Denmark, a Green Energy Leader, Slows Pace of Its Spending

Source: By MELISSA EDDY, New York Times • Posted: Tuesday, December 8, 2015

Jens Dall Bentzen at a furnace in Sonderborg, Denmark, that is built on a design he developed with a government grant. It burns organic matter to generate heat. Credit Michael Drost-Hansen for The New York Times 

SONDERBORG, Denmark — Not long ago, Denmark was making headlines for harvesting so much wind power that it was leading the way in generating renewable energy, while becoming a center of innovation and growth for green and clean technology.

Then, in June, a center-left government was replaced by a right-wing, minority coalition determined to tighten spending and balance the budget in a program to grow the economy.

The budget cuts include a key fund that was used to seed green technology projects — a government subsidy that environmental advocates said had paid itself off many times over.

“This funding has proven instrumental for Danish advances in clean tech for many years, and it is incomprehensible why it is being cut now,” said Soren Houmoller, whose 1st Mile consulting company helps businesses apply for public funds in Denmark.

Mette Abildgaard, a spokeswoman for green energy affairs for the opposition Danish Conservative People’s Party, said the timing of the cuts was disappointing.

“I believe this is a very bad signal to be sending the world, for Denmark to be taking a step backwards just before the Paris climate summit,” she said last month.

The debate going on in Denmark may serve as a cautionary tale for leaders of the 195 countries now meeting in Paris and trying to reach a global deal to rein in dangerous greenhouse gases that have been linked to climate change.

Should the negotiators be able to put aside their conflicting agendas, and sign an accord when the talks end this week, they will then face another challenge: meeting their national goals.

One lesson they may learn from Denmark is how it is possible to substantially replace fossil fuels with clean and renewable energy. But even when progress is made in reducing environmentally harmful carbon emissions, countries may have difficulty sustaining the gains because of politics, economic concerns and, in places like the United States, ideological disputes.

The new government in Denmark argues that spending on alternative energy and innovation is still high, but that the budget must be reeled in as the country faces a predicted deficit of 3.3 percent in 2015. Shortly after taking over in June, the new government was forced to cut its forecast for economic growth to 1.5 percent this year and 1.9 percent in 2016, citing a slow recovery in domestic demand.

“I think the criticism is over the top,” Lars Christian Lilleholt, Denmark’s energy minister, told the Politiken newspaper last month. He said the country still planned to invest 800 million krone, or $114 million, in green energy research in the coming year. “There is less money, but it is still a lot. And I sit in a government that must find a way for the Danish economy to make ends meet.”
Wind turbines on the island of Samso, Denmark. The country of 5.6 million people generated 40 percent of its power from wind turbines last year. Credit Erik Refner for The New York Times 

But people who have relied on government funds and other incentives to help finance their energy projects said the cuts were a mistake.

One of them is Jens Dall Bentzen, who eight years ago began thinking about how to burn wood chips, grass clippings and other organic matter more efficiently to generate heat. He had an inkling he could contribute to Denmark’s efforts to wean off fossil fuels by 2050, but he worried about quitting his job as a researcher to pursue his idea.

With the help of a grant of 2.5 million Danish krone, or $448,000, he developed a prototype of the low-emissions furnace he had imagined. He started his own company, Dall Energy, and was able to sell the furnace to Warwick Mills, a manufacturer in New Ipswich, N.H. Since then, he has built two other furnaces for Danish municipalities, and attracted interest from elsewhere in Europe and the United States.

He said the grant from the Energy Technology Development and Demonstration Program made it possible.

“I found it more tempting to leave my job and start a company,” he said in an interview inside the heating plant in this Danish coastal town, where his furnace was turning the damp chill into cozy warmth. “I started realizing it could be achievable.”

Denmark, a country of 5.6 million people, was able to generate 40 percent of its energy from wind turbines last year. Germany, by comparison, generates less than 30 percent of its energy from renewable sources, primarily wind and sun.

Jens Dall Bentzen developed a furnace that more efficiently generates heat from the burning of wood chips and other organic matter. Credit Michael Drost-Hansen for The New York Times 

The new governing party, Venstre, or Liberal, reached an agreement on its 2016 financial plan last month. The budget cut spending for research into green energy sources to 127 million krone, or $18 million, from 385 million krone, or $55 million.

The cuts are troubling to Soren Hermansen, who runs a renewable project, the Energy Academy, on Samso, an island off the eastern coast of Denmark’s main peninsula. Delegations from Maine to China have visited to observe its success at energy independence through a combination of wind, solar and geothermalproduction.

Around 20 percent of its annual budget of about $100,000 comes from the government. Mr. Hermansen said that with the cuts, he would have to reduce his small staff and shelve a biofuel project to convert methane waste from local farms to liquid natural gas to power the ferry to the island.

“This is hurting everybody,” Mr. Hermansen said. “How can you take that away?”

The fund that helped Mr. Dall Bentzen develop his biomass furnace will be among the most deeply cut. Over the past eight years, the fund has paid out about three billion krone, said Aksel Laurids Beck, a special adviser to the fund. Starting next year, it will be cut to about 40 percent of its 2015 budget.

Unlike conventional furnaces that burn only one organic fuel, usually dried wood chips or straw, Mr. Dall Bentzen’s system can use a variety of materials. It converts them to gas, which is then burned. That results in dust emissions that are 95 percent lower than those produced by conventional biomass burners, and significantly lower carbon and nitrogen oxide emissions.

“We want to provide heat as cheaply as possible, and if we can use garden and other waste as fuel, that will bring down the prices for us, for our customers,” said Erik Wolff, who runs Sonderborg District Heating, which bought the furnace from Mr. Dall Bentzen’s company with similar government support.

This year, the Energy Technology Development and Demonstration Program, which was started in 2007, distributed 380 million krone, or $54 million, to some 88 solar, wind and geothermal energy projects, as well as to systems to better integrate and use them.

In the best scenario under the new budget, the government next year will provide support for one in every eight project applicants, instead of the current rate of one in every four.

Besides setting a poor example for the climate summit meeting, critics said, the cuts are ill-timed. With the green technology sector taking off, and many people looking to Denmark for examples of successes, jobs and new businesses may be in jeopardy, critics said.

Projects seeded by the fund have had a success rate of 84 percent, a quarter of which led to exports. Overall exports of green and clean technology grew 15.4 percent last year to 43.6 billion krone, or $6.2 billion, according to the country’s energy ministry.

“The government is saying that we have always been one step ahead in the green technology, so we have room to maneuver,” Ms. Abildgaard said. “But being one step ahead is what gives us many jobs in this area. It is very important that we keep them.”

Mr. Wolff said the furnace his company bought from Mr. Dall Bentzen was more expensive than conventional models and had not yet been tried on a large scale. But the grant he received made it possible for him to take the risk associated with investing in a new technology.

“When we bought the plant, we knew we would not have any guarantees, that we would not hit the bull’s eye every time with every decision we make,” Mr. Wolff said.

The cuts will not hurt Mr. Dall Bentzen. With his invention now patented and his company profitable, he no longer relies on the government fund.

“We are beyond the research stage now — our projects are funded by the clients,” he said. “But those who come after me, they may not have the same chance.”