that the installation of new oil furnaces be banned from 2015. Property owners would be required to pay into an "energy savings account" an amount determined by the size of the building and its energy standard, with buildings receiving the top rating exempt. The money could be used later to help finance renovations.

Taxes on fossil fuels and incentives for biomass
Biomass will become hugely important, both to make biofuels for transportation and to be used in power plants as a backup for wind turbines, the commission said. Biomass and waste incineration could supply as little as 30 percent or as much as 70 percent of Denmark's energy, depending on how prices develop.

"A number of power plants can already use biomass," the report says. "Biomass also has the advantage that it can be stored. This makes biomass a valuable energy source which is likely to be increasingly utilized."

Yet Denmark will not be able to produce all the biomass it will need in 2050.

"Even if most Danish farmland was converted to production of biofuels, it would be far from sufficient to meet the future energy demand in Denmark," the report says. "An energy system based extensively on biomass would become dependent both on considerable imports and on trends in the price of biomass."

To discourage the use of fossil fuels, the commission proposed phasing in a tax that would start at 5 Danish crowns per gigajoule next year. Increasing it to 20 crowns per gigajoule in 2020 would lead to the demise of coal-fired power plants and prompt consumers to replace oil-fired heating furnaces with heat pumps, it said.

Predictably, the business lobby had reservations about new taxes in a country that already has the highest income taxes in the OECD.

"We don't need new taxes that don't create investments," said Ole Krog, vice president at the Confederation of Danish Industry. "The parliament needs to find the right balance between green energy and economic responsibility."

First higher prices, then savings and growth
The commission acknowledged that businesses exposed to international competition could face a serious challenge because of the tax but said that phasing it in would ameliorate the problem. In fact, the authors argued that the tax should rise even higher, to 50 Danish crowns per gigajoule by 2030.

It also recommended a review of current tax breaks given to biomass used in heating and a reconsideration of car taxes and road tolls. The tax break for electric cars should not run out in 2015 as currently planned, but should be limited to 100,000 cars, it said.

How much will all this cost?

Phasing out coal, oil and gas won't cost that much in the long term, but only if the process is begun soon, the commission said. Increased demand for energy will anyway make fossil fuels more expensive just as advances in technology will make renewable energy cheaper. If Denmark doesn't take a long-term approach to eliminating fossil fuels, then when the country finally does have to live up to an international target to reduce CO2 by 80 to 95 percent, it will have to pay dearly for allowances and credits from other countries, the authors said.

At first, Danes will see higher prices on electricity, heating and transportation because of the new taxes and investments. The new taxes would by themselves increase the gasoline price by 8 percent in Denmark in 2020, for example. But gradually higher prices will be offset by savings from efficiency improvements, the authors argued.

"There will be economic growth," Richardson said. "The difference between doing it with or without fossil fuels is about 0.5 percent of gross national product in 2050. That's the cost of insurance to keep money in this country, creating jobs here instead of sending it to a few countries somewhere else in the world to get oil and gas."

The commission said it didn't consider the use of nuclear power because "there is no indication that nuclear power will be economically competitive compared with offshore wind turbines, especially if the cost of storage of waste and decommissioning are included." In addition, nuclear is not well-suited for a system that has other fluctuating energy supplies, as is expected in a system with a large proportion of wind energy, and it would require imports of technology and know-how, as Denmark has no experience operating nuclear plants.

Carbon capture and storage could be applied if it becomes more competitive or if new coal-fired power plants are built before 2050. It could also be used at biomass installations as a supplement if it's decided that even more greenhouse gas reductions are needed, the commission said.
Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC., 202-628-6500