The government launched the ambitious Climate Act in 2020, which in record time aims to reduce Danish CO2 emissions by 70% - to 23 million tonnes by 2030.
Denmark has come a reasonable long way, but there is still a long way to go to achieve the goals, and companies often feel lost when reading the Danish climate law, for several reasons:
- The Climate Act is limited to Denmark, which is a challenge because many companies' activities cross borders, and along with it the companies' CO2 emissions.
- The Climate Act is based on the 70% target of 1990, however, this is rarely also is the natural baseline for a company, as many companies have changed size, no longer exist, or have changed activity.
- The Climate Act is based on statistical assumptions about CO2 emissions, which do not necessarily fit all companies, where a particular company potentially may emit greater or lesser amounts of CO2 than average.
The Danish Council on Climate Change issued a progress report in February 2021, which deals with an assessment of whether Denmark is achieving its climate goal. Despite the fact that Denmark has already reduced 40% CO2 emissions (mainly due to coal, which has been replaced with wind mills and biomass, and energy efficiency), made various political agreements on more electric cars, green tax reform, and an energy island, it is nevertheless "the Climate Council's overall assessment that the government's climate action does not show that the 70 percent target will be met".
HOW WE, LAWYERS, CAN HELP COMPANIES
According to the Danish Council on Climate Change, Denmark has yet to find solutions to reduce CO2 emissions by an additional 13 million tonnes. The Danish Council on Climate Change recommends that this can be achieved, among other things, by introducing a uniform CO2 tax.
Other recommendations for a Danish strategy are Power-to-X, which our lawyers deal with. Power-to-X supports reducing CO2 emissions by 13 million tonnes by 2030, which in turn requires a massive effort for manufacturing startups.
Kick-starting production requires great investments, as well as international cooperation, which requires lawyers with an international outlook, like us. It also requires that the business community is continuously involved and consulted related to the Power-to-X strategy (and here our specialist lawyers are highly active) as it places great demands on the companies that will develop and mature products and technologies. Furthermore, lawyers can provide guidance related to CSR, SRI, and ESG – also all areas of our legal expertise.
The above concepts are often difficult to distinguish, wherefore they are briefly defined here:
Power-to-X (PtX)
Power-to-X (PtX)Power-to-X (PtX) is a process in which green electricity is part of the conversion processes into hydrogen, or other hydrogen-based PtX products, that can be used in sectors where electrification is not an obvious option, for example in the aviation industry and heavy transport.
Excess electrical energy is used, often during periods when generating fluctuating renewable energy exceeds the capacity or needs of the grid. As an example, the X terminology can mean power-to-gas. PtX is CO2 neutral and is crucial for a green transition in the energy sector.
ESG
ESG stands for "Environment, Social and Governance". These three parameters are used to measure and assess a company's accountability and sustainability. The company's environmental goals are assessed based on energy consumption and recycling of materials.
The social aspect includes the company's relationship with human right and labour, and corporate governance concerns the ethical management and business of the Executive Board. The ESGanalysis is the most common method of analysis in sustainable investments.
SRI
SRI stands for "Socially Responsible Investments" based on the UN and OECD guidelines related to sustainable and socially responsible investments, including a company's social responsibility regarding investments both in Denmark and abroad.
This includes that a company's management assures the company's compliance with international standards and guidelines.
CSR
CSR is short for "Corporate Social Responsibility", which is a company's social responsibility, a concept that includes environmental considerations and demonstrates consideration for society in general. This is a big and important part for the management team of both small and large companies.
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