Despite climate being low on the political agenda in Denmark’s forthcoming general elections, the climate plan of the country’s second biggest party has made news. Venstre, Denmark’s conservative-liberal party, published a 60 billion kroner ($8.04bn) green investment plan on 7 October. To fund the plan, the party plans to sell part of the government’s share in Ørsted, the world’s largest developer of offshore wind. Specifically, the plan is to sell the state’s share of the international offshore wind turbine business, but keep Ørsted’s Danish power plants under state ownership. Currently, the Danish government owns just over 50% of the company.
“It is a difficult, but correct, priority to sell off the state’s share of Ørsted,” said Venstre’s chairman Jakob Ellemann-Jensen in a press release. “Denmark is in the middle of a serious climate crisis and an energy crisis, where we are fighting Putin. We have to react to that. We are now coming up with Danish politics’ most ambitious and responsible, green 2030 plan.”
The 60bn kroner plan would, among other things, go towards retrofitting the country’s housing stock, ensure more nature by raising a new forest, more renewable energy, research and development, and additional developments in future technological breakthroughs.
The plan evoked strong reactions from other parties. Dan Jørgensen, Denmark’s minister of climate and energy and public utilities, told Danish media it is “completely incomprehensible” to sell the share. Pia Olsen Dyhr of the Green Left said on Twitter it is “close to the craziest thing” she has heard in a long time.
The energy crisis and inflation, not climate, top the agenda
Denmark holds its general elections on 1 November 2022, several months earlier than planned. Prime Minister Mette Frederiksen called the early elections after a scandal over the culling of the country’s farmed mink population in 2020 over fears the animals could spread a mutated Covid-19 variant. Coalition party the Social Liberals threatened to withdraw support if Frederiksen didn’t call for early elections.
There are 14 parties in the race to secure seats in the Danish Parliament, with the prime minister’s Social Democrats leading in the polls. However, polling also shows a close race between the country’s traditional red and blue blocs. Danish political parties are divided into a left-leaning ‘red bloc’ and a right-leaning ‘blue bloc’ of parties.
In the 2019 elections, four of the six ‘red bloc’ parties – the Social Democrats, Social Liberals, Green Left and the Red-Green Alliance – got a majority of 91 seats together and formed the governing coalition.
In the latest opinion poll, those four parties are estimated to secure 83 seats, making this election a close call between the two blocs. According to polling from the Danish analysis institute Voxmeter on 25 October 2022, 47.2% of votes would be for the red bloc and 41.3% for the blue bloc, neither bloc having a clear majority.
With a war in Europe and the sabotage of the Nordstream pipelines just two months ago, the political campaigns have not put climate and the green transition high on the agenda. Rather, the energy crisis, inflation and the food crisis seem to be the political hot topics. The Social Democrats do highlight their aim for a faster green transition on their homepage. But the party talks more about what they’ve achieved in the past, and why a transition won’t limit economic growth, than they lay out concrete plans on how they plan to reach the national target of a 70% CO2 reduction by 2030.
Selling Ørsted to finance a climate plan
Much of the debate over the plan to sell Denmark’s Ørsted share has been around whether the sale could create financing for Venstre’s climate plan. The answer to that can be short, according to Per Nikolaj Bukh, professor at the Department of Economics and Management at Aalborg University.
“No," he says. "That is not going to happen. It wouldn’t solve any financing problems in Denmark.”
Following the requirement of the European Fiscal Compact that public budgets must be balanced, the Danish government passed the Budget Act in 2012. Simply put, there is a limited amount of public spending available, and if the government wants to spend more than the available financing on something, it will have to either lower expenses elsewhere or take the money from something else.
“Even though it sounds plausible that selling the shares would raise extra money, you can’t really use it to finance anything because you’re just moving things around on the balance sheet,” explains Bukh. “The real restriction that politicians are facing is that if they want to use more money for one thing, they need to reduce spending on another. It’s difficult to prioritise something at the expense of something else. It’s easier if you can just promise a lot of things.”
Should Denmark own a share of Ørsted?
Another part of the debate going on in Denmark is whether the government should own a share of Ørsted in the first place. According to Bukh, it is a valid question, but a separate issue from the financing of Venstre’s climate plan. Ørsted told Energy Monitor in a response to Venstre's proposal that decisions about ownership are up to the shareholders.
“It’s up to our shareholders to decide any potential changes of their ownership shares," said chairman Thomas Thune Andersen. "We’re here to drive the green transformation forward, and this is what we’ll continue to focus on.”
Whether Ørsted belongs to Danish critical infrastructure has also become a hot topic of debate among politicians. According to Prime Minister Frederiksen, Ørsted is critical infrastructure and the company must be kept in Danish hands. Venstre, on the other hand, argues the company is no longer critical infrastructure for Denmark since its shift towards the international wind energy business and therefore it should be freed from political ties.
Ørsted has its origins in Danish Oil and Natural Gas (DONG), a company charged with extracting oil and natural gas from the North Sea to become less dependent on oil from the Middle East. In 2008, the company announced its transformation from a fossil fuel-based to a renewable energy company, by developing offshore wind farms in Denmark and other countries and selling its oil and gas business in 2017. At present, a large part of Ørsted’s business is abroad, with 7.6GW of offshore wind installed in total and involvement in Danish offshore projects that total over 0.9GW. Recently, the company announced four new projects off the Danish coast with a capacity of 5.2GW.
In all, 30 companies in Denmark are either owned or partly owned by the state. Bukh explains that the general principle in Denmark is that the state should not own private companies, although it is not written in law.
“There’s only need for the state to own a company if they are part of critical infrastructure,” he says.
What is “critical infrastructure”?
The problem with so-called "critical infrastructure” is there is no common definition in Denmark, complicating the discussion about whether Ørsted should be considered as such. Whether a company is considered critical, can also depend on timing. Bukh gives Danish vaccine production as an example.
“Six years ago, the Danish state sold the vaccine production business of the State Serum Institute because it was decided that the costs of production were higher than the price of buying vaccines on the market. It was decided that Denmark didn’t need its own production,” he explains. “But then a few years ago, as we know, it suddenly became very important to be able to produce vaccines. So, I think if the state still owned production now, we would consider it critical infrastructure.”
With the energy crisis and geopolitical tensions, other countries in Europe are now moving to nationalise their energy companies. France has started the process to fully nationalise utility company EDF. In the UK, the Labour Party announced plans for a state-owned power generation company, Great British Energy. The European Commission emphasises energy as a key sector in its proposal to strengthen the resilience of EU critical infrastructure.
Bukh adds: “A few years ago, I would have assumed that Ørsted wouldn’t be considered critical. But now that we have an energy crisis, should it be considered critical to have some kind of ownership or influence on your energy supply as a state? It could be so.”