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Don’t believe everything you hear about the green-energy revolution. It’s coming, but more slowly than advertised. Fossil fuels, in absolute terms, are still on the rise because of population and economic growth.

In some spots, green energy is even going into reverse. Having won kudos everywhere for eradicating its coal burners, Ontario, under Fossil-in-chief Doug Ford, is now busy de-greening the province’s image by ripping up its wind farms. He claims their eradication will save the taxpayer a small fortune. Never mind that the cost of unbolting them, plus the price of settling the inevitable lawsuits, might ensure the opposite.

Failure of the imagination can help explain the reluctance to take the wholesale lunge into green energy. Going quickly from black to green in, say, electricity generation, seems a megaproject too far, an unfathomable exercise in science fiction, theoretically possible but about as easy as building a colony on Mars.

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The trouble for the naysayers such as Mr. Ford is that greening up the economy in a hurry is no longer an option. It has to be done to prevent catastrophic climate change. The cost of business-as-usual as the Arctic ice cap melts, sea levels rise, deadly floods and droughts become commonplace and animal species go extinct en masse is far worse than making the bold decision to put the green evolution into overdrive. For inspiration, look at Denmark.

Ten years ago, when Copenhagen was the host of a crucial climate-change summit, the country had one of the dirtiest electricity systems in Europe. How ironic that this grubby city, and country, had the nerve to host a climate summit, the international press covering the event thought (I was at the summit and wrote exactly that).

The criticism was not lost on the Danes. They cleaned up their act in a hurry by focusing their green effort on Orsted, the state-controlled energy company that was then known as Dong, short for Danish Oil and Natural Gas. At the time, Orsted emitted fully one-third of Denmark’s planet-warming carbon dioxide emissions. Since 2006, it has reduced those emissions by an astonishing 83 per cent.

There’s more. Along the way, it turned into a stock-market star and transformed itself into the world’s largest developer of offshore wind power. In the last year alone, the shares are up 41 per cent, giving the company a market value equivalent to $56-billion, and up 160 per cent since its 2016 initial public offering price. Not bad for a once obscure company in a country that could be sunk in one of Canada’s bigger lakes. Mighty Suncor, Canada’s top oil company and the biggest name in the Alberta oil sands, is worth only $9-billion more than Orsted and has lost 5.4 per cent in the last year.

How Orsted went from small and dirty to big and clean is a remarkable story in perseverance. But first some numbers that reveal the importance of going green if the goal of keeping average global temperatures from rising more than 2 degrees over pre-industrial levels is to be achieved.

According to an Orsted report on cleaning up the world’s energy system released on Thursday, two weeks ahead of the Madrid climate summit, 73 per cent of all greenhouse gas emissions today – 54 billion tonnes in 2018, a record high – come from burning oil, natural gas and coal, largely for electricity production, transportation, construction and manufacturing. The biggest single component of that amount is electricity and heat production, accounting for 17 billion tonnes, or 31 per cent.

Total emissions need to fall by half by 2030 to avoid radical climate change, and reach net zero by 2050, according to the Intergovernmental Panel on Climate Change (IPCC). Reaching those goals, or anywhere close, would be unattainable without the massive decarbonization of electricity production. Increased energy efficiency alone won’t come anywhere close to getting the job done. The task will be formidable and perhaps unachievable. Today, only 11 per cent of all energy comes from green sources; fossil fuels provide 80 per cent and their demand keeps rising (the rest comes from nuclear and biomass).

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Current global energy mix

Per cent of total final energy consumption, 2017

80%

2%

8%

11%

Fossil fuels

Nuclear

Traditional

biomass

 

Green

energy

Numbers are rounded

Projected vs. required green share

in the global energy supply

The global share of green energy should reach more than

60% by 2050 to limit global warming to 1.5°C

+60%

Projected

1.5˚C warming

scenario

28%

27%

18%

14%

2016

2030

2050

THE COST OF BUILDING ENERGY SOURCES

169

Northwestern Europe

Euros/MWh, 2018 prices

93

83

69

61

52

Onshore

Offshore

Solar PV

Nat. gas

Coal

Nuclear

204

United States

Euros/MWh, 2018 prices

81

67

49

42

34

Onshore

Nat. gas

Solar PV

Offshore

Coal

Nuclear

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: orsted

Current global energy mix

Per cent of total final energy consumption, 2017

2%

11%

80%

8%

Fossil fuels

Nuclear

 

Traditional

biomass

Green

energy

Numbers are rounded, which explains why they add up to 101%

Projected vs. required green share

in the global energy supply

The global share of green energy should reach more than

60% by 2050 to limit global warming to 1.5°C

+60%

Projected

1.5˚C warming

scenario

28%

27%

18%

14%

2016

2030

2050

THE COST OF BUILDING ENERGY SOURCES

169

Northwestern Europe

Euros/MWh, 2018 prices

93

83

69

61

52

Onshore

Offshore

Solar PV

Nat. gas

Coal

Nuclear

204

United States

Euros/MWh, 2018 prices

81

67

49

42

34

Onshore

Nat. gas

Solar PV

Offshore

Coal

Nuclear

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: orsted

Current global energy mix

Per cent of total final energy consumption, 2017

2%

11%

80%

8%

Fossil fuels

Nuclear

Traditional

biomass

 

Green

energy

Numbers are rounded, which explains why they add up to 101%

Projected vs. required green share

in the global energy supply

+60%

The global share of green energy should reach more than

60% by 2050 to limit global warming to 1.5°C

Projected

1.5˚C warming

scenario

28%

27%

18%

14%

2016

2030

2050

THE COST OF BUILDING ENERGY SOURCES

169

Northwestern Europe

Euros/MWh, 2018 prices

93

83

69

61

52

Onshore

Offshore

Solar PV

Natural gas

Coal

Nuclear

204

United States

Euros/MWh, 2018 prices

81

67

49

42

34

Onshore

Natural gas

Solar PV

Offshore

Coal

Nuclear

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: orsted

The good news is that Orsted proved that rapid decarbonization is not a fantasy. The company almost made it look easy.

As late as the middle part of the past decade, Orsted was still investing heavily in coal and blackening the skies over Denmark. It even intended to build an enormous coal-fired plant in northeast Germany, at Greifswald. The German foray was badly timed. Al Gore’s An Inconvenient Truth had just come out and coal became the poster child for global warming. The Greifswald plan triggered mass protests.

Orsted decided to reverse its coal strategy virtually overnight, in 2008. Coal would be replaced by clean offshore wind power. It wasn’t promising miracles. It expected the transformation to take decades and meet all sorts of internal and political resistance, given the risky nature of the overhaul.

The skeptics were right, at least at first. The 2008 financial crisis and plunging gas prices – high prices were needed to help finance the transformation – severely damaged the company. Orsted bought time by unloading non-core businesses, such as hydro power, and tapping Goldman Sachs for a US$1.2-billion investment. It stuck with its green strategy, convinced that, morally and financially, it was the right direction for the company.

By 2014, the worst was over for Orsted and its offshore wind business was coming on strong. Two years later, it joined the stock market in Denmark’s biggest IPO. In 2017, it sold the last of its oil and gas assets and proclaimed itself the “greenest energy company in Europe.” Its net profit last year was $3.8-billion and return on capital a hefty 32 per cent. Today, its wind business is vast and global; it is building America’s first offshore wind farm, near Block Island, off the east coast. More U.S. wind farms are coming.

Orsted’s black-to-green transformation in less than a decade is unique among big electricity producers, but it shouldn’t be. It’s proof that embracing clean energy is not just necessary for the fight against climate change; it can create a lot of value too. Who’s next?

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