Largest Oil Producer in EU “Closing Down the oil industry for good” in bid to gain “moral authority”

Denmark’s climate minister has announced that his country is, “closing down the oil industry for good by 2050.” Minister Dan Jorgensen referred to the “difficult” decision as the biggest of his career. Apparently climate activists were not satisfied with Denmark’s pledge to cut emissions by 70% by 2030 and Jorgensen and Prime Minister Mette Frederiksen felt they needed to pledge a complete shut down in order for Denmark to garner the “the moral power to punch above its weight”

Jorgensen was quoted as saying “In most countries, politicians will often say ‘This is a historic decision’. Sometimes it’s true, other times it’s not. With this one, we don’t even have to say it ourselves.

Dan Jørgensen. Photograph: Jacob Gronholt-Pedersen/Reuters

Historic? Well as they say all politics is local and this is a big deal locally, but historic? Denmark produced only a little over 100,000 barrels a day in 2019, but refers to itself as the largest oil producer in the EU. That is only true because the the UK is now out of the EU. The UK produced about 1.7MM barrels per day last year and was just behind Norway, which produced 1.8 million barrels per day. Many think of Norway as part of the EU as it does have a trade union with the EU but no it never fully joined the EU.

For anyone wondering why the Brexit crowd was so anxious to leave the EU this will add to their argument that they need to be independent when it comes to setting policy. But while they cannot be forced to conform to the more radical requirements of their neighbors will they have the “moral authority” to resist a call to shut down their own industry? The UK is hosting the next UN conference on climate change next year in Glasgow and as the ever rising tide of climate pledges continues to grow the pressure on the Brits to match their former EU partners will continue to grow as well.

It is ironic that Denmark which became one of the EU’s richest countries largely on the back of their oil production now feels pressed to move on and make such a dramatic move. But that irony pales in comparison to Norway which in addition to producing 1.8 million barrels a day is home of the worlds largest sovereign wealth fund, all of course generated from that very oil and gas production. Last year the fund joined many other ESG focused investors and divested their investments in all oil producers. You cannot get more ironic than the “oil fund” which is how most locals refer to the fund divesting from the industry that created it.

This all has to have Saudi Arabia feeling better about their position long term. These pledges are easy to make with oil currently oversupplied and relatively cheap. What will the citizens of Denmark say when production declines as others join them in their bid to shut down the industry and oil again tops $100/bbl? Maybe they won’t care as they will have their energy islands producing enough wind power to charge enough EV’s that they won’t miss oil at all. In the mean time they are sure to wield their newfound “moral authority” to pressure the UK, Norway and the new Biden administration to step up with their own pledges.

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