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Q&A: How DONG Energy Plans to Phase Out Coal by 2023
February 15, 2017
Back in 2006, Danish energy company DONG Energy was one of the most coal-intensive utilities in Europe, with only 15 percent of its heat and power coming from renewables. In just one decade, the company has completely transformed itself into one of Europe’s cleanest, most sustainable energy companies. Fifty-five percent of DONG’s heat and power is now renewable, and Denmark’s largest energy company now ranks 11th on the Carbon Clean 200 list — a ranking of 200 companies from around the world that are profiting from sustainable energy.
And the company show no signs of slowing down. Building on its portfolio of three gigawatts of installed offshore wind capacity — which accounts for roughly one-quarter of global offshore wind capacity — DONG Energy revealed earlier this month that is going full-steam ahead with plans to phase out coal entirely from its operations by 2023. The move is in line with DONG’s sustainability goals of reducing its CO2 emissions in power and heat generation by 96 percent compared to 2006 levels.
Here, Filip Engel - Director and Head of Group Sustainability, Group Environment, Public Affairs & Corporate Branding — discusses how DONG Energy is utilizing sustainable biomass to help complete the coal phase-out and support its bread and butter — offshore wind.
What drew DONG Energy to biomass, specifically wood pellets and wood chips, as opposed to other forms of biomass?
Filip Engel: In Denmark, we have power plants that have historically run on coal and, ultimately, we need to get rid of coal both at DONG Energy and in society. Today, there isn’t really a good replacement for coal if you want to produce heat and power at a large scale, while complementing wind energy and solar. When it’s not windy, you need something else and sustainable biomass can be that something else. It’s more than a backup; it’s something that burns clean and can help us continue to reduce emissions in Denmark.
With biomass fractions, there are a lot of questions that you need to answer, and one of them is ensuring that the biomass burns right. If it’s a very wet biomass, the process is much more difficult and has the potential to destroy the kettles. We have a lot of straw in Denmark that could be used as feedstock, but we simply don’t have enough of it to fuel our power plants. And even if we did, we wouldn’t use it because the salts could make the kettles corrode. Wood pellets and chips burn well and in a way that make them possible to use with our existing systems.
While biomass has largely been viewed by the energy and utilities industry as renewable and carbon neutral in comparison to fossil fuels, it is not without its environmental impacts. What steps is DONG Energy taking to ensure that the switchover from coal to biomass is truly sustainable?
FE: People are often under the impression that biomass involves destroying the Amazon, but that’s not what we’re doing here. The wood we are using comes from sustainably managed forests in the Baltics and in the United States — not the Amazon. When replacing coal with biomass, it is important the biomass be sustainable. We only want to source biomass from suppliers that live up to certain CO2 reduction and biodiversity criteria.
When you say that it is essential that the biomass be sustainable, how are you defining sustainability? Against what criteria will biomass producers be measured?
FE: The incineration of biomass must be CO2 neutral, and biodiversity needs to be protected. That is why we introduced the Sustainable Biomass Partnership (SBP) certification scheme in 2016. It allows us to ensure that the biomass we buy meets our sustainability requirements. To be certified, biomass producers have to comply with criteria such as the ability to trace the raw materials back to the original source and prove that it is sustainable. The certification also ensures that trees are continuously replanted to continuously capture and store CO2 emitted from the incineration of wood pellets and chips; biodiversity is protected to safeguard forest health; and social and labor rights are respected. Third-party auditors also conduct regular control visits to check if producers are meeting the requirements. Since August 2016, 61 percent of our sourced biomass has been certified as sustainable. By 2020, the target is to have the certification fully implemented, with 100 percent of our biomass being certified as sustainable.
What challenges do you expect to encounter as DONG completes the transition away from coal?
FE: At this point, I would say that there aren’t so many challenges ahead of us now. We’ve done a lot of the decision-making and planning by this point, but I think a key challenge has been to understand what we could do differently. If you’ve operated on coal-fired power for years, it’s very difficult to tell your organization to do something totally different. That transition is extremely hard to do — it’s a hard conversation for the people, the culture. So, that has, of course, been a huge change.
In regards to technology, another one of our key challenges has been to get offshore wind to a point where it was viewed as a reliable and serious technology for stakeholders. And that involved bringing the price down and building up wind capacity. We have brought the price of offshore wind down significantly over the past few years. In 2012, we set a target to reduce the price of offshore wind by 35 to 40 percent by 2020. Last year, in 2016, we actually reached that target more than three years ahead of time.
We had already started to phase out coal in 2008, and while we were doing that, we really started to build up the offshore wind business. We’ve steadily been transitioning from black to green over the past eight years. And transitioning the rest of our coal-fired power plants to sustainable biomass is really one of the last stages of the process of going coal-free by 2023. We’ve also decided to get rid of our oil and gas business by the end of this year, a process which we’ve already started.
DONG Energy has played an important role in the reduction of Denmark’s CO2 emissions already. How do you envision this new decision will impact emissions in the country?
FE: What we’ve done in Denmark can really be viewed as the first phase and, at this point, we’ve really done everything we can do. I think it’s in our other markets — the UK, Germany, the US and the Netherlands — that we have more to do. In all of these areas we are going to be building wind farms, and we already have wind farms in the UK. So basically, we plan to take what we’ve done already in Denmark with green energy and reducing CO2 emissions and replicate it in other countries.