How Power-to-X can help the Danish business and economy beyond the 70% target

Globally, Power-to-X is gaining traction. However, the latest IEA report “Hydrogen Review 2021” indicates that while the deployment of low-carbon hydrogen is accelerating, it still falls short of what is required to reach net zero emissions by 2050.

While hydrogen and Power-to-X are very important in terms of achieving Denmark’s climate goal of reducing CO2 emissions by 70% by 2030, the future national Power-to-X investment strategy should have higher ambition levels that go beyond the 70% target.

A recent report prepared by Ramboll for Danish Energy has explored Power-to-X opportunities and business potentials that could benefit the Danish business and economy on a longer run. The report concludes that local knowledge and experience, green fuel exports, and job creation are key markers for local Power-to-X development plans.

Local knowledge can boost opportunities on the international competitive market

Production of green fuels is not only important to reach the 70% reduction target and to decarbonise the shipping and aviation industries. Focusing on the establishment of Power-to-X production capacity and on accelerating the uptake in the end use sectors would also enable Danish businesses delivering goods and services to the industry gain important knowledge and experience in developing innovative and scalable solutions for Power-to-X developers. The knowledge and experience acquired locally can boost opportunities on the future international competitive market.

Where there’s plenty of renewable energy, there’s great potential for exporting green fuels

Denmark has a booming renewable energy market with further expansion plans, especially for offshore wind in the North Sea. This creates a flourishing opportunity to develop Power-to-X capacity that can transform green power into hydrogen and hydrogen-based fuels like ammonia and methanol to be consumed in Denmark or exported.

The magnitude of this opportunity relies, however, on renewable energy deployment. Denmark’s Power-to-X project plans could sum up to approximately 6 GW of electrolysis capacity that would need around 30 TWh of green electricity annually by 2030. This could require an additional renewable capacity of 13 GW on top of the 19 GW of wind and solar capacity estimated to be installed in 2030. Therefore, development plans of Power-to-X, renewable energy, and hydrogen infrastructure must go hand in hand.

According to the report, the turnover in net energy exports - accounting for fossil fuel import savings and Power-to-X fuel exports - is estimated to be between DKK 2 and 9 billion in 2030, depending on the levels reached for Power-to-X fuel demand in domestic and international transport, and Power-to-X fuel exports from Denmark.

Opportunities for green job creation

Investment in the production of green fuels, including electrolysis for hydrogen and synthesis for ammonia will lead to an increased activity in connection with the construction and operation of the plants. Up to 35,000 man-years are expected to be created over the life course of the plants. The right competencies need to be in place locally, which underlines the need for targeted policies and incentives across the job market.

Read the full report here (in Danish).