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J_%_+ _ eh, + 0___ MnNUFnCTUREDTO nlIM STnNDnRDS + ._xx////_/__+0++ LBL-32362 UC-Iim _ c_ W Energy Use in Denmark: An International Perspective Lee Schipper, RichardHowarth, and Bo Andersson with Lynn Price - August 1992 InternationalEnergy Studies Group Energy Analysis Program _ Energy andEnvironment Division Lawrence Berkeley Laboratory - BerkeleyC,aliforniUa.,S.A.94720 = q Work funded by Energislyrelsen (the Danish Energy Agency) and the Danish utilities ELKRAFT and E./_AM, by = Oliebranchens Fcellesrepr_semation, (the Danish Petroleum Industry Association) andby Komgas (Foreningen af re. _- gionale aaturgasselskaber, the Danish Federation of Regional Natural Gas Companies), through the U.S. Deparm,tent of Energy under Contract No. DE-AC03-76SF00098. Opinions expressed aresolely those of the authors, and not those of thesponsors or the Lawrence Berkeley Laboratory. MASTER "L_._ DISTRIBUTION OF THIS DOCUMENT IS UNLIM1TI_rb iii Table of Contents Abstract ................................................................................................................................................. ix Acknowledgments ................................................................................................................................. x _4 Energy Use inDenmark: Overview andSectoral Analysis .................................................................. I-1 Introduction ................................................................................................................................. I-I The Residential Sector ................................................................................................................ 2-I The Manufacturing Sector .......................................................................................................... 3-I OtherIndustry ............................................................................................................................. 4-1 The Service Sector ...................................................................................................................... 5-1 Passenger Transportation ............................................................................................................ 6-1 The Freight Sector ....................................................................................................................... 7-I Summary: Integrating the Results ............................................................................................... 8-1 International Comparison ...................................................................................................................... 9-1 Issues Forthe Future ............................................................................................................................. 1O-1 Recommendations: Analysis andInformation for BetterPolicies ........................................................ 11-1 Appendices Appendix A. Energy Use intheResidential Sector .................................................................... A-1 Appendix B. Energy Use inthe TransportationSector ............................................................... B-1 Appendix C. FutureEnergy Use in Denmark: Reflections on Scenarios fromEnergi 2000 .................................................................................................. C-1 Appendix D. Summary of Data Used inThis Report ................................................................. D-1 References ............................................................................................................................................. R-1 v List of Figures Fig 1-1 DenmarkGrossEnergyUse ....................................................................................................1..-.8. " Fig 1-2 DenmarkGDPandGrossEnergy/GDP..................................................................................1..-.8 Fig 1-3 Denmark Dispositionof GrossEnergyUse ............................................................................1..-9 Fig 1-4 DenmarkFinalEnergyUseByForm .....................................................................................1..-.9 Fig 1-5 DenmarkFinalEnergyUseSharesBy End-UseSector.......................................................1..-.10 Fig2-1 EnergyinDenmark:LongTermTrends,StructuralFactorsinHousing............................. 2-9 Fig 2-2 HouseholdEnergyUseinDenmarkbyFuelType .................................................................2.-9 Fig 2-3 HouseholdUsefulEnergyUseinDenmark.........................................................................2..-..1.0 Fig2-4 HouseholdUsefulEnergyPerCapita ...................................................................................2..-.1..0 Fig 2-5 HouseholdEnergyUsein Denmark,FinalEnergy: Activity,Structure,IntensityEffects.....................................................................................2..-.1..1 Fig 2-6 HouseholdEnergyUseinDenmark,PrimaryEnergy: Activity, Structure,IntentsityEffects ...................................................................................2..-.1..1 Fig2-7 HouseholdEnergyUseinDenmark,Appliances: Activity, Structure,IntensityEffects.....................................................................................2..-.1..2 Fig 2-8 HouseholdElectricityUseinDenmark: Activity,Structure,IntensityEffects...................2-12 Fig 2-9 HouseholdEnergyPricesinDenmark:Real (1980)Prices..................................................2..-13 Fig 3-1 DenmarkManufacturingOutputandAggregateEnergyIntensity .......................................3-5 Fig 3-2 DenmarkManufacturingEnergyUse .....................................................................................3..-.5 Fig 3-3 DenmarkManufacturingEnergyUse:VaryingIndustryStructure, 1972OutputandIntensities.....................................................................................................3..-.6. Fig 3-4 DenmarkEnergyIntensitybyIndustryGroup.......................................................................3..-6 Fig 3-5 DenmarkManufacturingEnergyUse:VaryingEnergyIntensities, 1972OutputandStructure.......................................................................................................3..-.7. Fig 3-6 DenmarkManufacturingFinalEnergyUse: Activity, Structure,IntensityEffects .......................................................................................3..-.7 Fig 3-7 Denmark ManufacturingElectricityUse:Activity, Structure,IntensityEffects ................ 3-8 Fig 3-8 DenmarkManufacturingPrimaryEnergyUse: Activity, Strut,_ureI,ntensityEffects .......................................................................................3..-.8 vii Fig 9-5 U.S. andEurope Space Heating Intensity: Useful Energy ...................................................... 9-20 Fig 9-6 OECD Household Electricity Use: 1972/3 vs. 1988/9 ............................................................ 9-20 Fig 9-7 Energy Use for Appliances andLighting ...................................:.............................................. 9-21 Fig 9-8 Thermal Performance Standards:Maximum Heat Transmission Values: Walls ................ 9-21 Fig 9-9 OECD Residential Oil Prices 1970-1988 .................................................................................. 9-22 Fig 9-10 OECD Residential Electricity Prices 1970-1988 ..................................................................... 9-22 Fig 9-11 Manufacturing Energy Use .......................................................................................................... 9-23 .,p Fig 9-12 Manufacturing Value Added ....................................................................................................... 9-23 Fig 9-13 Manufacturing Energy Intensity: Constant 1973 Industry Structure .................................... 9-24 Fig 9-14 Manufacturing Energy Use: Actual Industry Structure, 1973 Output and Intensities ......................................................................................................... 9-24 Fig 9-15 Manufacturing Energy Intensity: 1988 ...................................................................................... 9-25 Fig 9-16 Industrial Heavy Fuel Oil Prices ................................................................................................. 9-25 Fig 9-17 Industrial Electricity Prices ......................................................................................................... 9-26 Fig 9-18 Service Sector Fuel Intensity: Energy Use per Unit of Services GDP ................................. 9-26 Fig 9-19 Service Sector Electricity Intensity: Energy Use per Unit of Services GDP ....................... 9-27 Fig 9-20 Car Ownership in OECD Countries: 1970-1989 ...................................................................... 9-27 Fig 9-21 Distance Travelled per Automobile ........................................................................................... 9-28 Fig 9-22 OECD Per Capital Travel 1970-1989: All Modes ................................................................... 9-28 Fig 9-23 Rail and Bus Travel ...................................................................................................................... 9-29 Fig 9-24 Automobile Travel ........................................................................................................................ 9-29 Fig 9-25 Real Average Fuel Prices Weighted for Gasoline and Diesel ................................................ 9-30 Fig 9-26 Automobile Fuel Economy On Road Fleet Averages ............................................................. 9-30 Fig 9-27 Gasoline Price vs. Fuel Use: OECD Countries, 1987 ............................................................. 9-3J Fig 9-28 1988 Travel Energy Intensity: Actual and OECD-9 Structure .............................................. 9-31 Fig 9-29 Energy Intensity of Travel: Holding Modal Structure Constant ............................................ 9-32 Fig 9-30 Energy Use forTravel .................................................................................................................. 9-32 Fig 9-31 Freight Energy Use per GDP: Modal Distribution .................................................................. 9-33 Fig 9-32 Truck Freight Energy Intensity ................................................................................................... 9-33 Fig 9-33 Freight Energy Intensity: Holding Modal Structure Constant ............................................... 9-34 Fig 9-34 Energy Use for Frieght ................................................................................................................. 9-34 Fig 9-35 Energy Use for Industrialized Countries: 1988 ........................................................................ 9-35 Fig 9-36 Total Primary Energy Use: Impact of Intensity Changes 1973-88 Six Sectors ...................................................................................................................................... 9-35 viii Fig 9-37 PrimaryEnergy Intensity: Relative Change 1973-1988 ......................................................... 9-36 Fig 9-38 Primary Energy Use: Savings Relative to Constant 1973 Energy Intensities ..................... 9-36 Fig 9-39 Primary Energy Use: Aggregation of Subsectoral Change .................................................... 9-37 Fig 9-40 Primary Energy Use: Aggregation of Subsectoral Change ............................................ 9-37 Fig A-1 Danish Household Energy Use by Fuel Type ........................................................................... A-11 Fig A-2 Household Energy Use in Denmark: Space Heating Fuel Choice ........................................A-11 Fig A-3 Household Energy Use in Denmark: Water Heating Fuel Choice ........................................A-12 Fig A-4 Household Energy Use in Denmark: Fuel Use for Cooking ..................................................A-12 Fig A-5 Household Energy Use in Denmark: Appliance Saturation ...................................................A-13 Fig A-6 Household Energy Use in Denmark: Unit Consumption of Heating Fuels .........................A-13 Fig A-7 Household Energy Use in Denmark: Fuel Use for Hot Water ...............................................A-14 Fig A-8 Household Energy Use in Denmark: Fuel Use for Cooking ..................................................A-14 Fig A-9 Household Electricity Use in Denmark: Electricity byEnd-Use ..........................................A-15 Fig A-10 Household Energy Use in Denmark: Unit Consumption for Appliances ............................. A-15 Fig B-1 Transportation Energy Use in Denmark By Main Market ...................................................... B-8 Fig B-2 Transportation Energy Use in Denmark By Main Market ...................................................... B-8 List of Tables Table 1-1 Definition of Factors for Impacts of Changing Activity Levels, Sectoral Structure, and Structure-Adjusted Energy Intensity on Sectoral Energy Use ........................................ 1-7 Table 8-1 Energy Savings in Denmark 1972-1988 .................................................................................... 8-4 Table C-1 Energy Savings Forecasts in Denmark: Reductions in Unit Consumption in Industry ...................................................................................................................................... C-2 Table C-2 Energy Savings Forecasts in Denmark: Changes in Unit Consumption in Buildings .................................................................................................................................... C-6 Table C-3 Energy Savings Forecasts in Denmark: Changes in Unit Consumpion in Transportation ........................................................................................................................... C-9 Table D-1 Danish Energy Summary ............................................................................................................. D-4 "ix ABSTRACT This reportanalyzes theevolution of energy use in Denmark sincethe early 1970sin orderto shed light on the future path of energy use in Denmark, with particular emphasis on the role of energy efficiency. In a recent policy document,Energi 2000, the DanishMinistry of Energy set forth an ambi- tious plan of action to achieve an environmentally sustainable energy future (Energiministeriet 1990). Energi 2000 calls for the reduction of energy-related carbon dioxide emissions to at most 80% of their 1988levels by 2005, with even larger reductions in emissions ofoxides ofsulfur and nitrogen. Most of . these reductionswill takepiace withinthe eoergysector,butabout one-thirdis expectedin homes,build- ings, manufacturing andother industry. The heart of the plan forthese final-demandsectors lies in the adoption of higher energy taxes and accompanying policy measures to achieve enhanced energy . efficiency and restraint in energy-using activities. Regeringens transporthandlingsplan for milj_ og udvikling (Trafiknu'nisteriet1990a)examined thetransportationsectorseparately. The transportation plan calls for a less ambitious drop in CO2 emissions, closer to 5% compared with 1988. In both plans improvedenergy efficiency playsa cent/al role. How muchdid efficiencyinDenmark improve inthe past? Wefoundthat improvements inend-use energy efficiency reduced primary energy requirements in Denmark by 22% between 1972 and 1988. This change accounts for two-thirds of the decline in the ratio of energy use to gross domestic product that occurred during this time; therest of the decline wascaused bychanges inthe mixof goodsand ser- vices produced andconsumedby Danes. Additionally, increased efficiency inthe energy conversion sec- tor itself contributed important energy savings in Denmark, We also found that the shareof oil in final energy use fell from 78% to 55%, with large declines in alisectors except transportation. Including ali primary energy losses,the shareofoil fell from93%in 1972to 48%in 1988asoil wasalmost eliminated fromthepower sector. Focusing ondevelopmentsin sixindividual sectorsoftheDanisheconomy (residential, manufactur- ing, other industry, service, travel, and freigh0, we found thatthe residential, manufacturing, andservice sectorshave ledthe improvements inefficiency since 1972. Forexample,by 1988residential space heat- ing intensity had fallenby almost 50%, household appliances required 10%less electricity, manufactur- ingused 14%less finalenergy, and the primary energy intensity of the service sector fell by over 20%. By contrast, travel showedfew significantefficiency improvements and the efficiency offreight transpor- tation worsened. Infact, 62%more energy wasrequiredto movefreight in 1988than in 1972. Our international comparisons showed that the structure of energy use in Denmark is less energy- intensive than that ofmosthigh-income OECD countries, withthe exception ofJapan. Total energy sav- ings achievedbetween 1972and 1988in Denmark ranked among thehighest wemeasured in any major OECD country; that is, if energy intensities had not fallen, Denmark would have required 31% more energy in 1988than was actually used. This is more than would have been required for the U.S. (29%), West Germany (22%), Japan(17%),and Norway(3%). Overall, we concluded that most of the energy savings achieved in Denmark were brought about through improvements in technology. Short-term changes in consumer behavior were significant in reducing energy needs for space heating and, through shifts from car to bus and rail travel, in transporta- tion as weil. qhese changes have reversed somewhat since the early 1980s, but do not threaten the overwhelming part of total energy saved through technology improvements. We also found that an important stimulus for improved efficiency was higherenergy prices, led in no small partby significant " taxes imposed on small consumers of heating oil, electricity, and motor fuels. Energy-efficiency pro- grams accelerated energy savingsinhomes andcommercial buildings. Programs currently in piaceprom- ise to boost efficiency in ali sectors where electricity is used. Future programs could push efficiency of allenergy uses even farther,if supported byhighprices. The rate of improvement of energy efficiency in Denmark has slowed down significantly since 1984, consistent with trends we observed in other major countries. While manyof theenergy-efficiency goals stated orimplied in Denmark's Energi 2000 areachievable over a very long period, present trends to not point towards achievement of these goalsby 2010 oreven 2020. Strong measures willhave to he developed by both public and private authorities if energy efficiency is to make a key contribution to reducing environmental problems associated withenergy use inDenmark. Acknowledgments We wish to thank many colleagues here at the Lawrence Berkeley Laboratory for their assistance in preparing the report: Claudia Scheinbaum and Maria Josefina Figueroa, who prepared data and provided assistance with graphics, and Karen Olson, our publications coordinator. Equally important was the tire- less involvement of two analysts from Energistyrelsen, Peter Bach and Lene StrCm-Werge, as well as Jan SOrensen from Trafikministeriet. We also offer thanks to the officials of these agencies who also contri- butedtheir time. Jan M¢ller of DEFU provided much important data and many insights. The members of our steering committee, including J. GatzwiUer and J. Posborg of Oliebranchens Fa_Uesrepraesentation, Nils C. Rasmussen of Komgas, JCm Mikkelsen and Henning Parbo of ELSAM, and Jt_rgen Olsen of E/KRAFT, provided valuable guidance throughout this project. Finally, special "tak" to Kurt Jensen of Energistyrelsen, without whose determination the complicated arrangements for this pro- ject never would have been carried out. ENERGY USE IN DENMARK: OVERVIEW AND SECTORAL ANALYSIS 1. INTRODUCTION Nearly twenty years ago, Danish policy makers andthe public at large were confronted by unwel- come andunanticipated increases in energy prices. While world oil markets previously had been marked - by relative stability, the Arab oil embargo of 1973 sent fossil fuel prices to record highs. In 1979, oil prices jumped once again, spurredby the IranianRevolution andensuing Iran-IraqWar. The impacts of these events on the Danish economy should not be underestimated. Ineach case, the rise in oil prices was w followed by a deep and prolonged recession as producers and consumers adapted to new conditions and the government made compensating adjustments ineconomic policy. Denmark was particularly vulnerable to the oil price shocks of the 1970s because the nation depended almost entirely on imported energy andbecause oil supplied a full 93% of gross energy use.1 Not surprisingly, the energy shocks triggered significant changes in national policy and individual behavior that substantially reduced the nation's dependence on oil imports. In electricity generation, Denmark substituted coal imported from ostensibly secure regions of the world for oil and developed indigenous resources of oil and renewable energy. Today Denmark is for the most part energy self- sufficient. The changes that occurred were not limited to energy supply. Changes in the structure and efficiency of energy demand led gross energy use to decrease by 4%between 1972 and 1988 despite a 44%increase in GrossNational Product. This record of achievement, coupled with recent developments in oil markets, has largely alleviated concerns about thesecurity of energy supplies. In the mid-1980s, oil prices collapsed due to curtailed world demand and increased production in non-OPEC nations. While prices rose briefly during the Persian Gulf Crisis of 1990, even this majorevent hadonly fleeting impact.s on the supply of oil. In the 1990s, the "energy problem" has been redefined in light of concerns over the relationship between energy use andenvironmental degradation. Fossil fuels areamajorsource of urbanairpollution and contribute to the acid deposition thatthreatens terrestrial and aquatic ecosystems in Northern Europe and Scandinavia. Nuclear power imposes risks related to reactor safety and the storage of high-level radioactive waste. Perhaps most importantly, carboniferous fuels such as coal, oil, and natural gas are a driving force behind the greenhouse effect, which threatens to bring about highly uncertain but potentially devastating changes in the earth's climate. The energy successes of the 1970s and 1980s had both posi- tive and negative impacts on the environment. Certainly enhanced energy efficiency reduced the environ- . mental burder.__associated with energy use. Increased reliance on coal and coal-based electricity, how- ever, has exacerbated the environmental impacts of Danish energy use and poses a special challenge to future policy: How can the nation enhance its energy security while reducing energy-related environmen- • tal insults to acceptable levels? I Gross energy use is the sum of domestic energy production aridnet imports before conversion to finished energy products. The energy data discusseidnthissection were provided by Energistyrelsen. The dataon economic activity are from Damnarks Statistik.