Climate neutrality: Denmark decides to stop oil production (neue-deutschland.de)

Photo: image images / Ritzau Scanpix

Three years are sometimes more than just the sum of the calendar days. Sometimes society develops so rapidly in a few years that an agreement made three years ago seems like a papyrus from a distant past. This fate happened to a package of laws passed by the Danish Parliament in 2017 to stimulate the production of oil and gas in the Danish part of the North Sea for the next few decades. From bourgeois parties to social democrats and left-wing socialists there was consensus that it was important to maintain domestic production until the end of the 21st century, when resources are likely to be exhausted. Since then, the blatant climate crisis, Fridays for Future and the withdrawal of the oil companies that fought over the bill have fundamentally changed the picture.

The parties who were in favor of oil production at the time now believe that Denmark should become a pioneer in the energy transition. At the end of last week, the Danish parliament voted to stop oil and gas production until 2050. Renewable energy sources should completely supply the country at this point and Denmark should be CO2-neutral in all respects. In purely arithmetical terms, one could continue the funding beyond this year and still use the title climate-neutral, provided, however, that the entire funding is exported. Because Denmark is the biggest sponsor in the EU after Brexit.

Environmental groups and left-wing parties had long worked on the ruling social democratic party to make Denmark climate neutral. But the Social Democrats hesitated for a long time to implement this. The billions in taxes that are at stake in the long term must be replaced by other means. Denmark is one of the wealthiest countries in Europe with an economic output of 49,720 euros per inhabitant. The country generated an important part of this prosperity in the past decades by extracting crude oil in the North Sea.

In order to gain time for decision-making behind the scenes, Energy and Climate Minister Dan Jørgensen first set up a commission to collect more knowledge about the pros and cons of oil and gas production. It took more than a year for this, while at the same time the eighth round of tenders for the exploration of new oil and gas reserves was suspended. This moratorium gave the oil producers interested until then the opportunity to recalculate their forecasts.

Against the background of rising costs, at best stagnating prices and the many years that have passed since the last worthwhile find, they withdrew one after the other. Almost at the same time as the parliamentary decision, Total, the most important sponsor in Denmark, announced its withdrawal. Total had taken over the oil and gas business of the Danish Mærsk conglomerate in 2018, one year after the legislators had expressly given their support for further oil production. This same company had worked significantly to maintain favorable funding conditions, but shortly afterwards threw in the towel. Total is currently in the process of making the Tyra field purchased in 2018 fit for the next 30 years and will have to invest around four billion euros for this. As an established sponsor, however, the group still has the opportunity to search for new sources within its area and to exploit them until the year 2050 is phased out.

Since the start of oil and gas production in 1972, the Danish treasury has made good profits from it. It is estimated that it brought about 100 billion euros in tax revenue. Denmark was a net exporter for around 25 years, but this has slowly changed as its resources dwindled after the turn of the millennium. The state currently earns around two billion euros a year. Around 10,000 jobs are directly or indirectly linked to the funding. Most of them are located in Esbjerg on the North Sea coast. In the long term, employees are to be retrained in green energy technologies. Esbjerg is also a hub for the export of wind turbines and is to be expanded further. Part of the decision to stop oil and gas production is a government-funded research project into how CO2 can be stored in the emptied fields. So-called Power-to-X technology is also mentioned as another possible energy source and workplace of the future, and investments are also made in its research and application.

The Danish decision was welcomed by environmental groups. They are now hoping for similar decisions in the UK and Norway. In these countries, however, oil and gas exploration plays a much bigger role in the economy and higher profits, tax revenues and more jobs are at stake. But sometimes it only takes a few years before a utopian idea suddenly becomes a reality.

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