The low-carbon diet

DENMARK, SWEDEN - Scandinavia is cold enough to grow a Mats Sundin. Yet nowadays nearly everyone in the hockey hero's native Sweden keeps warm in winter without burning so much as a drop of oil.

Such are the spoils of the Nordic energy paradox, where a generation of pragmatic energy policy is putting paid to the notion that life cannot prosper on a lower-carbon diet.

For those who would have their cake and eat it, too, look to Sweden, where the raw data is to be envied: between 1990 and 2006, the country enjoyed economic growth of 44 per cent in fixed prices, even as it cut carbon emissions by 9 per cent.

Denmark's numbers show a similar decoupling of GDP from the use of fossil fuels, with 43-per-cent growth contrasting with a 14-per-cent carbon reduction in the same time frame.

The shift was driven by a complex array of policies. But at its root, experts say, was the world's first carbon tax on fossil fuels – an early version of the so-called green shift now under discussion in Canada.

"We are living proof the world should not fear a tax on carbon. Sweden has the highest carbon taxation in the world but we are not living in the Stone Age," said Per Rosenqvist, a climate expert with the Swedish Environment Ministry.

"The standard of life here has improved even as emissions came down. It hasn't been easy. It takes a range of policies, not just a tax. The solutions are different in every country. And they need to be regularly readjusted, as we learn from our mistakes. But it works."

Those with long memories may recall the best of these results match the promises made by the Nordic countries a full 20 years ago, when they first committed to unilaterally weaning their economies off carbon at the 1988 Toronto Conference on The Changing Atmosphere.

In fact, Scandinavia had been brooding over energy issues long before the summit in Toronto. Energy experts say the flashpoint came in 1973, when the first wave of OPEC embargoes shocked the then import-dependent Nordic nations.

"More than any other country, Denmark was severely hit by the 1973 crisis because at the time 95 per cent of our energy was imported oil and coal," said Ole Odgaard, a senior adviser to the Danish Energy Agency.

"It was a very deep shock. And out of this came a determination to rethink our entire energy strategy in order to avoid the same thing happening again."

It is almost required, when writing about Scandinavian energy policy, to wax breathless about enlightened nations who put the planet uppermost on their national agendas.

Yet the reality is something somewhat less angelic. The Danish and Swedish models are driven as much by hard-nosed pragmatism as anything else. Enlightened? Absolutely. Daring? That, too. But the imperative, as with any nation, was self-interest, first and foremost.

"There is also a cultural explanation: We tend to have a culture of consensus on the really important issues," said Odgaard. "It goes back hundreds of years in Denmark, that tradition of finding a common strategy. And we saw it come together again after the crisis of the 1970s. We decided as a society that the issue of energy was so vital that we would raise it above politics – and ever since, that broad consensus has endured. The broad political alliance behind our strategy extends throughout parliament, and as a result the government can change but the basic policy endures."

The Danish consensus, said Odgaard, enabled Denmark to begin drafting plans for the extensive district heating networks that today provide 60 per cent of the country's winter warmth, from the whole of Copenhagen to isolated rural farms. Much of that heat comes from cogeneration plants that harvest heat energy previously wasted in electricity production.

"The district heating is the main reason we saved six to 11 million tonnes of CO2 per year," he said.

Though the bulk of Denmark's carbon tax burden is borne by consumers in fuel and electricity bills, industry pays, as well, albeit at a lower rate – heavy industry has long complained it is suffering a competitive disadvantage.

"When Canada goes shopping for policy, please take wisdom from our mistakes. Because the fact is we face carbon leakage issues in Denmark – the fear of losing our energy-heavy industry to places like Russia and North Africa," said Helle Juhler-Verdoner, head of the Danish Federation of Industries' energy unit.

"I'm not saying the carbon tax hasn't helped improve efficiency. We are, of course, fine with that. But we argue that a better model is to assist the new energy technologies through other means, rather than forcing energy-intensive companies to pay for it."

Juhler-Verdoner points jealously to Sweden, where most major industries – cement, steel, aluminium, pulp and paper – enjoy handsome exemptions from carbon taxation. Swedish policy, she said, allows heavy industry to more easily compete in the global marketplace.

Though they are neighbours, Denmark and Sweden have shifted away from fossil fuels in distinctly different ways. Though both have realized significant energy savings in ultra-efficient cogeneration heat/electricity plants, the Danes have embraced wind as their flag-bearing renewable energy, whereas the forest-rich Swedes have turned to biomass.

In both cases, the shift has resulted in a second dividend of emerging energy technology industries, with Denmark's Vestas Wind Systems alone, at 15,000 employees and growing, accounting for a quarter of the burgeoning global market for wind turbines.

Put another way, Danish energy technology exports were negligible in 1992, accounting for less than 1 per cent of total exports. Last year, Vestas and other burgeoning Danish energy technologies accounted for 9.2 per cent of total exports, worth 52 billion Danish Kroners, or $10.5 billion.

In Sweden, the economic gains are more difficult to pinpoint. While the Swedish home appliance conglomerate Electrolux, for example, is a global giant that routinely wins awards for its emphasis on energy efficiency, many argue carbon taxation played a minor role in the company's search for energy savings.

Swedish biomass and geothermal heat production, on the other hand, have become industries in their own right and now account for nearly 100 per cent of Sweden's district heating supply.

"By exempting biomass from the carbon tax we're made a dramatic shift away from coal in fuelling our power plants," said Rosenqvist.

"But it has also created an industry that would probably be of interest to Canada, given your forests. What we do is extract the biomass from growing forests, by using the residues that would otherwise be rotting and releasing CO2 in the process."

Though very much a society of car-lovers, Sweden is seeing a rapid fuel shift toward ethanol. The change is driven both by the carbon tax, and by a supplementary government edict requiring all filling stations to offer at least one alternative fuel in addition to gas or diesel. Ethanol now accounts for more than 25 per cent of the market, said Rosenqvist.

Swedish and Danish officials alike stress that carbon taxes don't succeed in and of themselves. To achieve results, they must be paired with comprehensive incentives and subsidies that build toward the desired energy shift.

"The advantage of leading the world in some of these areas is obvious. The disadvantage is that we made some mistakes," said Odgaard.

"For example, the first of the land-based windmills were built without any procedure to gain public acceptance. They caused landscape pollution and now we are paying to pull them down and re-establish better, more efficient ones in better locations," he said.

One Danish analyst describes the carbon tax as an almost Darwinian accelerator of the adapt-or-survive dilemma that all Western economies face today.

"The West is losing the heavy industrial production anyway, to China and India and wherever, because cheap labour is the real issue," said Martin Lidegaard, chair of Concito, a Danish environmental think tank.

"So what the carbon tax has done is to force the rest of our industry to go through a process of natural selection. The companies that can deliver new technologies and efficiencies survive and thrive. The companies that cannot are old and weak. And yes, let us be honest, they die," said Lidegaard. "But that's the whole point of a carbon tax. You want to pick winners that will position your economy for the future. If you make your policy to protect everybody, nothing will change."