Caspian Energy (CE): Mr. Peterson, what do you think of today’s realities for setting up an Energy Union in Europe? What position does Denmark adhere in this regard? Is Europe ready to have a joint stance at the energy market?
Rasmus Helveg Peterson, Minister for Climate, Energy and Building of Denmark: We agree to the plan of setting of an Energy Union. We think that it shall address the barriers that exist in reaching low-carbon economy in 2050 and that can be done by creating an efficient market for energy. That will improve the Union’s security of supply, competitiveness and sustainability. We want the Energy Union to ensure integrated climate and energy policy.
We want the Energy Union to include multiple areas of the EU politics such as trade and external relations as well as transport and agriculture, also bearing in mind economic sector’s shares of greenhouse gas emissions. We want the Energy Union to ensure a more integrated climate and energy policy. That will need coherence and synergies between the elements of the common climate and energy brainwork. We want the same pool on our energy and on our climate policy through the Energy Union.
So, we want the EU objectives for the 2030 greenhouse gas emissions, renewable energy efficiency to serve as intermediate steps toward realizing the goal of the Energy Union.
I have certainly heard some suggestions that some parties want the European Union to act as one coordinated buyer and then supplier of gas. We don’t subscribe to that point of the view. We consider the market to consist of many commercial access and we would not want to replace a number of commercial access with the state monopoly doing all purchase since that would be contradictory to our aims of a more integrated market, a more flexible market and I don’t really see a point in it.
CE: Which ambitions does Denmark pursue in the Arctic? What is the latest statement, made by Denmark in the UN, based on? What are the probable reserves of energy resources in the sector that Denmark runs for?
Rasmus Helveg Peterson: The Kingdom of Denmark consists of Greenland, the Faroe Islands and Denmark. We have a lot of chunk of the Arctic till Greenland. The thing is that we have a common goal for the three parts of the Kingdom. That is to work toward creating a peaceful, prosperous and sustainable future for the Arctic. We have them in close cooperation within the Kingdom and with our international partners. When I say peaceful I mean we want to keep the Arctic dematerialized. When I say prosperous we obviously want trade. When I say sustainable that means a lot of sense because this is one of the most environmentally better areas of the world.
I think you are referring to the claims by the Kingdom of Denmark of the area north of Greenland, which we have submitted to the UN convention of the law of the sea. That is a claim based on extensive surveys and scientific investigations of the seabed carried out by national geological survey of Greenland and Denmark. We consider our claims valid. We consider the areas north of Greenland including the North Pole to be an integrated part of the Kingdom of Denmark.
CE: Denmark has recently begun consuming more energy resources than it produces. What kind of solution can you offer in this situation? Is it possible to discover new deposits in the Danish sector of the North Sea?
Rasmus Helveg Peterson: Well it is true. For the first time since 1996 Denmark started net importing energy in 2013. We did at 93% self-sufficiency. So, it almost makes a full self-sufficiency. Our long-term plan is to phase out fossil fuels all together. So, we will only use renewable energy by 2050 and that will be obviously produced in Denmark. You can say that oil and gas have an important role to play in the energy supply in many years to come. The first plan we have to maintain energy self-sufficiency is to phase out fossil fuels. We are going to use less coal in our power plants because we use wind turbines and we do energy efficiency. So we need to use less oil, less gas for heating or transportation purposes. So, we are going to phase out the use of fossil fuels and introduce renewable. That means an answer to this challenge.
We have received 25 applications from oil companies that want to search oil and gas in the North Sea. That is the highest number of applicants compared with the previous licensing rounds in the North Sea. We would expect the results of this licensing round and future licensing rounds to create a basis for maintaining exploration and production activity. We believe that there are still discoveries to be made in the Danish sector of the North Sea. We also initiated a work toward a strategy of future oil-gas production. We expect to finalize in May of this year. We have to look at aging infrastructure and exploration opportunities and challenges of suppliers and service industry, etc., because we want to maintain high oil production for years to come.
CE: What are the expectations from production of shale gas and oil?
Rasmus Helveg Peterson: We don’t know whether there is natural gas in the shale of the Danish subsoil. If there is we don’t know if it can be produced commercially. So in 2010 we granted two licenses to investigate it. Before we consider any new licenses for exploration of shale gas we evaluate current activities. So, currently there are drilling companies that we gave an exploration permit. They are currently drilling and we expect the answers to come this summer. On the European level we don’t believe that the shale gas is an answer to the challenge of the energy security. So, we think that shale gas exploitation in Europe, if it comes, would rather compensate for the declining production of European conventional gas rather than replacing import. The Polish have not been really able to produce gas in quantities. So, it does not go very promising because we are obviously geologically close to Poland. I also say that declining oil prices had made it very hard to imagine that you could do this in a commercially viable way.
CE: What is your opinion about the potential of new energy corridors including Southern Gas Corridor?
Rasmus Helveg Peterson: All European countries agree that diversification of gas supplies to Europe is important for ensuring Europe long-term gas supplies. The political situation in Russia and Ukraine underline this. The main objective of the Southern gas corridor is diversification of natural gas suppliers and establishment of new transport corridors for natural gas to Europe. And that will reduce European dependence on Russian gas suppliers. But of course, bringing gas to Europe from Azerbaijan and other countries of the region through Georgia and Turkey will require huge investments and agreements so that to get reliability and security of gas supplies. But anyway we support all energy corridors.
CE: What are the prospects of cooperation in the energy sector with the Caspian region states?
Rasmus Helveg Peterson: That is very difficult to say. The point of view from my field of expertise is to re-encourage the commission to conduct such cooperation. I come from peaceful region myself and we can see Denmark, Sweden, Finland and Norway and even Germany. We work together seamlessly on gas or electricity. And it does not create real problems but only opportunities when we shift energy across borders. We are ready to share experience for encouraging such type of cooperation since it provides a lot of benefits.
CE: Denmark has been actively promoting alternative energy sources, wind energy in particular. How did you manage to gain such high indicators?
Rasmus Helveg Peterson: We have been engaged in this sphere for a long time since 1973 when the first oil crisis occurred. Last year we produced 39% of electricity from wind. We have not just created the technology of windmills. Basically, you can say that foundations of modern turbines are invented in Denmark. Our success in generating renewable energy in particular is based on a policy where we take all decisions based on long-term targets. So we look at where we want our energy supply to be in 20-30 years. So when we take decisions we look at the effective security of supplies, climate mitigation and economy. And it works. This can only be done because we have very stable political decisions. Normally, all parties in our parliament agree on energy policies. Even if we have a change in our government, we don’t have a change in policy. Our policy remains the same even if the government changes. That means that we can plan for long-term.
We have decoupled an economic growth from our energy consumption. So even if our economy grows our energy consumption will not grow. Energy efficiency means that a unit of gross domestic product requires a third less energy today than it did in 1990. So our energy consumption keeps falling. It is now in the lowest point since 1980s. So, that is important because the cheapest and the smartest way to reduce greenhouse gas emissions, create jobs and address all other related circumstances goes through energy efficiency.
We obviously have very good to share experiences politically and technically. First of all we need long-term political agreements because that keeps the stability. Then you need to have a broad focus. You have to address both households, industry and buildings. You also have to use many different measures: economic incentives, standards. For instance in the building sector we have had a building code since 70s. And since then we have cuts in our energy use in buildings by half by building better houses. We have a lot of good experiences in how to save energy and money and the environment at the same time. We can do a lot and actually save money on it.
CE: Which measures does Denmark offer for combating climate change?
Rasmus Helveg Peterson: A lot. We have a lot of renewable energy and a lot of focus on energy efficiency. That is the key examples. We have set a national reduction target for 2020 at 40% below 1990 levels. That is 10 years before the EU will reach the same number. And to reach this goal we have a wide range of initiatives that we have analyzed for costs and potentials. We have also adopted a climate change act in parliament. We will be 100% renewable energy and we will have a lot low greenhouse gas emission by 2050. We have a climate council independent of the government. The council gives the government advice how to reach the climate targets. We also support a strong European climate policy. We work for ambitious EU reduction targets and then we are pushing for ambitious climate targets in the UN. We have also done a bilateral cooperation with a number of developing economies, most significantly we have encouraged China to do more renewables, we do the same with Mexico, we do the same with Vietnam and we do the same for South Africa. So we try to do three things basically. Firstly, we would try to do all we can in international negotiations. Secondly, we work directly with some of the developing economies, trying to show them technical solutions that exist for this problem. Thirdly, we are fully engaged in this and we consider our climate and energy policy to be the most ambitious in the world in regard to develop more.
CE: Do you think that the oil age is coming to end?
Rasmus Helveg Peterson: The new economy that we are creating is based on renewable energy. It is more modern, more technologically advanced than the old economy. What we are doing when we do the shift to green is also to modernize and build the economy of the future. Once you have done this shift, then fossil energy looks old-fashioned, it looks like yesterday’s technology. No one would like to go back. It is not just a question of doing it because the alternative energy looks to be less expensive. The question is to get something better than what we used to rely on. As you say the stone age did not end because there was no more stones. The oil age did not end because we ran out of oil. The oil age is going to end because we have invented better technology. So, when I drive my electric vehicle it makes no noise. It has faster acceleration, does not require import of fuels and will not destroy the global climate. So what we get now is better. It is not something we do as a sacrifice.
Thank you for the interview
