The new Danish rules mean that companies will be almost completely banned from receiving new licenses to search for and extract oil and gas resources. Previously issued licenses will remain in effect until 2050.
Denmark is The largest oil producer In the European Union, but it has come under increasing pressure in recent years as the European Union aims to become carbon neutral within the next 30 years.
“It’s a historic decision for Denmark,” Dan Jurgensen, the Danish Minister of Climate and Energy, told the Washington Post in an interview on Friday.
He said, “It is a difficult decision, it is an expensive decision, but it is the right decision.” He added that the move “will cost taxpayers’ money” but is necessary to remain “trustworthy” as the country seeks to implement the European Union’s 2050 climate target by reducing carbon dioxide emissions and offsetting much needed emissions.
The financial risks from this week’s decision appear manageable for Denmark, with losses estimated at $ 2.1 billion, compared to more than $ 88 billion in total revenue from the North Sea since 1972. But some Environmentalists hope that phasing out Danish fossil fuel production will create momentum that will be impossible to ignore for major oil producers.
“Denmark is a small country but has the potential to transcend its weight and pave the way for the necessary transition to green and renewable energy,” Helen Hagel, political expert at the Danish Greenpeace organization, He said in a statement.
Despite government and activists’ hopes that the ban will have global repercussions, its repercussions may not be felt immediately. Denmark’s oil and gas production has been declining for years, prompting some criticism that the move comes too late and at an appropriate time for the country’s center-left government seeking to portray itself as the leader of green energy.
“Maybe there isn’t a lot of oil to extract after 2050,” said Jan Belov, an oil market analyst at Jyske Bank.
in a Tweet“The real news here is that Denmark will apparently continue extracting fossil fuels for another 3 decades. For us children, this is not the ‘good news’ that some people seem to think,” said Swedish climate activist Greta Thunberg.
Speaking to The Post, the Danish Energy Minister responded to the criticism, saying that a faster timetable would expose the Danish state to compensation claims with the potential for “significant harm to our well-being”.
Denmark’s oil and gas production has far exceeded that of Norway and Britain, which has left the European Union. This week’s decision will not affect more than 50 drilling rigs in the non-Danish sectors of the North Sea. The suspension of exploration licenses will not affect Danish consumers, who can turn to other places for oil supplies.
But Denmark’s decision increases the pressure on businesses and consumers to prepare for the 2050 goal of zero carbon. Other countries in the region may be under pressure to refrain from extracting the recently discovered oil in other parts of the North Sea as a result of the Danish move.
For Denmark, this week’s announcement marks the latest chapter in a five-decade era in which oil and gas revenues have helped successive governments turn the country into one of the world’s richest and most generous countries.
In neighboring Norway, oil and gas revenues have likewise formed the basis of the country’s welfare system.
Both countries have seen their production drop dramatically over the past 20 years, driving them to be at the forefront of switching to renewable energy. Amid early signs that the era of oil extraction in Denmark may end, French energy producer Total recently withdrew its request for new oil exploration projects, keeping the government canceling the licensing round this week.
But while Denmark’s ban will now place it at the forefront of phasing out fossil fuels, Norway As recently as last year He announced plans to increase oil production.
The phasing out of fossil fuels in Denmark does not apply to Greenland, a semi-autonomous island that belongs to Denmark, where analysts suspect there will be significant amounts of unexplored oil resources that could be accessed due to climate change in the coming decades. Exploration Significantly increased In that region in recent years, but it remains uncertain whether it would be easy to extract fossil fuels there.
In Denmark, the government remains confident that the country’s wealth is not in danger of its transition to renewable energy – a view increasingly shared in the country’s oil industry hub, the city of Esbjerg on the west coast. About 10,000 residents work either directly or indirectly in the offshore industry.
Mayor Jesper Frost Rasmussen said residents are “sad that a large part of our livelihood over the past 48 years is now gone.” But he said he believes the town’s brightest days may still be ahead.
Over the coming decades, major investments in renewables are expected to transform it into a green energy hub.
“We moved before from a fishing town to an oil city, and now we switched from oil and gas to wind power,” said Frost Rasmussen.
Hagel, a Greenpeace analyst, added that the thousands of jobs lost over the coming decades could be replaced by tens of thousands of new jobs created in the renewable energy sector.
“The problem will be: How do we find workers?” She said.
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