Denmark says goodbye to oil – will the world follow?

A drilling platform in the Danish North Sea. Photo credit: Erik Christensen CC BY-SA 3.0 via Wikimedia.

By Anders Lorenzen

Denmark has yet again taken a crucial climate leadership position where other countries have hesitated. The science is clear that in order to avert the climate crisis countries must stop extracting hydrocarbons from the land and sea.

Last week, the Danish climate minister Dan Jorgensen declared that Denmark, the largest oil producer in the EU would now no longer hand out new licenses for oil and gas drilling in the North Sea. He explained that a large majority in the Danish parliament had voted for the resolution, covering parties from left to right across the political spectrum. He added that this demonstrated that Denmark was serious about becoming a fossil fuel-free country.

Denmark is seen as the first major oil and gas producer to make this move, following in the footsteps of France, New Zealand and Costa Rica who were much smaller oil producers.

Welcome move

This move has been welcomed by activists and green groups, and points to signs that we are beginning to leave some fossil fuels in the ground. 

Celebrating this gigantic milestone Helene Hagel, Head of Climate and Environmental policy at Greenpeace Denmark called it a win for the climate: “This is a watershed moment. Denmark will now set an end date to oil and gas production and bid farewell to the future licensing rounds for oil in the North Sea, so the country can assert itself as a green frontrunner and inspire other countries to end our dependence on climate-wrecking fossil fuels.” She further underlined why it was right for the small Scandinavian country to make this call: “As a major oil producer in the EU and one of the richest countries in the world, Denmark has a moral obligation to end the search for new oil to send a clear signal that the world can and must act to meet the Paris Agreement and mitigate the climate crisis.” 

Denmark’s move has turned the focus on the two other big North Sea oil producers, Norway and the UK, to follow Denmark’s lead – though they have stayed quiet. This is despite particular focus on the UK as the host of next year’s crucial UN climate summit COP26

Dwindling oil resources

But while climate advocates around the world have heaped praise on Denmark’s move, the decision had been made easier as a result of dwindling North Sea resources.  Only one oil company, Ardent Oil, having expressed an interest in the next bidding round for new licenses. Denmark produced the equivalent of 103,000 barrels of oil and gas a day in 2019, compared with the UK’s 1.7m barrels of oil equivalent last year and Norway’s 1.8 million barrels a day.

Limited loss

The Danish government estimates that the decision will cost the Danish state DKr13bn (£1.6bn) in lost revenue, amounting to only a small economic loss.  The body who advises Denmark on climate change, the Climate Council, estimates it could be even less if global oil prices fall in line with the actions set out in the Paris Agreement. In addition, this loss could be even less if new initiatives launched by the government such as carbon capture, and Denmark’s leadership position on green technologies, become even more important as as countries are scaling up climate ambitions.  Many Danish companies operating globally are set to benefit.  

Denmark’s move came 80 years after they first started exploring for hydrocarbons in the North Sea, and the first production was in 1972. But Denmark was also one of the first countries in the world to start using wind power commercially for electricity generation. 

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