PUBLIC OR PRIVATE — WHY NOT BOTH?
The global transition to green energy is a challenge of such enormous dimensions that neither the private nor the public sector can handle the task alone. Governments and corporations are therefore focusing to an increasing extent on a partnership approach.
By Jan Aagaard
Climate change, global population growth and scarcity of resources.
The world is facing colossal challenges in the years ahead. With more and more people on the planet, the pressure is increasing on the Earth’s climate, environment and resources.
According to a new report from McKinsey Global Institute, the next 20 years will see the number of middle class consumers reach 3 billion compared with the current figure of 1.8 billion. This will lead to a markedly higher demand for more or less all resources, from oil and gas to rare metals, as well as basic things like food and water.
There is a need for green growth and new, sustainable approaches and technologies, and this will require huge investments. The International Energy Agency has calculated that in order to reduce the world’s CO2 emissions by 50 percent by 2050, it will be necessary – in the energy sector alone – to invest USD 750 billion annually until 2030 and over USD 1.6 trillion annually from 2030 to 2050.
In Denmark, a number of companies received support from successive governments to focus on green technology. Today those companies are international leaders in areas such as wind, water and bioenergy.
NEW INSTITUTIONAL MINDSETS
The transition to green energy is a project of such enormous dimensions that neither private, institutional nor public parties, regions or countries can undertake the task alone. As the McKinsey report states:
“Tackling the resource agenda must start with new institutional mindsets and mechanisms that can develop more coordinated approaches to the challenge of resources…”
Governments and corporations the world over are therefore focusing to an increasing extent on public-private partnership (PPP) or similar forms of collaboration. This is also happening in Denmark, where a number of companies received support from successive governments to focus on green technology.
Today those companies are international leaders in areas such as wind, water and bioenergy.
PPP is traditionally known as a model for financing large-scale infrastructural projects, but many players in the climate and energy area see extensive opportunities to utilise the model to promote the development of a greener society.
As Denmark’s Minister for Climate, Energy and Building, Martin Lidegaard, expresses it:
“The world is facing scarcity of resources, rising fossil fuel prices and increased pressure on the Earth’s climate. The transition to a green future, seen from a global perspective, is our chance to make economies more robust to the benefit of governments, companies and citizens. Neither countries, industries or peoples can do it alone. We need stronger operative partners to create the necessary change in the way we produce, develop and use energy, and especially to ensure investments in green growth.”
BARRIERS TO GROWTH
Partnerships can take different forms and have different objectives – from a wish to inform, to financing of projects and collaboration on the development and marketing of new products.
Financing is one of the biggest barriers to green growth, and it is here that capital-rich private investors such as pension funds can play a decisive role. An actual example from Denmark is PensionDanmark’s investment of over EUR 540 million in two large-scale Danish offshore wind farms in collaboration with Danish energy company DONG Energy and the Danish Energy Authority. The two wind farms will supply enough green electricity to meet the needs of 540,000 households.
Experience from previous PPPs around the world show that that partnerships are successful when the partners have common interests and the collaboration enables them to overcome barriers that they would not have been able to surmount alone, because one or the other player lacks expertise or experience in specific areas.
PARTNERSHIPS IN FOCUS IN COPENHAGEN
PHOTO: KELD NAVNTOFT /SCANPIX.
The annual Global Green Growth Forum (3GF) in Copenhagen in October focuses on green growth through public-private partnerships.
3GF is a Danish initiative established in 2011 with support from the Republic of Korea and Mexico. Since the first forum in Copenhagen in October 2011, where UN Secretary General Ban Ki-moon (photo) attended, 3GF has become internationally recognised as a leading platform for public-private dialogue and collaboration for green growth.
The overall theme for 3GF 2012 is efficient use of resources and growth. This year the forum will profile and support a number of public-private partnerships, which through improved resource efficiency can stimulate green economic growth and thereby create more green jobs. The forum will also look at global partnerships in areas such as energy, water, biorefining, trade, purchasing, financing and urban development.
Global Green Growth Forum 2012 takes place 9-10 October 2012 in Copenhagen.
Read more: http://www.globalgreengrowthforum.com
Many Danish cleantech companies are developing new green technologies in collaboration with or with the support of public sector partners in Denmark and abroad. ’Focus Denmark’ presents a couple of current examples…
MAKING BIOFUELS ABLE TO COMPETE
Danish enzyme manufacturer Novozymes develops and manufactures second generation bioethanol worldwide. It is only possible with public support, the firm emphasises.
By Jan Aagaard
At the present time, biofuels are the only existing alternative to liquid fuels like gasoline (petrol) and diesel, and a number of Danish companies are among the international leaders in developing biofuels.
One of them is the enzyme manufacturer Novozymes, which is involved in developing and producing second generation biofuel in a number of countries including USA, China, Brazil and Denmark. Unlike the first generation product, second generation bioethanol is made from agricultural waste like straw and corn stover, or from other sources of cellulosic waste material such as domestic waste.
According to Novozymes, it is essential that private sector companies receive public support in order to develop and extend the spread of second generation bioethanol.
“The energy sector is an area very much subject to political influence. Fossil fuels have played a dominant role in the world for the last 100 years, and have received significant state subsidy throughout that time. If biofuels are to become a competitive alternative to fos sil fuels, political support and state subsidy will be necessary for development and the ensuring of proper framework conditions,” says Fleming Voetmann, director and head of public affairs and media relations at Novozymes.
He points to the US as a showpiece of public-private partnership in the development of biofuels, where the US authorities offer support throughout the whole process, from the cultivation of crops to sales of fuel at gas stations.
Novozymes collaborates with authorities in a number countries on the development and commercialisation of biofuels. In China, the company has entered a partnership with the state companies COFCO and Sinopec regarding the supply of enzymes to a new demonstration plant that will produce bioethanol from agricultural waste.
BIOFUELS FOR SHIPPING
Among the Novozymes projects in Denmark is a new large-scale research and development programme, which over the next five years will develop biofuels for ships as a replacement for polluting fossil fuels. Shipping today accounts for 10 percent of the global transport sector’s energy use and CO² emissions, corresponding to the entire emissions of Germany.
Also involved in the project are the Danish shipping giant A. P. Moller-Maersk and a number of other Danish companies, plus the University of Copenhagen and the Technical University of Denmark.
The project has an overall budget of EUR 15 million, of which half comes from the Danish National Advanced Technology Foundation – a state financed agency that invests risk capital in high tech initiatives in order to build a bridge between companies and public sector research institutions.
“The new collaboration on the development of biofuels for the shipping industry is a really good example of how the public and private sector in Denmark can get together to create new, sustainable technology,” says Fleming Voetmann of Novozymes.
GREEN VEHICLES NEED A KICK-START
Entrepreneurial firm H2 Logic is aiming to make Denmark one of the first countries where hydrogen fuel cell electric vehicles are introduced onto the market on a large scale.
By Jan Aagaard
Two blue hydrogen fuel cell electric vehicles, developed by Danish entrepreneurial firm H2 Logic, exhibited next to a somewhat less modern vehicle near the parliament in Copenhagen.
PHOTO: CARSTEN SNEJBJERG/POLFOTO
Hydrogen fuel cell electric vehicles (FCEVs) are considered to be one of several alternatives to internal combustion engine vehicles. Worldwide there are currently only a few thousand FCEVs on the roads as part of research or demonstration projects. Even so, a number of leading automotive manufacturers have entered agreements to introduce FCEVs onto the market in 2015.
Denmark and the other Scandinavian countries have long been seen by auto makers as an attractive place to introduce hydrogen FCEVs onto the market. Part of the reason for this is the intensive hydrogen technology research and development work being carried out in Scandinavia. In Denmark alone, companies and universities, together with public sector programmes, have invested more than EUR 310 million in the technology since 2001.
One of the frontrunners in this development is the Danish entrepreneurial firm H2 Logic, which since 2003 has positioned itself as one of the world’s leading developers of energy solutions based on hydrogen and fuel cells.
The private and public sector need to work together in order to broaden hydrogen solutions to the transport sector.
Director, H2 Logic
HYDROGEN REFUELLING STATIONS
The company has developed refuelling stations, where hydrogen FCEVs with a range of over 500 kilometres (300 miles) can be tanked up in a few minutes. The first 10 hydrogen refuelling stations are in operation in Scandinavia – of which three are in Denmark.
H2 Logic has developed and matured its technologies and products by entering national and international collaborations involving private and public sector players.
One example is the H2MOVES Scandinavia project, where H2 Logic and a number of European collaboration partners, including Daimler and Fiat, are investing EUR 19.5 million in testing hydrogen FCEVs and refuelling stations in the Norwegian capital Oslo. The EU is providing EUR 7.8 million in support, with additional finance coming from Denmark’s EUDP and Norway’s TRANSNOVA, which are both publicly funded programmes.
The H2MOVES project involves the testing of 17 hydrogen FCEVs in Oslo, where a large-scale hydrogen refuelling station has been established. The vehicles will also go on a round tour of Europe together with a mobile hydrogen refuelling station in order to communicate the project’s aims and results.
In another public-private collaboration, The City of Copenhagen, H2 Logic and Hydrogen Link Denmark last year entered an agreement with auto maker Hyundai/KIA Motors on extending hydrogen FCEVs and refuelling stations in both Denmark and the Republic of Korea.
“The private and public sector need to work together in order to broaden hydrogen solutions to the transport sector. This is especially so in the demonstration and maturing phases, for while research and development costs money, it is typically much more expensive to demonstrate the technologies. This is not always an attractive scenario for private investors, but instead the public sector can go in and support the process,” says director Jacob Krogsgaard of H2 Logic.
This page forms part of the publication 'Focus Denmark, June 2012' as chapter 4 of 8
Version 1.0. 02-07-2012
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