Denmark’s pension sector has put out a stark warning today that both Denmark and the EU urgently need to firm up plans for investment in the green energy transition – or else Danish pension funds will invest in the US rather than Europe.
Insurance & Pension Denmark (IPD, Forsikring og Pension) said in a statement today the US was pushing climate technology forward, while Europe remained dependent on Russian gas.
Kent Damsgaard, IPD’s chief executive officer, said: “The Danish investors, including pension companies, will put their investments on the other side of the Atlantic if Denmark and Europe do not move now.”
IPD said the large-scale US investment programme – the Inflation Reduction Act signed into law by President Joe Biden last August – was so good at creating the framework for investments in renewable energy, including Power-to-X (PtX), that it had now become hard to defend investing in Europe.
RePowerEU, the European Commission’s plan presented last May to rapidly cut the bloc’s dependence on Russian oil and gas and accelerate the green energy transition, could not keep up, the association said.
Damsgaard said Danish pension funds and the country’s other investors could not wait for years for Danish and European decisions, or let their green projects languish in convoluted “snail’s pace” approval processes.
“And the consequence is that the Danish and European objectives to ensure energy independence are under threat,” he said.
Investment decisions should already be being made about a huge expansion of offshore wind and the establishment of PtX facilities in Denmark and Europe, the CEO said, in order to produce green hydrogen that could free the country from the Russian gas and secure its place in the green transition.
But the framework for such investments in Denmark was not in place – neither was it in Europe, he said, which put the multi-billion roll out in Denmark and Europe seriously at risk.
IPD said the US plan included a subsidy to produce green hydrogen that was almost three times as high as the one on the table in Denmark and Europe.
The association listed three steps it said the Danish government should take: put the long-term investment framework for offshore wind and PtX in place in the first half of this year; make a decision to establish hydrogen infrastructure before the end of 2023; and give authorities the resources to grant fast-track approvals, possibly using modern tender processes.
The Danish pension industry had set the goal of having nearly DKK500bn (€67bn) of green investments worldwide in 2030, Damsgaard said, adding that on top of that, there would be money coming from foreign investors and companies.
“With every month that passes, it costs billions in investments and in the long-term, even more billions in lost export income and - jobs here in Denmark and Europe,” he said.
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