Wind Power Policies and Diffusion in the Nordic Countries: Comparative Patterns 3031341856, 9783031341854

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Wind Power Policies and Diffusion in the Nordic Countries Comparative Patterns Jon Birger Skjærseth Teis Hansen Jakob Donner-Amnell Jens Hanson Tor Håkon Jackson Inderberg Helle Ørsted Nielsen Birgitte Nygaard Markus Steen

Wind Power Policies and Diffusion in the Nordic Countries

Jon Birger Skjærseth · Teis Hansen · Jakob Donner-Amnell · Jens Hanson · Tor Håkon Jackson Inderberg · Helle Ørsted Nielsen · Birgitte Nygaard · Markus Steen

Wind Power Policies and Diffusion in the Nordic Countries Comparative Patterns

Jon Birger Skjærseth Fridtjof Nansen Institute Lysaker, Norway Jakob Donner-Amnell Department of Geographical and Historical Studies University of Eastern Finland Joensuu, Finland Tor Håkon Jackson Inderberg Fridtjof Nansen Institute Lysaker, Norway Birgitte Nygaard Department of Interdisciplinary Studies of Culture NTNU Social Research Trondheim, Norway

Teis Hansen Department of Food and Resource Economics University of Copenhagen Copenhagen, Denmark Jens Hanson Department of Technology Management SINTEF Digital Oslo, Norway Helle Ørsted Nielsen Department of Environmental Science Aarhus University Aarhus, Denmark Markus Steen Department of Technology Management SINTEF Digital Trondheim, Norway

ISBN 978-3-031-34185-4 ISBN 978-3-031-34186-1 (eBook) https://doi.org/10.1007/978-3-031-34186-1 © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover credit: © Melisa Hasan This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface and Acknowledgements

Wind power is widely seen as a key form of renewable energy production to replace fossil fuels and mitigate climate change. Over the last decade, the Nordic countries—Denmark, Finland, Norway, and Sweden—have substantially upscaled their wind power production as a central source of renewable electricity production. This development has followed different trajectories with distinct prospects for the future. Nordic wind power has involved a range of national policy mixes, including how conflicting land-use concerns have been handled—spanning from nature management to strategic military issues. This book aims to uncover these different patterns among the four otherwise highly comparable welfare states. By explaining what has happened and identifying conditions that promote or impede wind power development, we also hope to be able to offer policy lessons valuable to the rest of Europe and beyond. The study is the result of a joint effort involving a project group of scholars from the Nordic countries, as reflected in the joint authorship of this book. The chapters were discussed by the entire author team in multiple iterations throughout 2022 to ensure coherence and comparability across cases. As to the division of labour and responsibilities: coordinators Jon Birger Skjærseth and Teis Hansen have had main responsibility for the cross-country Chapters 1, 2, 7, and 8, together with Tor Håkon Jackson Inderberg and Helle Ørsted Nielsen. Helle Ørsted Nielsen and

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PREFACE AND ACKNOWLEDGEMENTS

Birgitte Nygaard have main responsibility for Denmark, Jakob DonnerAmnell for Finland, Tor Håkon Jackson Inderberg, Birgitte Nygaard, Jon Birger Skjærseth, and Markus Steen for Norway, and Jens Hanson and Teis Hansen for Sweden. We are also highly grateful to Birgitte Nygaard for preparing comparative data. Several scholars have provided valuable inputs and constructive criticism. Special thanks go to Madeleine Wahlund and Anna Svantesson, for their excellent research assistance. Jonas Algers gave valuable comments to the chapter on Sweden. We are also grateful to Susan Høivik for improving the text considerably, and to all our interviewees across the four countries who contributed their time and insights. We also wish to honour our former colleague Tuula Teräväinen, University of Eastern Finland, who passed away during the project. Further, we wish to express our gratitude to NordForsk and Nordic Energy Research for financing this research through the project ‘GREENMIX – Green Growth Policy Mixes’ (grant no. 97329), a part of the Nordic Green Growth Research and Innovation Programme. Additional support has come from the Norwegian Research Council (Enable, grant no. 308789; Windgov, grant no. 320481; and Include, grant no. 295704). Lysaker, Norway Copenhagen, Denmark April 2023

Jon Birger Skjærseth Teis Hansen

Contents

1 8

1

Introduction References

2

Analytical Framework 2.1 Focus for Explanation: What Has Happened? 2.2 Explaining What Has Happened 2.3 Summary References

11 12 16 22 23

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Denmark 3.1 Introduction 3.2 Policy Mixes and Wind Power Development 3.2.1 Targets and Policies 3.2.2 Wind Power Development 3.3 Explaining the Policy Mix and Wind Power Development 3.3.1 Energy-economic Situation 3.3.2 Role of the EU 3.3.3 Domestic Politics 3.3.4 Policy Context 3.4 Conclusions References

27 28 29 29 34 35 35 37 39 44 44 47

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Finland 4.1 Introduction 4.2 Policy Mixes and Wind Power Development

53 54 55 vii

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CONTENTS

4.2.1 Targets and Policies 4.2.2 Wind Power Development 4.3 Explaining the Policy Mix and Wind Power Development 4.3.1 Energy-economic Situation 4.3.2 Role of the EU 4.3.3 Domestic Politics 4.3.4 Policy Context 4.4 Conclusions References

55 58 60 60 62 64 69 70 71

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Norway 5.1 Introduction 5.2 Policy Mixes and Wind Power Development 5.2.1 Targets and Policies 5.2.2 Wind Power Development 5.3 Explaining the Policy Mix and Wind Power Development 5.3.1 Energy-economic Situation 5.3.2 Role of the EU 5.3.3 Domestic Politics 5.3.4 Policy Context 5.4 Conclusions References

79 80 81 81 84 86 86 88 91 95 95 97

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Sweden 6.1 Introduction 6.2 Policy Mixes and Wind Power Development 6.2.1 Targets and Policies 6.2.2 Wind Power Development 6.3 Explaining the Policy Mix and Wind Power Development 6.3.1 Energy-economic Situation 6.3.2 Role of the EU 6.3.3 Domestic Politics 6.3.4 Policy Context 6.4 Conclusions References

103 104 105 105 108 109 109 112 113 119 121 122

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Comparative Analysis 7.1 Introduction 7.2 Policy Mixes and Wind Power Development in the Nordic Countries

127 128 129

CONTENTS

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7.2.1 Targets and Policies 7.2.2 Wind Power Development 7.2.3 Linking Policies to Development 7.3 Explaining the Policy Mix and Wind Power Development 7.3.1 Energy-economic Situation 7.3.2 Role of the EU 7.3.3 Domestic Politics at National Level 7.3.4 Domestic Politics at Local Level 7.3.5 Policy Context and Technological Change 7.4 Conclusion: Relationships Among Explanatory Factors References

129 133 135 136 136 139 142 145 147 149 151

Conclusions 8.1 Findings 8.2 Lessons 8.3 The Road Ahead References

153 155 158 159 163

Index

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About the Authors

Jon Birger Skjærseth is a research professor at the Fridtjof Nansen Institute. His research interests include international environmental cooperation, European climate and energy policies and corporate strategies. Among his publications are the following books which he co-authored: Corporate Responses to EU Emissions Trading (2013), Linking EU Climate and Energy Policies (2016), and The Politics of Low-Carbon Innovation (2020). Teis Hansen is a professor at the University of Copenhagen, and a senior research scientist at SINTEF, Trondheim. His research focuses on sustainability transitions, transformative innovation policy, green urban and regional development, foundational economy, and technology transfer from developed to emerging economies. He is also a member of the Danish Government’s expert group on the role of research in the green transition. Jakob Donner-Amnell is a sociologist, foresight expert, and project researcher at University of Eastern Finland. His research focuses on resource-based industries, peripheral regions, and future studies. Among his publications are the following books which he co-authored: Politics of Forests (2004), Metsän uusi aika (2008), and Maailma haastaa (2011).

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ABOUT THE AUTHORS

Jens Hanson is a research scientist at SINTEF Digital, Department of Technology Management. His research interests include sustainability transitions and industrial transformations in the domains of energy, transport, and industry. He has, among others, published on the relations between established and emerging industries and the formation of novel value chains as part of the energy transition. Tor Håkon Jackson Inderberg is a research professor at the Fridtjof Nansen Institute and works on climate and energy policy, and policy change. He has published widely on a range of topics, including wind power licensing and influence structures, energy systems and electricity system transitions, energy poverty, emissions trading, and climate change adaptation, in several jurisdictions. Helle Ørsted Nielsen is a senior researcher at Aarhus University, Department of Environmental Science. Her research interests include multi-level governance and implementation of climate and energy policy. Publications include the following article and book: Climate Change and Sustainable Development Governance (2022), and Bounded Rationality in Decision Making (2010). Birgitte Nygaard is a Ph.D. candidate at Norwegian University of Science and Technology. Her project is funded by FME NorthWind, and in the project she focuses on framings and geopolitics of Norwegian wind power. Other research interests include sustainability transitions, class and power, and the Arctic. Markus Steen is a senior research scientist at SINTEF, Department of Technology Management, and does research on industrial and regional development, innovation, policy and sustainability transitions. Recently co-authored publications include the following articles: Paradoxes of Norway’s Energy Transition: Controversies and Justice (2023), and Complexity Challenges for Transition Policy: Lessons from Coastal Shipping in Norway (2023).

Acronyms and Abbreviations

CHP DEA DSO EEA ENOVA ETDDP ETS FINGRID GHG GWh LCOE MPE MW NGO NVE PPA PV R&D RE RED RES TSO TWh

Combined Heat and Power Danish Energy Agency Distribution System Operator European Economic Area Norway’s State-Owned Fund for Energy Transition Energy Technology Development and Demonstration Program Emission Trading System Finland’s Transmission System Operator Greenhouse Gas Gigawatt hours Levelized Cost of Energy Norwegian Ministry of Petroleum and Energy Megawatt Non-Governmental Organization Norwegian Water Resources and Energy Directorate Power Purchase Agreement Solar Photovoltaics Research and Development Renewable Energy Renewable Energy Directive Renewable Energy Source Transmission System Operator Terawatt hour

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List of Figures

Fig. 1.1 Fig. 3.1

Fig. 3.2

Fig. 4.1

Fig. 4.2 Fig. 5.1

Fig. 5.2 Fig. 6.1

Fig. 6.2 Fig. 7.1

Wind power production (GWh) in the Nordic countries, 2000–2020 (Source Eurostat) (Color figure online) Installed wind power capacity (MW) and wind power production (GWh) in Denmark, 2000–2020 (Source Eurostat) (Color figure online) Electricity production and consumption by fuel in Denmark, 2000–2020 (Source Eurostat) (Color figure online) Installed wind power capacity (MW) and wind power production (GWh) in Finland, 2000–2020 (Source Eurostat) (Color figure online) Electricity production and consumption by fuel in Finland, 2000–2020 (Source Eurostat) (Color figure online) Installed wind power capacity (MW) and wind power production (GWh) in Norway, 2000–2020 (Source Eurostat) (Color figure online) Electricity production and consumption by fuel in Norway, 2000–2020 (Source Eurostat) (Color figure online) Installed wind power capacity (MW) and wind power production (GWh) in Sweden, 2000–2020 (Source Eurostat) (Color figure online) Electricity production and consumption by fuel in Sweden, 2000–2020 (Source Eurostat) (Color figure online) Installed wind power capacity (MW) in the Nordic countries, 2000–2020 (Source Eurostat) (Color figure online)

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35

36

59 62

85 87

109 110

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List of Tables

Table 2.1 Table 2.2 Table 7.1 Table 7.2 Table 7.3 Table 7.4

Additive index for the level of ambition of wind power policies Summary of explanations, theoretical foundation, and expectations Energy-economic situation and wind power policies, Nordic countries Role of the EU in Nordic wind power policies National politics in the wind power policies of the Nordic countries Local politics in the wind power policies of the Nordic countries

15 22 137 140 143 145

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CHAPTER 1

Introduction

Abstract The extensive diffusion of renewable energy technologies is central in all scenarios for limiting global warming to 1.5 degrees. Wind energy production is a key form of renewable energy production that many countries aim to upscale quickly, so as to replace fossil fuels. This underlines the importance of understanding the conditions that allow for, or impede, the widespread diffusion of wind energy. As the energy transition accelerates with the diffusion of renewables like wind power, the focus of policy tends to shift and expand, from early adoption and technology maturation to facilitate the integration of renewables across diverse national contexts. To understand and deal with such rising policy complexity, a policy-mix perspective is useful. In this book, we focus on policy mixes for wind energy in the four major Nordic countries— Denmark, Finland, Norway, and Sweden. We analyse the factors that have shaped the configurations of these policy mixes and their significance for the development of wind power in the four countries. Keywords Wind power · Nordic countries · EU · Renewable energy policies · Climate policies · Energy transition

The extensive diffusion of renewable energy technologies is central in all scenarios for limiting global warming to 1.5 degrees (Rogelj et al., 2018). © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. B. Skjærseth et al., Wind Power Policies and Diffusion in the Nordic Countries, https://doi.org/10.1007/978-3-031-34186-1_1

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Wind energy production is a key form of renewable energy production that many countries aim to upscale quickly, so as to replace fossil fuels. A global capacity of 836 GW was achieved in 2021; four times this capacity must be added by 2030 to remain within the framework of limiting global warming to 1.5 degrees, according to the Global Wind Energy Council (GWEC, 2022). In Europe, the Russian invasion of Ukraine in February 2022 accentuated the need to develop energy independence, including renewable energy. Thus, in the spring of 2022, four EU countries pledged to quadruple their wind power production in the North Sea by 2030 and to increase wind energy production tenfold by 2050 (Hook, 2022). This underlines the importance of understanding the conditions that allow for, or impede, the widespread diffusion of wind energy. A key factor here, as with other renewable and ‘green’ technologies, is the role of public policy in stimulating research and development (R&D) and market development—including societal acceptance related to trade-offs with nature and other conflicting land-use concerns (Rennings, 2000). As the energy transition accelerates with the diffusion of renewables like wind power, the focus of policy tends to shift and expand, from early adoption and technology maturation to facilitate the integration of renewables across diverse national contexts. To understand and deal with such rising policy complexity, a policy-mix perspective is useful (Markard, 2018). In this book, we focus on policy mixes for wind energy in the four major Nordic countries—Denmark, Finland, Norway, and Sweden. We analyse the factors that have shaped the configurations of these policy mixes and their significance for the development of wind power in the four countries.1 The Nordic countries are relevant cases for study as they share several features. They all have natural conditions favourable to wind power, with good wind resources onshore as well as offshore. Further, policymakers have adopted progressive greenhouse gas (GHG) emissions reduction targets, with ambitions of replacing fossil fuels with renewable energy, thereby setting in motion energy transitions through the electrification of various sectors of society, such as transport and energy-intensive industries. The four countries are also frequently seen as global frontrunners in low-carbon economic development, with three of them (Norway being the exception) having decoupled emissions from economic growth since 1 Iceland has hardly any wind power, but is richly endowed with low-cost geothermaland hydropower options.

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2000, thereby achieving actual green growth (Stoknes & Rockström, 2018). However, they all also have historically strong interests in fossilfuel production (Denmark and Norway) or nuclear energy (Finland and Sweden). Institutionally, all four countries are part of the same Nordic energy market and are bound by the EU’s first Renewable Energy Directive (RED I) introduced in 2009, as members of the EU or the European Economic Area (EEA).2 The relation to the EU’s wider energy and climate policies is also quite similar across the four countries (Skjærseth et al., 2016). Further, as Nordic welfare states, they share similarities along several state/society dimensions—including traditions of a consensual policy style. Previous EU implementation research has found that the political and administrative systems of the Nordic countries have quite similar characteristics (Treib, 2008). Finally, all four countries have had to deal with trade-offs between wind power diffusion and various land-use interests, especially nature conservation. Finland, Norway, and Sweden have the largest forest areas and the largest GHG absorption (compared to their emissions) in the EU/EEA (Eurostat 2018). Although they have much in common, the four countries have experienced quite dissimilar development patterns regarding wind power, particularly as to the design of the policy mixes, but also the actual diffusion trajectories of wind power, societal acceptance, and the prospects for further development. Denmark has been a Nordic and European wind power pioneer, on- and offshore. Not only has it been a frontrunner in developing ownership rights, support and value-loss schemes, it has also pushed wind power innovation that has contributed to a dramatic drop in the costs of wind power technology and has supported considerable export of wind turbines. Latecomer Finland has become a rapidly growing wind power country—although restricted by strategic military concerns due to its 1340-km common border with Russia. Finnish defence forces tend to veto wind power projects closer than 40 km to radars. Norway has also been a latecomer, but wind power was boosted by the EU’s 2009 RED I, a common electricity certificate market (2012) with Sweden, more favourable depreciation rules, and falling costs of technology. Norway took the European lead in establishing new onshore wind power in 2020—followed by an abrupt halt in the issuance of new 2 Renewable Energy Directive (229/28/EC). In 2001, the EU adopted a Directive on renewable electricity production.

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30,000

25,000

20,000

15,000

10,000

5,000

0

Denmark

Finland

Norway

Sweden

Fig. 1.1 Wind power production (GWh) in the Nordic countries, 2000–2020 (Source Eurostat) (Color figure online)

wind power licences due to massive local opposition. Sweden has steadily increased its wind power ambitions and share of wind power in electricity production. It has designed what appears to be a well-functioning licensing system, striking a balance between wind power diffusion and societal acceptance. Today Sweden has by far the largest wind power production among the Nordic countries (Fig. 1.1). Understanding these patterns and differences across the major Nordic countries is the central puzzle that this book aims to investigate. We do so by addressing the following two main research questions: • How have policy mixes developed and affected the diffusion of wind power in Denmark, Finland, Norway, and Sweden?

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• How can we explain variation across time and between countries in policy mixes for wind power diffusion? Focusing mainly on the period 2010–2020, we aim to make several analytical and empirical contributions. Analytically, we take our starting point in the policy-mix literature, which argues that broader mixes of reinforcing policies are required to fulfil various functions in order to accelerate the energy transition, with wind power as a key component (see, e.g., Kern et al., 2019; Rogge & Reichardt, 2016; Rogge et al., 2017). Briefly put: given the complexity of transition processes, involving significant changes to systems of production and consumption—including infrastructures, user practices, and technologies—the literature argues for moving beyond a focus on the effect of ‘silver bullet’ policy instruments such as a CO2 -tax, to consider portfolios of policy instruments, policy strategies, and the relations between these (Rosenbloom et al., 2020). Further, to promote transitions at the necessary speed, policy mixes must not only support the development of emerging, cleaner alternatives: they must also promote the phase-out of existing polluting technologies (Kivimaa & Kern, 2016; Rinscheid et al., 2021). Despite the rapidly emerging interest in policy mixes for transitions, especially in the field of energy, this literature has remained largely insensitive to trade-offs among different concerns and political feasibility: i.e., whether it is possible to adopt and sustain a policy solution among the policymakers whose support is needed for policy change (Skjærseth, 2021). As Glaus (2021, p. 493) put it, ‘[r]esearch on the political feasibility of balanced policy mixes, however, is still limited’. Exceptions here include work on how incumbents influence energy policy mixes towards greater support for nuclear power and fossil fuels through various forms of strategic work (Johnstone et al., 2017), and the role of policy feedback in stimulating or hindering continued political support for policy mixes (Edmondson et al., 2019). The politics of policy mixes and their development over time are generally under-examined topics that we explore, drawing on theories of Europeanization and the role of domestic politics. We apply a multilevel governance approach and introduce four complementary explanatory perspectives for policy development and wind power diffusion: (1) the energy-economic situation indicating the ‘need’ for wind power policies; (2) the role of the EU and member/EEA states

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in downloading and uploading policies; (3) the role of domestic politics at the national and local levels, and (4) policy context, particularly concerning changes in the costs of wind power technology in the four countries. Empirical studies of wind power policies in each of these countries abound (e.g., Hvelplund et al., 2017; Söderholm & Pettersson, 2011), but there are no comparative studies of policies for wind power in the Nordic countries as such. Further, the longitudinal character of our analysis is unique, not only in the context of Nordic policy mixes for wind energy, but also in the sense that longitudinal studies of policy mixes have focused on policy output (e.g., Schmidt & Sewerin, 2019), whereas we pay more attention to analysing developments in the drivers of policy mixes over time, linking these to changes in policy outcome. For policy practice, a focus on the politics and policies of wind power holds important lessons for climate and energy policies in the Nordic countries, as well as for the rest of Europe and beyond. Unpacking the importance of policy and its constituents in countries that are widely seen as success cases in the energy transition may inspire policymaking processes in other countries aiming to fulfil their Paris Agreement commitments. In Nordic energy policymaking, scenario studies conclude that the Nordics need to accelerate wind power production substantially to achieve net-zero emissions by 2050, but these scenarios offer little discussion or analysis of how this can be achieved politically (Wråke et al., 2021). Moving beyond assessments of potential techno-economic pathways to carbon neutrality, in this book we seek to provide inputs to understanding also the potential socio-technical and political pathways (Rosenbloom, 2017) crucial to political feasibility (Bauer et al., 2022; Turnheim & Nykvist, 2019). We draw on a comparative logic in looking for patterns of similarities and differences based on a qualitative approach (Yin, 1989). Within this overall approach, we will assess the explanatory perspectives by various methodological techniques. Pattern-matching aims to compare expectations based on the explanatory perspectives with empirical observations. The better the match, the more confidence we will have in the explanatory power of the perspective. Explanation-building considers that our knowledge base may restrict our ability to extract empirically assessable expectations. This approach is based on process-tracing; it is particularly useful for capturing complex relationships between actors, policies, and the context within which they operate (Yin, 1989). Finally, we will assess

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the heuristic value of our explanatory perspectives. The heuristic value is specifically concerned with the mechanisms that link explanatory factors to what we seek to explain. As pointed out by Underdal and Hanf (2000), different ways of assessing expectations can add separate insights into causal relationships, with each way providing specific insights. We apply this structured comparative approach with flexibility to adapt to unique country features. Data collection is based on multiple sources. First, data for wind power diffusion over time are taken from Eurostat on installed wind power capacity (in MW) and estimated annual production (in GWh).3 Second, longitudinal analyses of policies were developed for the four countries. Analysis of policy documents provided a first overview of developments in the national-level policy landscapes. Policy documents were identified through keyword search (e.g., ‘wind power’ and ‘renewable energy’) on the websites of relevant national authorities, but we also included EU documents such as the National Renewable Action Plans (Nygaard, 2021; Nygaard & Wahlund, 2021; Svantesson, 2021; Wahlund, 2021). Third, to understand variation in policy mixes and wind power diffusion, we conducted 34 interviews with representatives from companies, industry associations, observers, policymakers, and public authorities in the four countries.4 The structure of the interview guide reflected the explanatory perspectives, while allowing for different emphasis according to the national context. To enable triangulation of data, interviews were combined with written sources, including position papers to the EU, public consultations on the RED I and national policies, official white papers on energy and wind power, research papers, and media articles. The national analyses were discussed by the entire author team in multiple iterations throughout 2022 to ensure coherence and comparability across the cases. Chapter 2 presents the analytical framework for answering the research questions. Chapters 3, 4, 5 and 6 describe and explain the development 3 Eurostat data are reported by national statistics authorities. In Denmark and Sweden, data are obtained by the energy authorities; in Norway, data are obtained and reported directly by Statistics Norway (SSB). In Finland, reported data are obtained by the Finnish Wind Power Association. Regardless, data should be sufficiently reliable and comparable for addressing the research questions. 4 Interviews are based on confidentiality and are used as background information. Interviewees are listed at the end of each country chapter, except for Sweden, where only interviewee affiliation is listed.

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in policy mixes and wind power diffusion in Denmark, Finland, Norway, and Sweden. Chapter 7 offers a comparative analysis of the similarities and differences observed in policies for wind power diffusion, and drivers across the four countries. Chapter 8 sums up the analysis and presents our main findings, lessons, and the road ahead for wind power in the Nordic countries.

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Skjærseth, J. B., Eikeland, P. O., Gulbrandsen, L. H., & Jevnaker, T. (2016). Linking EU climate and energy policies: Decision-making, implementation and reform. Edward Elgar. Söderholm, P., & Pettersson, M. (2011). Offshore wind power policy and planning in Sweden. Energy Policy, 39(2), 518–525. https://doi.org/10.1016/j. enpol.2010.05.065 Stoknes, P. E., & Rockström, J. (2018). Redefining green growth within planetary boundaries. Energy Research & Social Science, 44, 41–49. https://doi. org/10.1016/j.erss.2018.04.030 Svantesson, A. (2021). Sweden—Wind energy policy biography. Unpublished report. Treib, O. (2008). Implementing and complying with EU governance outputs. Living Reviews in European Governance, 3(5), 1–30. Turnheim, B., & Nykvist, B. (2019). Opening up the feasibility of sustainability transitions pathways (STPs): Representations, potentials, and conditions. Research Policy, 48(3), 775–788. https://doi.org/10.1016/j.respol.2018. 12.002 Underdal, A., & Hanf, K. (2000). International environmental agreements and domestic politics: The case of acid rain. Ashgate. Wahlund, M. (2021). Finland—Wind energy policy biography. Unpublished report. Wråke, M., Karlsson, K., Kofoed-Wiuff, A., Folsland Bolkesjø, T., Lindroos, T. J., Hagberg, M., Simonsen, M. B., Unger, T., Tennbakk, B., Jåstad, E. O., Lehtilä, A., Putkonen, N., Koljonen, T. (2021). Nordic clean energy scenarios: Solutions for carbon neutrality. Nordic Council of Ministers. https://www.nordicenergy.org/publications/nordic-clean-energy-scenar ios-solutions-for-carbon-neutrality/ Yin, R. K. (1989). Case study research: Design and methods. Sage.

CHAPTER 2

Analytical Framework

Abstract This chapter outlines the analytical framework that guides our examination of policy mixes and diffusion of wind power in Denmark, Finland, Norway, and Sweden, with emphasis on the period 2010–2020. The framework enables us to search for change and variation—not only in what has happened, but also why and how. The focus is on the energy-economic situation, the role of the EU, and domestic politics at national and local levels, as well as the policy context for technological development. We combine various approaches and theories to examine wind power in the four countries—including the policy mix and national resource endowment literatures, theories of Europeanization, and the role of domestic politics. Taken together, these literatures allow us to develop a multilevel governance framework that is attentive to political feasibility and the broad spectrum of policies that influence the complexity of wind power in energy-transition processes. Keywords Wind power · Nordic countries · EU · Renewable energy policies · Climate policies · Energy transition

This chapter outlines the analytical framework that guides our examination of policy mixes and diffusion of wind power in Denmark, Finland, Norway, and Sweden, with emphasis on the period 2010–2020. The © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. B. Skjærseth et al., Wind Power Policies and Diffusion in the Nordic Countries, https://doi.org/10.1007/978-3-031-34186-1_2

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framework enables us to search for change and variation—not only in what has happened, but also why and how. The focus is on the energyeconomic situation, the role of the EU, and domestic politics at national and local levels, as well as the policy context for technological development. We combine various approaches and theories to examine wind power in the four countries—including the policy mix and national resource endowment literatures, theories of Europeanization, and the role of domestic politics. Taken together, these literatures allow us to develop a multilevel governance framework that is attentive to political feasibility and the broad spectrum of policies that influence the complexity of wind power in energy-transition processes.

2.1

Focus for Explanation: What Has Happened?

In Europe, public policies at the EU, national and local levels have been essential in promoting the development of renewable energy and wind power over the last decade (Matti et al., 2017; McDowall et al., 2013; Reichardt & Rogge, 2016). To examine such policies in the Nordic countries, we distinguish between the formal output (targets, policies, measures) of a decision-making process and the set of consequences emerging from that output (Easton, 1965). The consequences can be specified as outcome: the actual realization and diffusion of on- and offshore wind power. Concerning output, targets may vary in scope, stringency, specificity, and time horizon. Scope refers to the extent to which targets include renewable energy in general or wind power in particular; stringency, to the share of new wind power aimed for; and specificity to the deadline achieving the targets and the baseline against which the targets are to be compared. Finally, time horizon relates to commitment strategies for dealing with long-term challenges such as climate change (Hovi et al., 2009). Policies and measures refer to the tools available to governments for promoting renewable energy and wind power, including national or regional frameworks for localization of wind power and licensing procedures. Concerning licensing procedures, we focus first on the distribution of decision-making authority at the central and local levels. For the long term, a major challenge is how to strike a balance between national interests and local needs (Ostrom, 2010; Saglie et al., 2020). Secondly, we examine complexity in terms of the number of licensing authorities

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involved. A simple system indicating a single point of access is often referred to as a one-stop shop, as with the Danish Energy Agency (DEA, 2020). The focus on multiple types of outputs is in line with the substantial and growing literature on the need for policy mixes in the energy transition, which argues that decarbonization cannot be achieved by single instruments like carbon pricing alone. Broader mixes of reinforcing policies are required to fulfil different functions or needs to accelerate the transition (see, e.g., Kern et al., 2019; Kivimaa & Kern, 2016; Rogge & Reichardt, 2016). This literature has outlined how the various characteristics of the overall policy mix affect its ability to support transition processes (Bach & Hansen, 2023; Reichardt & Rogge, 2016; Rogge, 2019; Rogge & Schleich, 2018; Uyarra et al., 2016).1 In this way, the policy-mix literature has helped to advance our understanding of the possibilities and limitations for policy to support energy-transition processes. However, as noted in Chapter 1, this literature has been insufficiently sensitive to political feasibility (see Glaus, 2021). One possible explanation is that only recently has there been an actual acceleration of energy-transition processes, where widespread diffusion of solar and wind energy technologies fundamentally changes the composition of the energy system in many countries (Markard & Rosenbloom, 2023). This has significant implications for the level of contestation around renewable energy technologies: from being seen as merely small niches that can exist almost independently of the broader energy system, they are recognized as complementing as well as directly competing with established technologies and interests. Their diffusion is also evident in the form of widespread changes in land use, landscapes, and the built environment— all of which may conflict with other concerns such as nature management. This points towards the need for greater attention to political feasibility in the policy-mix literature, including the role of policy cycles from initiation to reform of policies and policy feedback from e.g., implementation experiences (Edmondson et al., 2019; Skjærseth, 2018). In our assessment of policy mixes for wind power diffusion, we emphasize two functions or ‘needs’. First, technology ‘push’ policies 1 Policy mixes can be assessed against various criteria, including consistency between strategies and instruments, coherence of policy processes, as well as credibility, comprehensiveness, and stability of the entire mix.

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aim at accelerating the technological development of renewable energy by cutting costs through demonstration, research and innovation. By contrast, ‘pull’ policies, like feed-in tariffs, electricity certificates, or other forms of subsidies, aim at increasing the demand for renewable energy and wind power technology. The public authorities effectively pick the ‘winners’ when policies are technology-specific (Eikeland & Skjærseth, 2019, 2021), but policies may also promote renewable energy in general (Azar & Sandén, 2011). We will examine the extent to which policies stimulate wind power specifically or renewable energy in general. For general renewable energy policies, much will depend on the relative costs of the various technologies, such as bioenergy, solar photovoltaics (PV), and hydropower. Therefore, general renewable energy policies do not necessarily lead to less wind power compared to a more technologyspecific approach favouring wind power. Second, from an energy-transition perspective, policies need to achieve reduction or ‘destruction’ of fossil fuels (e.g., policies that tax the use of fossil fuels) and promote the creation of ‘niches’ for low-carbon solutions in order to decouple GHG emissions from economic growth (Kivimaa & Kern, 2016). Thus, the advantages enjoyed by established types of energy production and consumption—with well-established infrastructures, production systems, and user practices—necessitate policy attention to deliberate destabilization (Turnheim & Geels, 2012). This is important in the current phase of the energy transition, when renewable energy technologies no longer constitute small niches with scant impact on the overall functioning of the energy system. Without deliberate destabilization, the transition to renewable energy is likely to be too slow to curb climate change. Policies focused on fossil-fuel ‘phase-out’ (Rogge & Johnstone, 2017) or ‘exnovation’ (David, 2017) have been identified as important to the German Energiewende—an example of ongoing radical energytransition processes. We, therefore, examine the extent to which policies for wind power have been linked to policies for ‘creative destruction’ of fossil fuels in the electricity sector. Wind power targets and policies can be assessed according to the deliberations and dimensions introduced above. Taken together, these dimensions can be operationalized as indicators that may be aggregated to some standard or measure for the level of ambition of wind power policies. To guide our qualitative comparison of the four countries, we will use an additive index (Table 2.1) based on dichotomous values.

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Table 2.1 Additive index for the level of ambition of wind power policies

Wind power targets Specific targets Stringent targets Long-term targets Framework for localization Wind power-specific ‘pull’ policies Wind power-specific ‘push’ policies Balanced and ‘simple’ licensing Policies linked to reduction of fossil fuels in the electricity sector

Low (0)

High (1)

No No No No No No No No No

Yes Yes Yes Yes Yes Yes Yes Yes Yes

*This additive index has 10 values in total (0–9). Maximum score is nine points; minimum score is zero points

Several caveats should be noted in relation to Table 2.1. First, the specific criteria and the dichotomous values do not capture to what degree a phenomenon is actually present. This concerns particularly the categorization of licensing systems, which is multidimensional and part of wider, more complex decision-making systems. Second, the index is formulated in static terms to cover the end of the period examined, even though we are interested in change over time, particularly from 2010 to 2020. Third, as noted, a policy focus on renewable energy in general does not necessarily lead to less wind power than a wind power-specific approach. Therefore, our examination of the ambition level of wind power policies will be based on qualitative judgement rather than numerical aggregation of ‘scores’. However, we believe that explicit and transparent indicators are useful for both the absolute assessment of each country and the relative assessment when comparing the countries. Analytically, we treat output and outcome as distinctive steps in a chain of events flowing from policymaking. However, there is no guarantee of a causal link between targets and policies on the one hand, and the outcome in terms of behavioural change on the other. Output will not necessarily lead to intended outcome; and behaviour may change also without corresponding output, due to e.g., technology development driven by factors other than policy. The case of Norway is illustrative here (see Chapter 5): from 1998, public support was offered for achieving the 3 TWh annual production target by 2010, which failed considerably (just over 1 TWh

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was realized). By 2020, wind power production had increased far beyond new targets and the expectations of the energy authorities. Thus, we need to assess the relationship between wind power targets/policies and wind power development in each of the four countries. Outcome will be measured by installed wind power capacity (MW) and estimated annual production (GWh) over time.2

2.2

Explaining What Has Happened

We see output and potentially corresponding outcome mainly as a result of decision- and policymaking at different governance levels. Multilevel governance characterizes decision-making competence and influence on policies as shared across several levels of government: from the EU via national to local levels. Originally, the multilevel governance approach has been depicted as an alternative to state-centred intergovernmentalist approaches of EU integration and policymaking (Fairbrass & Jordan, 2004; Hooghe & Marks, 2001; Skjærseth & Wettestad, 2008). The main alternative explanation to governance at several levels of government explored here is the energy-economic situation. First, the energy-economic situation represents the structural ‘needs’ and opportunities for renewable energy and wind power to meet national goals. These goals may be concerned with reduction of GHG emissions. They could also be motivated by the need for benefits associated with the diffusion of renewable energy, including reduced air pollution, improved energy access and energy security, and improved job creation directly and indirectly related to renewable energy diffusion (Couture et al., 2019). Regarding opportunities, the literature on national resource endowment as a driver of different types of renewable energy highlights how wind and solar conditions influence the profitability of investments in wind and solar PV installations (Hoogwijk et al., 2004; San Cristóbal, 2011), even if the more detailed variation in diffusion within countries is also influenced by several other factors (Gosens, 2017).

2 Both in absolute figures and relative to the size of the electricity system.

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Other factors being equal, we assume that: • Given an increase in climate-policy targets, the larger the share of fossil fuels in the electricity mix, the more ambitious wind power policies and market creation/niche support will be. • The higher the electricity import dependency, the more ambitious wind power policies will be. • The greater the wind resources, the more ambitious wind power policies will be. To summarize, we propose: H1: Given an increase in climate-policy targets, Nordic countries with higher shares of fossil fuels in their electricity mix, higher import dependency and greater wind resources will adopt more ambitious wind power policies. Second, the EU may affect, or be affected by, national renewable and wind power politics and policies. Member states may ‘upload’ national policies to the EU level and the EU ‘download’ EU policies to the national level (Börzel, 2008).3 Uploading of national policies may take place by diffusion of policy instruments and approaches, i.e., policies in one country affect policies (via the EU) in another country. In the case of renewables, this may also occur as a deliberate effort by technology frontrunners such as Denmark (see Chapter 3) to expand their markets for wind power technology. In general, we assume that countries that upload specific policies to the EU will, in turn, not be pushed or pressured by these EU policies. We are particularly interested in examining how EU policies have been ‘downloaded’ to shape national renewable/wind power targets and policies. Downloading equals implementation, which represents the ‘sharp end’ of Europeanization, characterized by EU influence over domestic policy choices. Differences between EU requirements and governmental policies and preferences may lead to low alignment between national and EU policies, in turn resulting in pressure on countries for a change from 3 As an EEA country, Norway will be at the receiving end of EU policies.

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the status quo. This adaption-pressure perspective builds on the assumption that countries will resist implementation of EU policies that require fundamental changes to their own status quo (Knill & Lenschow, 2000; Treib, 2008; Skjærseth et al., 2016).4 Alternatively, EU legislation may be ‘customized’ to fit the national context: Thomann (2015) has argued that implementation/transposition can result in tailor-made solutions in a multilevel system. EU implementation research (e.g., Treib, 2008) has characterized the Nordic countries as the ‘world of compliance’, which might lead us to expect uniform and ‘successful’ implementation. Still, we expect that high alignment between pre-existing national policies and preferences and the final EU legislation will lead to low adaptation pressure, and will increase the likelihood of policy implementation in response to goals, and vice versa. We assume that: • ‘uploading’ of national policies to the EU level will pre-empt ‘downloading’ and alleviate the adaptation pressure effect of the EU on national policies; • the better the alignment between EU and national policies and preferences, the less adaptation pressure will there be from ‘downloading’ EU policies. Thus: H2: Nordic countries with pre-existing wind power-specific national policies and preferences that deviate significantly from/are less ambitious than the final EU policy will experience high adaptation pressure to make national policies more ambitious, but the likelihood of policy implementation in response to EU goals will be reduced. We will assess this proposition (H2) mainly in the context of the EU’s 2009 Renewable Energy Directive.5

4 This perspective has been criticized for excluding actor interests, and for being static (Treib, 2008). Our approach applied to the Nordic countries includes energy interests and preferences, and dynamic development. 5 RED I targets renewable energy consumption, but has significantly stimulated the production of renewable electricity, where wind power has been essential.

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Third, a simple perspective of domestic politics explains national policy development and responses to EU policies by the state, or government itself, society and the relationship between the state and society, where domestic institutions channel influence through electoral and corporate channels (Underdal & Hanf, 2000). In the context of EU adaptation pressure, this perspective relaxes the assumption that states are necessarily motivated to preserve the status quo. New governments or administrative actors may have different preferences and bring in new priorities. Societal actors may gain or lose political influence. As possible explanations of wind power policies, we will focus on governmental and societal actors and administrative organization. Governmental actors can act as ‘veto players’ whose agreement and support is necessary to achieve a change in the status quo in renewable and wind power policies as well as policies for reducing fossil-fuel use (Tsebelis, 2002). Change in (majority) government may thus affect renewable and wind power policies. Societal actors, such as industry, may be strengthened or weakened by new policies; they may gain or lose political influence and support, or resist EU and national policies and goals. Societal actors may be particularly influential if industrial segments of society form ‘social blocs’ or policy communities characterized by tight alliances among ministries, parliamentary committees, and industrial sectors (Daugbjerg, 1998). Some insiders with privileged status may represent the ‘core’, whereas others are more peripheral (Maloney et al., 1994). Insiders may distinguish between fossil-fuel and renewables industries or among different renewables technologies. The literature on sustainability transitions emphasizes the role of incumbent actors connected to nuclear energy and fossil fuels in resisting change and blocking policy development, although they may under some conditions contribute actively to an energy transition (Geels, 2014; Hellsmark & Hansen, 2020; Hess, 2013; Steen & Weaver, 2017). In some national contexts, such as Denmark, the wind energy industry constitutes such an established and economically important activity as to assume incumbent characteristics (see Chapter 3). Importantly, when benefits are concentrated to certain subgroups of society while costs are broadly distributed, there is reason to expect high incentives for promoting specific policies— as subsidized wind power developers that do not have to pay for the

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negative consequences of land-use changes (Wilson, 1980).6 The ‘weight’ and cost/benefit distribution of societal actors may thus affect renewable and wind power policies. Administrative organization refers to the distribution of decisionmaking authority at the horizontal and vertical levels. Horizontal fragmentation concerns the number and types of governmental agencies and ministries involved at each level of government, and the coordination and integration of different concerns in licensing procedures and decisions at higher government levels concerning, e.g., appeals. This will typically apply to potential trade-offs between renewable energy and nature or other land-use concerns. The basic assumption is that different regulatory actors will tend to perceive problems differently and will apply differing decision-making criteria. In turn, perceptions and criteria are largely shaped by the formal roles of governmental agencies. This assumption is captured by the aphorism ‘where you stand depends on where you sit’ (Allison, 1971, p. 176). Applied to the Nordic countries, this perspective can nuance the common view that the Nordic countries are characterized by similarities in their political and administrative systems (e.g., Treib, 2008), and highlight the extent to which the administrative organization of wind power is split among state agencies and ministries, how coordination takes place—and the consequences in terms of dealing with trade-offs with land-use concerns. Thus: H3: Nordic countries characterized by change towards more pro-wind power governments and ‘stronger’ industrial actors in wind energy will adopt more ambitious wind power policies. However, these factors are conditioned by horizontal fragmentation and coordination in the administrative organization—limited horizontal fragmentation or strong coordination is likely to reinforce ambitious wind power policies, and vice versa. Vertical fragmentation concerns the distribution of competencies among the state, regional and municipal authorities. At the local level, problems may look very different from how they appear at the national 6 Such as loss of biodiversity and reduced areas for other activities: economic development, recreation, military use, or reindeer herding.

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level, and what are seen as ‘national interests’ at the state level will not necessarily match preferences at the regional or municipal levels. Whenever local interests deviate from what the government has defined as the ‘national interest’, local opposition to national goals can be expected. Such opposition may be caused by different knowledge bases or negative policy feedback from implementation experiences (Edmondson et al., 2019; Skjærseth, 2018). If local opposition favours less ambitious national policies, and decision-making competence in the relevant sector is decentralized by municipal veto, there is a risk of defection from national goals. In the case of wind power, this will often concern issues of control over local area planning and application for permits. Local opposition may lead to vertical disintegration—the aggregate of ‘micro-decisions’ among affected municipalities may deviate systematically, or substantially, from higher-order policy goals (Underdal, 1979). This in turn may lead to policy reform (Skjærseth & Rosendal, 2022). Thus: H4: Nordic countries characterized by a combination of local opposition and municipal veto power in licensing will experience a backlash in wind power policy ambitiousness and development that will lead to policy reform. Fourth, the policy context in the four countries can affect the outcome directly, particularly when EU adaptation pressure is ‘moderate’ (Knill & Lenschow, 1998), or when domestic policies are not sufficiently ambitious to propel the development of wind power. A favourable policy context will promote wind power diffusion, whereas a negative policy context may work in the opposite direction. Technological development is seen as part of the policy context for explaining policy implementation of EU and national energy policies (Skjærseth et al., 2022). This perspective opens for a complementary explanation of wind power diffusion: that reduction in technology costs may be driven to different extent by public policies that promote research and innovation or scale up technologies among relevant actors (Table 2.1). Such complex relationships between policies, actors and the context within which they operate are difficult to capture by pattern-matching

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based on empirical expectations (see Chapter 1). We will simply examine and explore the development in wind power costs for (renewable) electricity production in each country in terms of Levelized Cost of Energy (LCOE) compared to other alternatives, since wind power LCOE varies geographically.7 We will also explore other policy-context aspects that may have consequences for wind power development, such as ownership and investment structure.

2.3

Summary

See Table 2.2. Table 2.2 Summary of explanations, theoretical foundation, and expectations Explanatory perspectives

Theoretical foundation

Expectations

Energy-economic situation Multilevel governance • Role of the EU

National resource endowment Europeanization/ domestic politics EU policymaking

Shape wind power policy ‘needs’ and opportunities Shape wind power policy ambitiousness

• Domestic politics at national level

State–society relations

• Domestic politics at local level Policy context

Implementation

Innovation

Uploading expands markets; Downloading/adaptation pressure leads to higher policy ambitiousness Pro-wind power governments and stronger wind power industries lead to higher policy ambitiousness (conditioned by administrative coordination) Local opposition and municipal veto power lead to policy reform Decline in wind power technology costs accelerate diffusion (independent of changes in EU and domestic policies)

7 For Finland, the costs of Power Purchase Agreements (PPAs) are used, due to lack of LCOE data.

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Skjærseth, J. B., Eikeland, P. O., & Inderberg, T. H. (2022). Biofuelling the energy transition in Nordic countries: Explaining overachievement of EU renewable transport obligations. International Environmental Agreements, 22, 825–842. https://doi.org/10.1007/s10784-022-09587-2 Skjærseth, J. B., & Wettestad, J. (2008). EU Emissions trading: Initiation. Ashgate. Steen, M., & Weaver, T. (2017). Incumbents’ diversification and cross-sectorial energy industry dynamics. Research Policy, 46(6), 1071–1086. https://doi. org/10.1016/j.respol.2017.04.001 Thomann, E. (2015). Customizing Europe: Transposition as bottom–up implementation. Journal of European Public Policy, 22(10), 1368–1387. https:// doi.org/10.1080/13501763.2015.1008554 Treib, O. (2008). Implementing and complying with EU governance outputs. Living Reviews in European Governance, 3(5), 1–30. Tsebelis, G. (2002). Veto players: How political institutions work. Princeton University Press. Turnheim, B., & Geels, F. W. (2012). Regime destabilisation as the flipside of energy transitions: Lessons from the history of the British coal industry (1913–1997). Energy Policy, 50, 35–49. Underdal, A. (1979). Issues determine politics determine policies: The case for a ‘rationalistic’ approach to the study of foreign policy decision-making. Cooperation and Conflict, 14, 1–9. Underdal, A., & Hanf, K. (2000). International environmental agreements and domestic politics: The case of acid rain. Ashgate. Uyarra, E., Shapira, P., & Harding, A. (2016). Low carbon innovation and enterprise growth in the UK: Challenges of a place-blind policy mix. Technological Forecasting and Social Change, 103, 264–272. https://doi.org/10.1016/j. techfore.2015.10.008 Wilson, J. Q. (Ed.). (1980). The politics of regulation. Basic Books.

CHAPTER 3

Denmark

Abstract As a first mover in wind power, and quite active in developing offshore wind, Denmark has implemented and adjusted a mix of technology ‘push’ and market ‘pull’ policies, supported by a carbon tax on energy. The aim has been to aid technology development on large-scale turbines and wind power deployment. There has also been a shift towards a reduction in wind power-specific subsidy levels. Still, Danish policies have brought a fairly steady increase in installed wind power capacity and production, yielding an electricity share of nearly 50% in 2020. Explanations for this development point initially to the energy-economic situation, as policies and the development of wind were accelerated by the need for alternatives to oil and gas and very good wind resources. EU adaptation pressure has played a minor role, as Denmark has generally been ahead of the EU’s renewable energy policies. National-level politics have been receptive, providing broad support to major wind power industrial interests. However, Danish national wind power policies have struggled to find a balance among ‘green’ industry, climate, and environmental policy objectives on the one hand, and local influence and acceptance on the other. Finally, technology costs have declined steadily. This is also a result of Danish policies that provide R&D support. Keywords Wind power · Denmark · EU · Renewable energy policies · Climate policies · Energy transition

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. B. Skjærseth et al., Wind Power Policies and Diffusion in the Nordic Countries, https://doi.org/10.1007/978-3-031-34186-1_3

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3.1

Introduction

Since the 1990s, Denmark has been an international frontrunner in wind power development, and Danish technology is recognized as a world leader; In 2023 Vestas ranked as the world’s largest turbine producer. Interest organizations, the business sector, and international analysts alike credit this development to a policy framework of ambitious wind power targets, feed-in tariffs, and funding for R&D. This policy framework, brought about through broad political agreements independent of the ideological leanings of the parties in power at any given time, has ensured a predictable environment for wind power investment (IEA, 2017; Ratinen & Lund, 2015). However, as an undercurrent beneath this seemingly stable framework, over the past five to ten years, the course of policy has taken a significant turn—from lucrative wind power subsidies, towards a market-oriented policy framework, increasingly emphasizing cost-effectiveness and technology neutrality. Tendering schemes have replaced fixed subsidies, first offshore and recently also onshore, and it is now foreseen that subsidies may disappear altogether (Klima, Energi og Forsyningsministeriet, 2020). Surprisingly, this change in policy course has encountered scant opposition, unlike the 2001 attempt by a liberalconservative government to introduce a market-based policy approach, which gave rise to large protests from renewable energy industrial interests, grassroots organizations, and centre-left political parties (Eikeland & Inderberg, 2016). Moreover, the story of Danish wind power development as a bottomup affair driven by local innovation does not apply to current developments, as onshore wind power has transitioned from locally owned projects to large-scale investments (Garud & Karnøe, 2003; Karnøe, 1991; van der Vleuten & Raven, 2006). Meanwhile, the role of the local level has switched from driver to a veto-player, often blocking wind power. Local ownership has been reconceptualized from being a requirement for onshore turbines (up to 2000) to merely an incentive for local support to wind power through the right-to-purchase scheme (from 2008). This scheme was replaced in 2020 by a renewable energy bonus where neighbours are offered a share of profits, but not ownership. Moreover, planning restrictions on the scale of turbines have been eased or removed. However, the municipalities remain crucial to onshore wind development, as they have authority to approve or reject developerproposed installations and may veto any near-coastal projects within a

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15 km zone from the coastline. The outcome is an ambiguous policy framework fraught with implementation problems. This chapter on Denmark seeks to explain both the significant policy turn towards market orientation and the lack of controversy surrounding this shift. We also examine ambiguities in the current policy framework for local implementation of onshore or coastal wind. Earlier studies have explained Danish renewable energy policy in terms of consensus-style politics (e.g., Toke & Nielsen, 2015) and the coalition of vested interests that opposed previous attempts at policy change (Eikeland & Inderberg, 2016; Moe, 2012). By contrast, we focus on the changes in interests and their alignment with broader national policy agendas to explain both the turn towards market-oriented policies, and the problems experienced in local implementation. Additionally, while it is argued that Denmark is an EU frontrunner that has succeeded in uploading its renewable energy policies, this chapter examines the interactions between the EU focus on competitiveness and smoothly functioning energy markets and players in the Danish policymaking system.

3.2

Policy Mixes and Wind Power Development 3.2.1

Targets and Policies

Renewable energy entered the Danish policy repertoire in the 1970s as a (minor) part of the response to the oil crises, focusing on security of supply (Dyrhauge, 2017; Miljøstyrelsen, 2003). Since then, Danish renewable energy policy has evolved through a series of political agreements, follow-up legislation, and strategies focused on wind power. The key features of Danish renewable energy policies have been a combination of steadily increasing targets for installation of wind, promoted through a system of subsidies and R&D funding, underpinned by carbon and energy taxes. Earlier state-funded subsidy-schemes were replaced in the 1990s by a consumer-funded feed-in tariff (public service obligation tariff). During this period, the government and power companies concluded a binding agreement obliging the power industry to install 750 MW wind-capacity offshore by 2008 (IEA, 2012), thereby putting Denmark on track as an international first mover in offshore wind power. This general policy trajectory was interrupted in the first half of the 2000s, when subsidies for wind power as well as for renewable energy

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R&D programmes were cut (Eikeland & Inderberg, 2016; Toke & Nielsen, 2015), reflecting a new emphasis on cost-effectiveness. The feedin tariff scheme expired in 2001 and was replaced by a feed-in premium in 2003 (Nielsen & Pedersen, 2013). In 2004, competitive tenders for large offshore windfarms were introduced; such tender auctions have since constituted the key policy instrument driving offshore wind installations. However, around 2007, Danish policy on renewable energy reverted to its previous course, with a medium-term goal of 30% renewables in energy consumption by 2025 (Andersen & Nielsen, 2017). This was underpinned by a new R&D programme, the Energy Technology Development and Demonstration Program (ETDDP). A 2008 parliamentary agreement (implemented in Act no 1392 of 27 December) mixed technology push and market pull instruments, including an increase in the feed-in tariffs for onshore wind and a doubling of energy R&D funding to 134 mill. EUR, with one-third earmarked for renewable energy (IEA, 2011, p. 29). The agreement also increased the CO2 -tax on fossil fuels from 0.40 EUR—12 EUR per ton to 20 EUR per ton, to align with the expected allowance price under the EU Emissions Trading System (ETS). The agreement set an ambitious target of 1,300 MW installation of onshore and offshore wind power for the years 2008 to 2012, adding to the 3,000 MW installed at the time. The 2008 agreement also focused on the municipal level. It set a collective target of 350 MW new net installation onshore to be approved by the municipalities under planning regulations. Additionally, the renewable energy law featured several schemes for promoting local acceptance of wind power. These included a value-loss scheme which required wind developers to compensate residential property owners for turbine-related value losses above 1%; a purchasing rights scheme obliging turbine developers to offer purchase rights of at least 20% of the shares to residents in the municipality or neighbours; and a green fund that offered support for environmentally related projects that would benefit the local community. The renewed focus on R&D in renewables led to a parliamentary decision in 2010 to establish a new onshore test centre for large wind turbines (up to 250 metres) near the west coast of Denmark. There was also increasing attention to the role of interconnectors with Denmark’s neighbours, to facilitate integration of a higher share of fluctuating renewable energy sources in the electricity supply system, while maintaining grid balance.

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These energy agreements enabled Denmark to commit to a 30% renewable energy target share of total energy by 2020 under the 2009 EU Renewable Energy Directive (RED I). Supporting this target, the 2012 energy agreement further ramped up Denmark’s wind power ambitions, aiming for installation of 1,000 MW offshore capacity in two offshore wind plants, 500 MW ‘nearshore’ capacity, and a net increase in onshore capacity of 500 MW by 2020 (Danish Government, 2012). Altogether, this was projected to result in approximately a 50% wind power share of total electricity consumption by 2020. For onshore, the 2012 agreement linked wind power subsidies inversely to electricity prices.1 This indicated growing attention to the level of renewable energy subsidies and constituted a step towards greater market orientation. A key shift in renewable energy policies came in 2017–18 when feedin tariffs for new onshore turbines and offshore wind installations under the open-door licence process were replaced by a technology-neutral tendering scheme in which wind and solar PV projects would compete to offer the cheapest production of renewable energy. Initially, developers were paid a fixed price on top of the market price; a 2020 agreement changed the system to a Contract-for-Difference model, varying the price premium according to the market price for electricity. Developers are guaranteed a price, but if the market price exceeds the guaranteed price, the difference must be returned to the state. This model is similar to the tendering model for offshore development. Another noteworthy policy change has been the discontinuance of subsidies for small-scale (‘household’) turbines, underlining both the market orientation and the focus on large-scale installations in the recent agreements. The 2020 Climate and Energy Agreement established as a goal that renewable energy development should move towards a completely market-based model without subsidies. In 2021, this materialized for offshore installations, when Thor Wind Farm I/S won a bid that involved no subsidies, but included net payments to the public coffers instead (DEA, 2021). For onshore, the tenders in 2018 and 2019 resulted in the lowest subsidies ever paid for onshore renewable energy, indicating that renewable energy was becoming competitive under market conditions. Support for technology development continued, as the 2018 agreement 1 Reducing the .03 EUR per kWh feed-in premium linearly when electricity prices exceeded a .04 EUR per kWh threshold, and eliminating it entirely at .08 EUR per kWh.

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included the establishment of two funds totalling nearly 27 mill. EUR for support to the development and demonstration of wind turbines. The 2018 agreement set a 2030 target of 55% renewables in total energy consumption. Important wind-specific targets in this agreement were three offshore wind installations with total capacity of 2,400 MW. The 2020 agreement increased the level of ambition for offshore, adding plans for two ‘energy islands’, totalling 5 GW power and with the aim of converting wind power to other energy forms, such as green hydrogen. These are to be established by 2030 and signal a focus on renewing Denmark’s position as a frontrunner in the green energy market. The Renewable Energy Schemes (RE-schemes), adopted in 2008 to promote local acceptance, have been revised under recent agreements. Importantly, the right-to-purchase scheme was cancelled in 2020 and replaced by a renewable energy-bonus scheme, offering neighbours within a certain distance of the turbine a bonus that varies but amounts to about 875 EUR per households for projects approved from 2021. Finally, the 2019 Climate Law, which stipulated that all sectors, including energy, must reduce their GHG emissions by 70% by 2030, is seen as a game changer in which promotion of renewable energy has become an indispensable means towards achieving climate-policy objectives. In 2022, referring to climate objectives as well as energy independence from Russia (Danmarks Radio, 2022b), the Danish Government announced two major multilateral agreements on offshore wind: one with Germany, the Netherlands, Belgium, and Denmark for 65 GW offshore wind in the North Sea by 2030 and 150 GW by 2050—a tenfold increase over the current capacity—and one with seven other countries bordering the Baltic for 19.6 GW offshore wind in the Baltic Sea by 2030 (Danmarks Radio, 2022a). The granting of wind power licences is divided into two systems: one for offshore wind and one for onshore. Offshore licensing is centralized. Most offshore projects are developed through public tenders in which the government determines the location and size of each wind installation. Three kinds of permits are required: a preliminary investigation permit, including an Environmental Impact Assessment; a construction permit; and an electricity production permit (DEA, 2022), all administered through a one-stop shop with the Danish Energy Agency (DEA). Until recently, project developers could also apply for a licence through

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an open-door approach, but this is now limited to nearshore projects, partly to ensure available sites for future public tenders for large-scale offshore wind (Regeringen et al., 2021).2 Licensing of nearshore, opendoor projects is less centralized. DEA still processes the application, but in July 2022 municipalities were accorded the right of veto. ‘Nearshore’ is defined as projects within 15 km from the local coastline (Act no. 804 of 07/06/2022). This has strengthened municipal influence on nearshore wind power, from the previous right to object to offshore turbines adopted in 2017 (Law proposal L138 2021–2022). The licensing procedure involves public hearings in several stages of the approval process. Licensing of onshore projects is decentralized to Denmark’s 98 municipalities. Through the spatial planning process, local authorities must identify areas suitable for wind turbines. Further, they have the power to approve actual projects. A project developer must apply for an investigation permit and a building permit with the local authorities and for a grid connection agreement with the local Distribution System Operator (DSO). Local actors may file a complaint to a special appeals board, a process which tends to lengthen the decision process. However, planninglaw restrictions on scale have been eased, granting to the local authorities full authorization rights regarding large-scale turbines (