Growth driver

The climate and energy area – the growth driver of the future.

The climate and energy area – the growth driver of the future

Denmark is facing low economic growth for a long time in the future. In order to arrest this trend and maintain the current standard of welfare, it is necessary to concentrate on areas with the greatest growth potential. The climate and energy area is definitely a high-growth area.

The Danish energy companies are vital growth players in the climate and energy area. The energy companies contribute directly through their unique knowledge to energy system innovation, growth, value creation and employment in Danish society.

It is important to realise that there is no miracle cure for Denmark’s growth problems. If there were, we along with many western countries with economic problems would have made use of it.

Nevertheless, a substantial number of independent surveys point to the climate and energy area as an important growth area. This includes a survey by the OECD among others, which emphasises the need for developing strategies which can create green growth and which will result in considerable economic benefits in the form of increased resource efficiency . The International Energy Agency has estimated the profit on needed investments in carbon-reducing energy systems to be USD 112 billion in the run-up to 2050 (IEA, 2010).

The Danish energy companies vital growth players

The Danish energy companies are vital growth players in the climate and energy area. The energy companies contribute directly through their unique knowledge to energy system innovation, growth, value creation and employment in Danish society.

In addition, there are a number of indirect contributions to growth. These stem from the energy companies’ activities, products and investments, which are the preconditions of growth and value creation in a large number of sectors and industries, partly from these sectors’ demand and use of the energy sector’s products and services and partly because the energy sector is often a condition for – or the origin of – activities in a large number of companies which develop energy technology and sell energy solutions.

The energy sector’s contribution to economic growth in Denmark may be illustrated by corporate work on increasing energy efficiency. Since 2006, the energy saving efforts of the energy companies have resulted in cost savings for Danish companies of DKK 6.8 billion, of which the companies invested DKK 3.7 billion themselves on energy-saving measures, i.e. a net benefit of DKK 3.1 billion. Companies have been able to use these funds in competition with other players, including on product development, marketing etc.

Part of the picture is that energy companies’ own investments contribute to the generation of growth and create substantial employment in other businesses, such as equipment suppliers, and they also contribute to innovation and renewal. In addition, energy companies have built up considerable knowhow about corporate energy consumption, knowhow which is being increasingly exported to other countries, among others those in Central and Eastern Europe.

No player can drive growth alone

It is important to point out that no single actor can create green growth. What is needed is intelligent collaboration between growth companies if we are to obtain the maximum impact of Danish efforts.

The development of the intelligent network – the so-called smart grid – is an area where intelligent collaboration between growth players is crucial. The development of technological – green – solutions for the whole energy sector requires the incorporation of knowledge from research and development institutes, companies and public authorities.

The ideal division of work is clear: on the part of the government the political framework must promote incentives for market players for developing cost-efficient technologies. This involves among other things establishing a long-term framework for future research and development initiatives and ensuring even greater focus on the business aspects of research.

The same also applies to exporting, where it is essential that energy companies take over the role of implementing intelligent solution at an early stage of the process. This creates competitive conditions and allows market participants to harvest valuable experience nationwide which can be used when exporting subsequently begins. In other words, the role of the public sector must as far as possible be limited to the research and development stages.

Thus, when all has been said and done, there is major economic growth potential in the climate and energy area. Energy companies are already making a considerable contribution to growth, but in order to exploit the enormous potential the following are required:

• A long-term framework for research and development in the run-up to 2020.
• Considerably greater focus on the business and growth potential of research.
• Greater focus on innovation partnerships between universities, market partici-pants and the political system.
• Modern financial regulation of energy companies.
• A new tax and subsidy system.