Renewables: can they deliver? Jorgen Mads Clausen CEO of Danfoss Chairman of Danish Energy Industries Federation European Business Summit Greening The.

Renewables: can they deliver?

Jorgen Mads Clausen CEO of Danfoss

Chairman of Danish Energy Industries Federation

European Business SummitGreening The Economy New Energy For Business

21st February 2008

VISION- Meeting the Carbon ChallengeWe are on the edge of a new energy revolution.

The coming decades will bring huge changes to energy systems throughout the world.

The challenge will be to provide eight billion people with energy and, at the same time, protect resources and the environment.

Technology will most certainly be fundamental in making it possible to meet the world’s growing energy needs in a socially and environmentally responsible way.

Tackling climate change is a pro-growth strategy

Economic growth and welfare can be maintained without influencing the climate negatively

This is what we have experienced in Denmark, and this is what we call "The Bright Green Strategy"

Here technology has a central role to play

A Bright Green Strategy

The case of Denmark: Wealth-creation at constant energy consumption

Source: Danish Energy Authority

The Danish gross domestic product (GDP) grew by 75 pct. from 1980 to 2006 (at constant prices). In the same period the consumption of energy in Denmark has been more or less constant.

This means that each unit of GDP requires approximately 40 per cent less energy today than in 1980

60

80

100

120

140

160

180

1980 '85 '90 '95 '00 '05

GDP, 2000 PricesGross Energy Consumption, Adjusted

The role of Technology

World Energy Consumption

Source: Siemens

-and the role of renewables

<2% of total

53%

31%9%5%

Biomass/residues

Wind

Geothermal

Other

5,5% of total

Other

1%Geothermal

20%

Wind12%

Biomass/residues

67 %

29.0

15.4

2000 2020

Other Renewables

Hydro

Nuclear

Natural gas

Oil

Coal

2.8 %/aSolar

2%

Power Generation 1000 TWh

Renewables are only part of the answer

Renewables are only part of the answer

CO2 e

Emissions

Population

GDP / Population

Energy / GDP

CO2e / Energy

X

Infl

ue

nc

ea

ble

wit

h

tec

hn

olo

gic

al

inn

ov

ati

on

s

=

X

X

Demo-graph

y

EnergyIntensity

CarbonIntensity

Wealth

Difficult to influence

May be Influenced by

choice oftechnology

Innovative solutions for reduction of CO2 emissions

Efficient energy generation Highly efficient gas and steam turbines Coal carbon capture storage (CCS) Cogeneration…

Switch to renewables Wind Biomass Solar…

Efficient energy distribution Smart grid High-voltage DC transmission systems Distributed heating and cooling systems…

Efficient energy consumption Fuel efficient vehicles Building technology measures Energy saving lighting Distributed heating and cooling systems…

The Kaya Identity

Meeting the carbon challenge

Source: Vattenfall, McKinsey

Some comments:

- All technologies, including renewables, must be in play in order reach the carbon goal

- However, we need to fix the order of priority in order to reach the goal in an efficient manner

- Energy efficiency has a vital role to play and must not be forgotten

- Higher focus on energy efficiency will also ease the effort to reach the targets for renewables

- Multiple business opportunities

Making the right choices

Making the right choicesShort term and long term

• Many future alternatives exits

• However, in the short term we need to focus on deploying existing, well proven and fully available technologies

• Especially technologies improving energy efficiency need to be in focus if we are going to reach the objectives of bringing down CO2-emissions

• Some of these technologies will also increase the share of renewables, especially district heating and cooling technologies

Meeting the carbon challenge Before 2020

• District heating and cooling technology – the most energy District heating and cooling technology – the most energy efficient form of energy production (combined electricity and efficient form of energy production (combined electricity and heating)heating)

• Biomass heating technology – Co2 natural and attractive Biomass heating technology – Co2 natural and attractive alternative to oil and gasalternative to oil and gas

• Heat pump technology – high efficient heat pumps as the best Heat pump technology – high efficient heat pumps as the best alternative to individual oil and gas boilers alternative to individual oil and gas boilers

• Comfort controls technology – to reduce energy use for comfort Comfort controls technology – to reduce energy use for comfort heating and to increase human comfortheating and to increase human comfort

• Energy audits and trimming – to reduce energy usageEnergy audits and trimming – to reduce energy usage

All the above mentioned alternatives are based on existing, well proven and fully available technologies

District heating and cogeneration The sleeping giant

• Lower import dependency of 4.5 EJ… or the equivalent of Poland’s energy supply

• Giving a reduction of the primary energy supply of 2.1 EJ … or the equivalent of Sweden’s energy supply

• Reduction of 400 million tons CO2 per year … or the equivalent of the emissions from fuel combustion in France

• Higher share of renewables as district heating is a common carrier for renewables like wind, biomass, solar ….

District Heating example:

Increasing the District Heating share from its current 6% to 12% in Europe will have major effects

See more about Bright Green here:www.ei.di.dk

ConclusionA Bright Green Future

With climate change hard upon us, a new green movement is taking shape - one that embraces the concerns of environmentalism but rejects its worn-out answers.

Renewables are part of the solution

But, we all have an obligation to make sure that we use existing, well proven and fully available technologies to secure immediately improvements of energy efficiency and CO2 reductions

This is a Bright Green Strategy