"The Danish Perspective"

Speech by Connie Hedegaard, Danish Minister for the Environment, at the Green Roads to Growth Forum, Copenhagen, March 2nd 2006

Check against delivery.

Ladies and Gentlemen,

Thank you for the opportunity to share my views on the Danish perspectives of Green Roads to Growth.

How best to make environment and growth mutually supportive, is a high priority and a crucial issue in modern environmental policies. Although it is still surfacing from time to time, we are moving away from the dogma that environmental protection is incompatible with economic growth. The need for economic growth to go hand-in-hand with environmental protection - and the possibilities even for positive synergies - is fortunately succeeding.

In the same vein the Environmental Assessment Institute and Peter Carlow has called this forum, which I am very grateful for.

We have made a lot of progress in coming to grips with the environmental problems in the rich part of the world. But the fact remain, that -  at the global level - almost all indicators are headed in the wrong direction: Climate change, loss of biodiversity, land degradation, water scarcity, pollution of drinking water - and so on.

Continuing growth in population and in demand for food and shelter will make it even harder to deal with all of this in the coming decades.

Environment - from expense to investment

Up until a few years ago, it was a widespread notion, that environmental protection is a kind of luxury that a society can only afford when is had become rich enough. Now we know better. To meet the aspirations of the developing world and to leave a sound basis to live from for future generations, we have an obligation to take the environment and the use of natural resources into account. Eco-efficiency in all of its aspects must be made the guiding principle on the path to sustainable production and consumption for all.

We have to look at the costs of environmental protection and the sound management of natural resources as an investment - rather than as an expense. And experience has shown that concerns for the environment as well as for growth can be mutually supportive.

Further we have to realise that in-action in many areas also comes at a cost. This cost is often neglected in the political processes. It may be more difficult to calculate the costs of in-action and include them in the annual budgets, but we need to be better at this.

EU policies for environment and growth

The ambitious Danish environmental policies - and gradually also European policies - have historically acted as drivers for industrial innovation. They have enhanced resource-efficiency and the development of more environment-friendly products and processes that are in demand all over the world.

On climate-change we see clearly the inter-linkages between ambitious targets and innovation - especially when we compare the EU with the US. There is no doubt that the European commitment to reduction of greenhouse gases has been a major driver for the innovation and the present strongholds that European companies possess. In the US the attention to innovation has only lately surfaced, and interestingly the attention has largely surfaced from private companies - the General Electrics "Ecomagination" strategy, being a proud example.

So it is no wonder, that the European drive for eco-efficient technologies has been made an integrated part of the Lisbon strategy for growth and jobs. At present, Member States are working on the follow-up to The Environmental Technologies Action Plan (ETAP) of the EU. To enhance this agenda, we need international co-operation in research and development, comprehensive business strategies and better contacts between science, business and governments. I am often surprised by how little one fraction knows what other fractions do.

My own effort has been directed mainly at pin-pointing what governments can do to inspire, to push for and to support the effort, - and remove barriers to progress. Next month, the Government will present a Danish Action Plan for Eco-efficient Technology and Eco-innovation which will underpin the competitiveness and innovativeness of our industry and promote export and the creation of new jobs.

Government has a crucial task in setting the agenda, taking responsibility for the environmental problems, we need to solve - nationally and internationally - and setting a clear regulatory framework. The implementation depends on science and business, and their effective contribution is depending on a conducive policy-framework with flexible mechanisms and incentives to develop workable and commercially sound solutions.

Sound environmental policies along these lines are an important part of the basis for growth in modern society. Looking around the world, we see that countries with high environmental standards have market-leading firms and better economic performance than those with lower standards. High performance standards are incentives to innovation in all areas - including the environment.

Private companies shouldn't be so frightened by environmental regulation. Historically it has always been necessary to regulate for the protection of the environment - benefiting man-kind! - and it has equally shown to be an business opportunity as well. Regulation is needed - preferably on an EU or international level, but national regulation is also from time to time relevant and necessary.

Environmental challenges and business opportunities

But new regulation triggers new kinds of demands which require new business opportunities. And we are talking big business here. At present, the world market for environmental goods and services is estimated to be worth 425 billion Euros and likely to grow to 565 billion Euros by 2010. It is about the same size as the aerospace and the pharmaceutical industries, - just to give you a sense of the proportions.

But, let us take a closer look of just a couple of the major environmental challenges we face and some of the business opportunities that are related to them.

Climate change

Global climate change is the emblematic example. Allowed to go on unchanged, its potential consequences are enormous. It involves every nation on earth: Every business, every household. And it is not going to go away by itself. To handle the challenge policies are needed.

According to the recent "business as usual" scenario of the International Energy Agency, world energy consumption will increase at least 60% towards 2030 and the share of fossil fuels will grow slightly from 80% to 82%. This will jeopardize efforts to curb our emissions of greenhouse gases. The result will be a rise in the global mean temperature beyond the 2 degree Celsius over the pre- industrial level that EU is using to guide its climate-policies. In other words: This is a scenario that we simply cannot allow to happen.

We have to curb growth in global emissions and start bringing them down within a few decades. The only way forward, is to reduce emissions and accelerate the development of new, eco-efficient technologies - gradually to move away from the use of fossil fuels. The market forces alone will not bring such a change about. Even though we can see the end of the reserves of oil and gas, there is coal for hundreds of years. So, while striving to develop alternatives, we have to make the use of fossil fuels less polluting.

I find it rather interesting - and surely encourage - the large attention President Bush recently gave to reduce the dependency of oil and gas in the US. I realise that the main reason is security of supplies, but take it only as a good example on the possible synergies to be obtained between environmental protection, economy and security.

More energy efficient technologies are a major part of the solution. The most direct way to get results in the short run, - and useful and necessary in the longer run as well. That is one reason why the EU has energy efficiency high on the agenda. Securing a reliable and sufficient supply of energy as well as economic considerations are other reasons, why it makes good sense to focus on efficiency. An area where Denmark has much to contribute, - by the way.

The development and marketing of new energy systems has to be an international effort. Few countries - if any- have the scientific and entrepreneurial capacity to advance purely on its own. Even the Bush-administration, that won't commit itself to internationally agreed climate-goals, has made the transformation of the US energy system a high priority and is looking for international partners to promote this effort.

And there are numerous fields in which European science and industry can contribute. The success of Danish producers of wind turbines is well known. Danish firms have marketed more energy efficient pumps, energy saving frequency-transformers, and they have introduced washing powder with enzymes that makes it possible to wash at lower temperatures and save energy.

The commercial potential in the transformation of the global production and use of energy are nearly endless. The International Energy Agency has estimated that global investment in alternative production of energy will double to about 16 billion Euros a year by 2010, and Danish firms have a significant share of this market already. China has planned investments in environmentally and energy efficient technologies to the tune of 125 billion Euro over the next 15 years. A significant part is expected to be invested in renewable energy, and I look very much forward to visit China this spring with our Minister of Foreign Affairs to explore the possibilities for Danish firms to contribute.

At the political level, our responsibility is to create an overall policy framework that gives our science and business communities the best possible basis for engaging in these dynamic processes - creating good solutions to our environmental problems and at the same also benefits the export and foreign investments. I see this as one of my very basic missions as minister for the environment. And I will be grateful to you for any contribution you have to offer to assist me in this effort.

Farming and husbandry

I have touched upon population growth, the need for food and shelter and rising expectations in the developing countries in the coming decades.

Take farming. We shall feed up to 3 billion more people by mid-century. A 50% increase. Farming will have to be intensified in all developing countries to make it possible. There are many environmental aspects to this, as you will know from our discussions in the EU-countries: Fertilisers, pesticides, GMOs, - just to mention a few.

Let me point to just one aspect: Increasing wealth in the developing countries will increase the demand for meat products. Animal production is expected to grow by 0,5 to 2,5% per year towards 2025, with the highest growth rates in India and China. As we have seen in Europe, the growth can be expected to be followed by a concentration of the production in fewer, but much larger, units in certain regions. Without a special effort they will face a significant increase in the nutrient pollution to their surface waters and their adjacent seas. A very familiar problem in all the parts of the world with a dense population and intensive farming, - as we know from experience, - and one that has to be dealt with.

New Danish regulation on husbandry

In Denmark we have production of around 25 million pigs per year and the market-opportunities apparently make it possible to increase the production to 30 million in just a few years. Such an expansion of our pig production depends on development of new feedstuff compounds, better management of manure and slurry and will require stronger efforts to reducing the smell problems, among other things. Without this, increasing production can't be made compatible with our environmental standards.

This fall, I will present a proposal for a new regulation on animal husbandry to the Danish Parliament with the intention of giving farmers and the supporting industries incentives to develop and use more environmentally efficient technologies.

Looking at the international developments and needs, I have little doubt that the technological improvement that we make in Denmark will find a wide audience in the global community. An analysis undertaken by the Århus School of Business has pointed to a global market for the sound management of manure and slurry of at least 1billion euros - at present!  It will only grow in the future.

Regulation, technology and stakeholders

Ambitious environmental standards support innovation. Better regulation is very much about smarter regulation, and we have to do a lot better in creating incentives for technological improvements in our environmental policies. The technology perspective must be made an essential part of any environmental strategy, and we need to create strategic co-operation and networks between government, industry and science to make it happen.

Co-ordination of policy measures at the European level is essential to ensure common approaches and ambitions, and we are discussing with our partners in the EU how we can use community regulation to promote the environment and create growth and new jobs at the same time.

But of course we have to keep an open mind as to which measures we put to use. The important thing is to arrive at a mix of policy measures that establishes a solid basis for emerging markets for new solutions, and give science and industry the right incentives to engage in the process.

One of the things that I have learned from my talks with Danish companies in the field is that we have to make our environmental policy more clear in order to create more stable framework conditions for the companies. Clear goals and timeframes at an early stage are of the essence to give companies directions for their investments in new products and processes.

Secondly, I have learned that we need to improve the possibilities for demonstrating, testing and verifying new technology. And thirdly, that close dialogue among all possible stakeholders is essential.

The Danish plan of action for eco-efficient technology

These are some of the important issues that we will deal with in the coming Danish action plan for eco-efficient technology. We have been mapping Danish strongholds, - in the business as well as in the research community, - and compared them to our environmental priorities. On the basis of this, the government will give its assessment of the future needs for eco-efficient technology and eco-innovation, and the most promising areas for development. And we will come up with a number of suggestions on how we can make progress and improve the dialogue between stakeholders.

One of the things, that should be made clear, is that it is important not to shy away from setting ambitious goals that require new technology. On the contrary. Ambition is a vehicle for progress. And sometimes we may even have to go further than our European colleagues - or be a bit more ambitious in how fast we want to move forward. The early bird gets the worm, as they say, and I am sure that our early phasing out of F-gasses, for example, will turn into an advantage, as our European colleagues follow suit, and they need our solutions.

Integration and sustainable development

To my mind, we are only at the beginning of a promising path of development. Environmentally efficient technology is not a solitary island or a particular sector. It is a necessity to the European and global efforts to enhance environmental sustainability for all. And it has to be integrated into all parts of society. Ambitious environmental policies and the sound management of natural resources is not a luxury. It is an integral part of the good life we want for ourselves and for all future generations.

I look very much forward to learn about the outcome of this forum - hopefully with some clear ideas on how we can shoulder our responsibilities and move forward at the same time.

Thank you for your attention.

Environmental technologies

Any technology, that either directly or indirectly improves the environment. It includes technologies for limiting pollution with the held of cleaning, more environmentally friendly products and production processes, more efficient energy and ressource management as well as technological systems that reduce the environmental impact.

Examples include e.g. technology flue gas cleaning, wind turbines, water treatment, enzymes for animal feed and washing powder, biofuel production, energy-efficient pumps and substitution of chemicals with more environmentally friendly solutions.