The Danish Parliament has announced that it will cancel all future licensing rounds for new oil and gas exploration and production permits in the Danish part of the North Sea and end existing production by 2050.
As a major oil-producing country in the EU, Denmark’s announcement is a landmark decision towards phasing-out fossil fuels in Europe.
The government of Denmark also agreed to allocate money to secure a just transition for impacted workers.
The government, the Liberal Party, the Radical Left, the Danish Party, the Socialist Party, and the Conservatives entered into a mutual agreement on the future of the North Sea, which sets a new green direction in line with the Climate Act’s goal.
In addition to the end date in 2050, according to which it will no longer be possible to extract oil and gas in the Danish part of the North Sea, the agreement entails the cancellation of both the 8th and all future licensing rounds.
This further means that the remaining rules are locked in such a way as to create security for existing production.
To date, Denmark will be the largest producer of oil and gas which set an end date for production. The countries that have taken similar steps up to now have been smaller producers.
The main rationale behind the decision is to use it as a springboard for a global leadership role in the work on the phasing out of oil and gas.
Minister of climate, energy and supply Dan Jørgensen, said: “I am very pleased that we now have a broad agreement on the future of the North Sea, and I would like to thank the parties for their constructive approach to the negotiations.
“The agreement sets a new, green course for the North Sea, and at the same time strikes a really good balance, and it benefits everyone. We are now putting an end to the fossil era, and drawing a straight line between our activities in the North Sea and the Climate Act’s goal of climate neutrality in 2050”.
The industry is somewhat secured regardless of the decision. Namely, the Esbjerg area will still grow and be developed, there will be a collaboration with the industry on possible electrification of the existing production, as well as creating an initiative on CO2 storage in the North Sea.
“It is incredibly important that we now have a broad majority behind the agreement so that there is no longer any doubt […]. In the Esbjerg area, in particular, there are many people employed in the sector, and now there is peace of mind so that the companies and investors involved in the North Sea have a stable framework to work within.
“At the same time, we will continuously help the people who are currently employed in the oil industry to new job opportunities, e.g. through continuing education. The agreement contains exciting opportunities to utilize the old oil and gas fields for CO2 storage, where there is also great job potential, even in the same area and for the same professional groups“, Jørgensen added.
‘A watershed moment’
For more than 80 years Denmark allowed exploration for hydrocarbons. The first commercial discovery was made in 1972.
On the Danish continental shelf in the North Sea, there are 55 platforms scattered across 20 oil and gas fields. French oil major Total is responsible for production in 15 of these fields, while UK-based Ineos operates in three of them while Hess and Wintershall Dea operate one each.
In 2019, Denmark produced 103,000 barrels of oil per day, making Denmark the EU’s second-largest producer after the UK. Denmark will likely take first place after the completion of Brexit. In the same year, Denmark produced a total of 3.2 billion cubic meters of fossil gas.
According to data from a statement by Greenpeace, Danish oil and gas production is projected to increase over the coming years before peaking in 2028 and 2026 respectively and will start declining thereafter.
Helene Hagel, head of climate and environmental policy at Greenpeace Denmark, said: “This is a watershed moment. Denmark will now set an end date to oil and gas production and bid farewell to the future licensing rounds for oil in the North Sea, so the country can assert itself as a green frontrunner and inspire other countries to end our dependence on climate-wrecking fossil fuels. This is a huge victory for the climate movement and all the people who have pushed for many years to make it happen.
“As a major oil producer in the EU and one of the richest countries in the world, Denmark has a moral obligation to end the search for new oil to send a clear signal that the world can and must act to meet the Paris Agreement and mitigate the climate crisis.
“Denmark is a small country but has the potential to punch above its weight and pave the way for the necessary transition to green, renewable energy. Now, the government and political parties need to take the next step and plan a phase-out of existing oil production in the Danish part of the North Sea by 2040”.
To remind, four Greenpeace activists occupied the Dan Bravo oil platform which is located on the Dan field in the Danish North Sea in August this year.
At the time, the environmentalist group stated that it was demanding an immediate ban on all further oil and gas exploration in Denmark, followed by a complete phase-out of domestic fossil fuel production, and a massive expansion of clean offshore wind power.