Global warming

Climate change is a serious problem requiring a global solution. Our planet is getting warmer and man-made CO₂ emissions are a major contributor to this problem. According to the UN climate panel, the temperature on earth will increase by between 1.8 and 4C until the year 2100 due to global CO₂emissions.

DONG Energy is part of the solution
As an energy company DONG Energy is co-owner of the CO₂ problem. Therefore, we should naturally be part of the solution, too. DONG Energy accounts for around one-third of Danish CO₂ emissions, primarily due to our power and heat generation plants based on coal and other fossil fuels.

In response to the Kyoto agreement and EU’s CO₂ reduction plan the Danish state has decided that in 2012 DONG Energy and other energy producers be allowed to emit 57% of our CO₂ emissions in 1990. If our emissions exceed this level we are obligated to finance corresponding CO₂ reductions elsewhere. Therefore DONG Energy is working hard to emit less CO₂ per KWh produced, while at the same time buying quotas and supporting CO₂ reducing projects in other countries. And we are preparing ourselves for a future, where CO₂ emissions must be reduced even further. We are addressing the climate challenge in several ways:

• Buying CO₂ quotas and investing in projects resulting in lower CO₂ emissions from other players
• Investing in renewable energy
• Generating power and heat at our power plants even more efficiently
• Using biomass to fuel our power plants
• Capturing CO₂ from power plant exhaust gas and storing it underground
• Developing bio ethanol for transport purposes
• Advising our customers on even more efficient ways to use energy
• Saving energy at DONG Energy’s own locations
• Supporting the creation of global political solutions

A global political solution is required
The Kyoto protocol and the EU quota systems are the first steps towards a political solution to the CO₂ problem. But we need much more ambitious measures with truly global reach.

Countries such as the United States and China, which are responsible for major CO₂ emissions, have refrained from signing the Kyoto protocol. Hence, only 31% of the world’s CO₂ emissions are covered by the commitments of the protocol to reduce emissions. The successor to the Kyoto protocol will be negotiated during the climate summit in Copenhagen in 2009. It is important that as many countries as possible sign the new agreement and that it will be long-term, ambitious, and binding on all parties.

Quotas are the way forward
At DONG Energy, we believe that a well-functioning system for trading CO₂ quotas is the right way to combat global warming. The possibility of buying and selling quotas implies that CO₂ emissions will be reduced where it pays the most.

The EU has already set up a quota system. Unfortunately, it covers only a very small part of global CO₂ emissions – only around 7%, which means that the system is not as efficient as it should be.

The quota system of the future should not distort competition
The EU quota system means that by 2012 DONG Energy can emit 57% of our CO₂ emissions in 1990. If our emissions exceed this level we are obligated to finance corresponding CO₂ reductions elsewhere. According to the EU quota system, DONG Energy must reduce its CO₂ emissions by 30% in 2008-2012, relative to emissions in 2005-2007. We probably have higher costs related to the Kyoto agreement than most other companies in the world since Denmark has set more ambitious targets for CO₂ reduction than other countries and because the energy sector has been selected to fulfil these targets. In addition, Denmark does not have either nuclear power or hydroelectric power.

A well-functioning quota system is a good tool for reducing CO₂ emissions where it pays to do so. However, it is important that future quota systems are implemented in a way that does not distort competition between European energy companies.

Companies support global political frameworks
DONG Energy is a member of 3C (Combat Climate Change) and has co-signed the Global Compact’s ”Caring for Climate” statement. DONG Energy’s Anders Eldrup is a member of the Copenhagen Climate Council. The purpose of these memberships is to show that we as an energy company demand political solutions to the climate challenge, and to show that we strive to participate in developing them.