DENMARK SUPPORTS EUROPE-WIDE APPROACH TO ENERGY

UNCLAS SECTION 01 OF 02 COPENHAGEN 000097

SENSITIVE
SIPDIS

STATE FOR EUR:DAS QUANRUD, EUR/NB, EEB/HSC/IEC

E.O. 12958: N/A
TAGS: ECON ENRG ECIN EPET PREL DA RS XG
SUBJECT: DENMARK SUPPORTS EUROPE-WIDE APPROACH TO ENERGY
SECURITY

REF: 09 COPENHAGEN 521

COPENHAGEN 00000097 001.2 OF 002


(U) SENSITIVE BUT UNCLASSIFIED -- NOT FOR INTERNET
DISTRIBUTION.


1. (SBU) SUMMARY: Danish Energy Agency (DEA) Deputy Director
General Anne Hoejer Simonsen told EUR Deputy Assistant
Secretary Pamela Quanrud in a February 10 meeting that
Denmark continues to pursue energy security as a top national
priority, and that greater EU energy interconnection is in
Denmark's interest. Denmark anticipates that rigidity in EU
electric transmission arrangements will ease with the
implementation of the Treaty of Lisbon and believes that the
EU should pursue grid expansion more aggressively. New EU
members in Central Europe present a particular dilemma with
regard to energy security, in part because of price subsidies
that encourage over-consumption and discourage efficiency.
Simonsen said ensuring all European consumers pay at least
market prices for energy is "the key to energy security."
Denmark is actively watching Russia, both in terms of
Russia's control of gas flows in Europe, and whether Russia
will be able to continue to deliver sufficient gas supplies
to Europe in the face of aging infrastructure and increased
deliveries to Asia. With regard to the Baltics, Denmark has
hosted extensive visits by Baltic Energy Market
Interconnection Plan (BEMIP) participants, but has not
engaged in intensive meetings within the BEMIP framework; DAS
Quanrud encouraged more Danish involvement. END SUMMARY.


2. (SBU) Danish Energy Agency (DEA) Deputy Director General
Anne Hoejer Simonsen recounted Denmark's experience in
achieving energy security, laid out the way forward in
maintaining that security, and reiterated Denmark's support
for an integrated European energy security approach, during a
discussion with EUR Deputy Assistant Secretary Pamela Quanrud
on February 10. Since the 1970s, energy security has been a
top national priority in Denmark (reftel). Denmark achieved
energy independence in the 1990s and Simonsen said that a
strong consensus persists among Danish leadership (both
government and opposition) that maintaining energy security
despite diminishing Danish North Sea oil and gas reserves
must be at the top of the national agenda. This includes
broad agreement on a commitment to maintaining high energy
costs for Danish consumers as an incentive to increase energy
efficiency. It also includes working towards broader
European energy security. Denmark is using its position as a
"front runner" on energy security to influence European Union
energy policy; Simonsen said that the 2008 EU energy policy
reflected "all of Denmark's wishes." Denmark will soon
outline a strategy on how to gain complete independence from
fossil fuels by around 2050. The Danes proudly regard the
last 35 years as a complete energy revolution in Denmark, but
anticipate that the country will need to undergo another
complete revolution in the coming 35 years to maintain its
position as an energy leader.


3. (SBU) Simonsen characterized EU energy interconnectivity
as in the Danish interest. She outlined several specific
projects to increase natural gas storage and expand gas and
electricity connections to broader European networks in which
Denmark is participating. She called increased EU investment
in the expansion of natural gas networks and electric grids
"wise," and said that energy infrastructure investment is
"always a net positive." However, Denmark believes that the
expansion of electric grids should be receiving more
attention than the expansion of natural gas networks, as
there can be greater diversity of supply for electricity and
it can be used for heating just as well as natural gas.


4. (SBU) Simonsen opined that the energy policy provisions
in the Treaty of Lisbon will enable member-state governments
to pressure national electric transmission monopolies to
become more efficient, helping to ease some of the rigidity
that has characterized electricity transmission in Europe and
open the path to more efficient interconnection of renewable
energy sources. The common EU energy policy is having
another benefit: as member countries are being required to
submit their plans for attaining EU carbon reduction targets,
the plans are being evaluated in Brussels to ensure that
multiple countries are not relying on the same renewable
sources and that adequate renewable supplies will be
available to achieve the EU carbon commitments.


5. (SBU) The new EU members in Central Europe present
particular difficulties for attaining European energy
security, according to Simonsen. Denmark believes these new
members must be fully integrated into the EU, and thus seeks

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opportunities on all matters to include them and cooperate
with them. However, she was pointed in her criticism of
policies throughout the region that subsidize energy costs
for local consumers, which leads to uneven gas pricing across
the EU, as well as encourages over-consumption and
discourages efficiency in the new members. Requiring that
all European consumers pay at least actual market prices for
energy is "the key to energy security," she said. She also
noted the lack of transparency in contracts for new energy
infrastructure to connect eastern EU members with western
networks. In Denmark's view, the European Commission must
play a more active role in ensuring transparency in these
contracts and ensuring that a minimum supply of energy be
available to all member states.


6. (SBU) On Russia's influence on European energy security,
Simonsen said discussion within the Danish Ministry of
Climate and Energy is "very vivid -- it is what is in focus."
(Comment: This renewed focus on Russia and European energy
security comes largely, though not entirely, from
newly-appointed Minister of Climate and Energy Lykke Friis,
whose background as a European security and EU expert has
been apparent in her early statements that energy security is
at least as much a priority as climate concerns. End
Comment.) Denmark is concerned not only about the threat
that Russia might cut off gas to Europe, but also whether
Russia will be able to meet delivery obligations as its
natural gas infrastructure deteriorates and it sends more gas
to China. On Danish approval of Nordstream, Simonsen said
that the question was basically a technical one for the DEA.
In the Danish view, Denmark was obligated under international
law to approve construction through its territory as long as
all environmental and security concerns were adequately
resolved. DAS Quanrud emphasized that the U.S. is not
opposed to Nordstream or any other route for energy to flow
to Europe. Simonsen called conflicts over Nordstream between
Germany and Poland "a political game too grand for Denmark."
The Danes believe that once there is new gas flowing through
the pipeline, it will be in all EU member states' interest to
ensure that the gas is appropriately distributed.


7. (SBU) DAS Quanrud asked Simonsen about Danish
participation in the Baltic Energy Market Interconnection
Plan (BEMIP). Simonsen replied that Denmark has hosted
extensive visits by BEMIP participants, but has not engaged
in intensive meetings within the BEMIP framework. Denmark
has become expert in sharing information on how to establish
smart electricity transmission systems that efficiently
incorporate wind and other forms of renewable energy, and is
open to becoming more active in sharing this knowledge with
BEMIP countries. DAS Quanrud encouraged the Danes to become
more involved in BEMIP and invited Denmark to consider making
a presentation at the upcoming BEMIP meeting this spring on
incorporating renewables.


8. (U) DAS Quanrud cleared this message.
FULTON