Climate and emmissions trading

Climate policy has become a central issue in energy policy.

 

The Danish climate strategy from 2003 relies on CO2 emissions trading as central element. Departing from a short-term cost-benefit analysis, the Danish government finds this to be among the most cost-efficient policy measures.

 

However, a very narrow emissions trading strategy is a risky climate mitigation strategy partly because the emissions trading framework is characterized by both political and economical risks. More importantly, it fails to adress the underlying causes of climate change, and fails to encourage investment in emmissions-free energy technologies.

 

Denmark has been singled out, as the OECD-country furthest from its Kyoto protocol obligations. In other words if Denmark wants to reach the reduction target of 21% in 2008-12 a considerable effort is called for. An appropriate climate strategy should play on several strings and give priority to national CO2 reductions. Furthermore is it already necessary to consider possibilities for CO2 reductions beyond 2012.

 

Analysis show that wind power over the long term is a cost-efficient way to reduce CO2 in Denmark.

 

Flexible mechanisms can provide fiscal benefits

There are considerable socio-economic benefits related to investments in CO2 reduction energy projects in eastern and third world countries, when Danish technology is used. That is the conclusion in a report made by Econ Analyse for the Danish Wind Industry Association.

 

The report examines three recent projects. It  shows that projects with high Danish technology content created a range of benefits in the receiving country and in Denmark:

• Long term environmental benefits in the receiving country
• Technology transfer in accordance to the Kyoto protocol
• Increase in production of clean energy in the receiving country
• Increase in production and employment in Denmark
• Increased tax revenue in Denmark

 

Related links

Read the report “Samfundsøkonomi i JI og CDM” made by Econ Analyse in February 2004. (only in Danish)