(Bloomberg) — Denmark’s minister in charge of energy policy plans to head to the U.S. this year to talk to state representatives in an effort to promote wind energy despite open declarations of hostility toward the technology from President Donald Trump.
Lars Christian Lilleholt, energy minister in Denmark’s minority center-right coalition led by Prime Minister Lars Lokke Rasmussen, has just returned from India to promote wind power. He now plans to travel to the U.S. to do the same and will count on state legislatures to see the potential of the energy form, irrespective of signals from Washington D.C., he said in an interview in Copenhagen on Tuesday.
“We’re intensifying our efforts with the U.S.,” Lilleholt said. “We’re expanding our cooperation with local authorities abroad to include the U.S.” As part of the minister’s planned trip this year, he said he’ll “visit green states and areas that want to pick up the green gauntlet.”
The comments come as the minister prepares to unveil a plan to put an end to Danish subsidies that have supported renewable energy in the country since the 1970s. He says such a framework is no longer necessary because wind power has proven its long-term capacity to compete on equal terms with fossil fuels, without state support. Lilleholt says it’s already cheaper to use wind than coal to generate electricity, based on estimated costs of creating a new facility.
“Building new coal capacity won’t be competitive versus offshore wind,” Lilleholt said. “That’s why the government wants to phase out subsidies for offshore wind. The target is that this has to be competitive and able to stand on its own feet.”
Denmark is home to Vestas Wind Systems A/S, the world’s biggest wind turbine maker. Dong Energy A/S, the world’s largest offshore wind-park operator, is also a Danish company. Both have built their businesses in a market that has been subsidized for the past four decades.
“The prerequisite for a transition to green energy is that the level of support is reduced,” Lilleholt said. “That the need for support becomes smaller.”
Denmark gets about 40% of its electricity from wind power. The country targets weaning itself off fossil fuels by 2050. Lilleholt says that goal is still fully achievable even without subsidies because wind energy is already more efficient than coal.
Much of America’s Midwest already generates a significant proportion of its electricity from wind power, according to the American Wind Energy Association. After Germany, the U.S. is Denmark’s biggest export market for wind power, Lilleholt said. His ministry has yet to decide on a final list of which states to visit.
With more than 40% of Vestas’s revenue coming from the Americas in 2015, the company’s fate depends to a large extent on renewable energy demand in the region.
Investors panicked after the U.S. election, driving Vestas’s shares down as much as 14% as it emerged that Trump — a card-carrying climate-change skeptic — had won. The stock plunged again in December, when the president-elect put forward Oklahoma Attorney General Scott Pruitt — a staunch opponent of the Obama administration’s climate agenda — as his choice to lead the Environmental Protection Agency.
Trump, who has blamed wind turbines for killing bald eagles, has as a businessman unsuccessfully tried to stop offshore parks that spoil the view from his golf course in Scotland.
Though Trump has made clear he doesn’t like wind power, existing legislation supporting the industry is set to run for several years. Before Trump took office, the U.S. congress passed a production tax credit, or PTC, that will give tax breaks to wind producers until 2020. Steven Mnuchin, Trump’s candidate to become treasury secretary, signaled in hearings this month he’ll let the PTC framework run its course.
Jacob Pedersen, head of equities at Sydbank, says that’s good news for investors in Vestas. He also warned that it is too early for the offshore wind industry to survive without state support. Producers are “not ready to stand alone yet,” he said by phone.
“A lot of people realize this will be a huge market, but nobody knows whether it will be a profitable market.”
Lilleholt said he’s counting on states having enough independence from the Trump administration to make informed choices when it comes to renewable energy.
“My experience is that there are several U.S. states with strong policies when it comes to wanting to go green,” he said.
Bloomberg News by Peter Levring
