Denmark introduces cutoff date of 2050 for oil and gas extraction in the North Sea, cancels all future licensing rounds

A broad majority in the Danish Parliament has reached a deal on the future of fossil extraction in the North Sea, leading to the cancellation of the ongoing 8th licensing round and all future rounds to extract oil and gas. The deal also establishes a final phase-out date of fossil extraction by 2050 and lays out plans for a just transition of impacted workers.

Denmark is currently the largest oil producer in the EU, and will now become the biggest producer worldwide to establish a final phase-out date so far. Other countries to have done so all produce significantly less oil and gas than Denmark.

The agreement sets the direction towards a climate neutral Denmark and a complete phase-out of fossil fuel production by 2050, while simultaneously nailing down remaining rules to ensure stability and safeguard employment in the impacted regions.

“When the calendar reads 2050, the oil and gas valves will be turned off for good, in line with our commitment to climate neutrality stipulated by the Danish Climate Act. We will cancel all future licensing rounds marking an end to fossil exploration by state invitation in Denmark, effective immediately,”, says the Danish Minister for Climate, Energy and Utilities, Dan Jørgensen.

The agreement also nails down remaining rules to ensure stability going forward.

It is the intention to use the new green course in the North Sea as a springboard for an active and targeted role in the global debate on the role and responsibility of oil producing countries in the fight against climate change.

“As a small country our only chance to make a real dent in the global emissions curve is to lead the way by example. We intend to show what an ambitious yet balanced phase-out of fossil fuel production might look like, taking into account both the urgency of climate change and the very real concerns of workers employed in the fossil sector. Just transition has to be part and parcel of any socially balanced approach. Hopefully we can inspire others to follow suit”, says the Danish Minister for Climate, Energy and Utilities, Dan Jørgensen.

Background:

The agreement consists of the following main elements

• A 2050 cutoff date for all oil and gas extraction
• A cancellation of the 8th licensing round and all future licensing rounds
• A commitment to lead a global campaign on the role of fossil fuel producing countries
• A just transition initiative in the affected region to ensure development and employment
• Remaining rules nailed down to ensure stability, including access to two other licensing schemes with limited scope. However any such permits would still have to adhere to 2050 date
• An analysis of the potential of electrification of current North Sea production
• An initiative to explore the potential of carbon capture and storage, using old oil and gas wells

1. Denmark started extracting fossil fuels in the North Sea in 1972 and since then the tax revenue and the associated employment has been a cornerstone in building and maintaining the Danish welfare state.
2. Since 1972, Denmark has made around 541 billion DKK in revenue from the North Sea. In 2019, the number was 5.9 billion DKK.
3. In 2016, where the latest inventory was made, there was around 4.000 workers directly or indirectly employed in the extraction industry.
4. Denmark is the largest oil producer in the EU. In global terms, Denmark was number 28 in per capita production in 2017 and number 39 in total production in 2019.
5. The independent Danish Council on Climate Change adviser earlier this year to cancel the 8th licensing round and establish a cutoff date consistent with the objective of climate neutrality by 2050.
6. In June, the Danish Parliament passed a Climate Act with an overwhelming majority. The Act, among other things, establishes a legally binding target of 70 pct. GHG reductions by 2030.