Denmark has become the EU’s biggest oil producer so far to set a finite deadline for ending oil and gas extraction, in an effort to meet some of the world’s most ambitious climate targets.
While Denmark is known for its low-carbon offshore wind networks and its bicycle lanes, it is the largest oil and gas producer in the EU, based on its domestic industry centered around the North Sea. (Keep in mind: Neighboring oil giant Norway is not part of the EU.)
The government will also cancel the current and all future licensing rounds for oil and gas extraction, the Danish Ministry of Climate, Energy, and Utilities said, following a vote for the deadline in the Danish Parliament.
“Denmark’s decision to cancel its eighth licensing round comes against the background of other canceled oil exploration tenders elsewhere and a growing number of oil and gas companies who are curtailing frontier exploration activities. But it also flags an important precedent to be made,” said Amy Myers Jaffe, managing director of the Climate Policy Lab at Tufts University, in a comment.
“With its decision to end exploration tenders permanently, Denmark stands out as the first developed nation to acknowledge not only the priority of the energy transition but also the need to step aside and let other less economically fortunate nations be the ones to benefit from any lingering budget for oil and gas development as we move off of oil over time.”
The country began extracting oil and gas in 1972, and oil and gas revenues played a key economic role in building up the country’s ample welfare state, the ministry said Friday. In 2019, the country made DKK5.9 billion (nearly $1 billion) in revenue from oil and gas and, as of 2016, the last year figures were collected, 4,000 people were employed in the sector. Denmark has a population of about 5.8 million people.
Danish climate minister Dan Jørgensen said that as a relatively small oil and gas producer, the country hoped to lead by example, in showing that such a cutoff was possible.
“We intend to show what an ambitious yet balanced phaseout of fossil fuel production might look like, taking into account both the urgency of climate change and the very real concerns of workers employed in the fossil sector,” said Jørgensen in a statement. The ministry said the cutoff would include a “just transition” for those workers and the regions affected.
Denmark has one of the world’s most ambitious government-level climate change targets: It has committed to lowering greenhouse gas emissions by 70% by 2030, compared with 1990 levels.
But it also has a leading edge in the energy transition in other ways. Ørsted, the Danish state energy company—originally formed to exploit oil and gas in the North Sea—has transitioned over the past decade into the world’s largest offshore wind producer, and aims to be carbon neutral by 2025.