57 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE Denmark’s next decade To better understand the future of the Danish energy mix, it is important to break down the energy economy by sector. Five major areas (households, transportation, service, manufacturing and construction, and agriculture) present opportunities for electrification and increased clean energy use. Household energy demand is heavily dominated by space heating. Heating accounts for 80% of energy consumption, with the remaining 20% as regular electricity consumption (Danish Energy Agency, 2021). In order to lower emissions, Denmark is shifting from oil and gas heating toward district heating and heat pumps—65,000 new heat pumps were installed in 2020, and this figure is projected to grow steadily through 2030. The shift to heat pumps and district heating will result in higher electricity demand, which will increase by nearly 30% from slightly more than 35 PJ to nearly 50 PJ by 2030 (Danish Energy Agency, 2021). This rise in electricity demand will be supplied by the continued development of wind power and bioenergy. Transportation emissions are driven by road transport, rail transport, domestic aviation, and domestic shipping, all of which include both private and public passenger transport as well as transport of goods. CO2 emissions are derived primarily from road transportation. Both the road transport and rail transport sectors have been targeted for emission reduction practices via electrification as well. Road transport is dominated by automobiles running on internal combustion engines. In order to reduce emissions from road transport, the Danish government has enacted a series of subsidies and tax breaks in order to incentivize citizens to purchase electric cars. With these measures, the Danish Energy Agency projects that 22% of cars on the road in 2030 will be zero- and low-emission vehicles, corresponding to approximately 730,000 vehicles. By 2030, it also projects that 48% of new vehicle registrations will be for electric and hybrid vehicles. As a result, electricity consumption from these vehicles is projected to increase from negligible levels in 2020 to 7.7 PJ by 2030 (Danish Energy Agency, 2021), a level that could be even higher if electric vehicle adoption is greater than projected levels. The service sector comprises many activities, both private and public, including restaurants, banks, data centers, retail stores, daycares, schools, hospitals, and public administration facilities. Most energy consumption within the service sector comes from electricity and district heating. As heating via natural gas is phased out and replaced with heat pumps, the energy consumption mix will continue to shift in favor of electricity. The private sector is projected to see an energy demand increase of 13%, while retail and wholesale are expected to see 20% increases in their level of consumption by 2030. One peculiarity in the service sector is the electricity consumption of data centers. Data centers consume only 1 PJ of electricity, but expectations suggest that the industry will grow exponentially in the next decade. The Danish Energy Agency projects data centers will consume 17 PJ of electricity by 2030. Overall, a significant rise in total electricity demand from the sector can be expected. Usage was approximately 35 PJ in 2020 but is projected to climb to nearly 60 to 65 PJ by 2030 (Danish Energy Agency, 2021). The manufacturing sector includes enterprises that produce goods such as textiles, furniture, and electronics as well as chemical and pharmaceutical products. It also includes building and construction. In many of these areas, the sector will undergo electrification with regard to utilizing different manufacturing equipment and the increased use of heat pumps. Thus, electricity demand will increase but only by approximately 5 PJ by 2030. However, the sector also includes the manufacture of products, such as glass, cement, and tiles, that require high temperatures currently only reachable using fossil fuels, especially natural gas. There is a planned shift to using biogas for machines that require fossil fuels to function in order to cut natural gas use by nearly half. This shift in fuels will require biogas production to increase substantially but in the long run should contribute significantly to reducing CO2 emissions (Danish Energy Agency, 2021). The agricultural industry contributes emissions through the production of livestock and crops and from land use as well as from energy consumption of fisheries and forestry. As a sector, agriculture contributes approximately 20% of Denmark’s total greenhouse gas emissions (Danish Energy Agency, 2021). Utilizing animal waste to produce biogas will at once reduce the waste product itself and its greenhouse gas emissions and also increase production of a fuel source that can replace fossil fuel usage in many industries that currently burn fossil fuels. (For more detailed insights on the future of the agriculture industry, see the article in this volume by Ali.) Given the expected growth in electricity demand across these five sectors of the economy, how will Denmark respond and how will that growth affect meeting the 2030 goal of a 70% reduction from 1990 carbon emission levels? As of 2020, Denmark had reduced total emissions by approximately 38%, equivalent to about 28 million tons CO2e, leaving a further unmet reduction of 32%, or approximately 24
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