Denmark to end all new North Sea oil and gas exploration
Denmark will end all new oil and gas exploration in the North Sea as part of a broader plan to phase out fossil fuel extraction by 2050.
Nearly half a century after the country first started production, the Danish parliament agreed late on Thursday to cancel its latest licensing round and all future tenders, which grant companies the right to search for and produce oil and gas.
Denmark has repeatedly put itself forward as a global leader in climate diplomacy, and has already announced some of the world’s most ambitious carbon targets. The country aims to reduce greenhouse gas emissions by 70 per cent by 2030 and to reach net-zero emissions by 2050.
“We will now follow a different path,” Dan Jorgensen, Danish minister for climate, energy and utilities, told the Financial Times in an interview. “It wouldn’t be in line with our ambition to be climate neutral in 2050 to still explore, produce and sell fossil fuels.”
Mr Jorgensen said he hoped to “lead the way by example”, spurring other countries to also phase-out fossil fuel production.
While Denmark is a small producer — in 2019, it pumped 103,000 barrels a day, far less than the UK and Norway — it is still the largest in the EU. Last year, Denmark also produced 3.2bn cubic meters of gas, according to BP’s Statistical Review of World Energy 2020.
Governments and companies around the world have pledged to take greater action on climate change — pushing to cut emissions as part of a broader plan to meet the goals of the Paris climate agreement.
Denmark started extracting oil, then gas, in the North Sea in 1972. Since then, the tax revenue has been a cornerstone in building and maintaining the country’s welfare state.
Mr Jorgensen said the latest announcement will reduce revenues by DKr13bn ($2.1bn), with production by 2050 now expected to be at least 9 per cent to 15 per cent less than it would have been.
Not only has Denmark said it will cut greenhouse gas emissions by two-thirds from 1990 levels — or around 20m tonnes of CO2 equivalent — within 10 years, it has also pledged to spend $1.6bn on new climate initiatives.
There are 55 drilling platforms on the Danish continental shelf in the North Sea, scattered across 20 oil and gasfields. French energy company Total — which recently announced it would withdraw its application for Denmark’s most recent licensing round, its eighth — is responsible for output in 15 of these fields. UK-based Ineos, US oil company Hess and Germany’s Wintershall also operate in the region.
Danish oil and gas production is projected to increase over the coming years before peaking in the late 2020s.
“This is a watershed moment,” said Helene Hagel, head of climate and environmental policy at Greenpeace Denmark. “The country can assert itself as a green frontrunner and inspire other countries to end our dependence on climate-wrecking fossil fuels.”
Denmark built the world’s first offshore wind farm in 1991, and in recent years it has become a world leader in the industry. It is home to two of the world’s largest wind companies, developer Orsted and Vestas, the turbine maker.
“We want to make sure oil workers have other jobs to go to. A lot of the employees in the oil and gas sector can be employed in the offshore wind sector,” said Mr Jorgensen.
Source: FT
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Published: 04-12-2020
