From crisis to capability: Lessons from Denmark on how to quit fossil fuels

Australia has world-class wind and solar resources, strong investor interest, net zero ambition, and an urgent need to accelerate clean electricity. The question is no longer whether the transition will happen; but whether projects can be approved, financed and built fast enough — and with enough local support – to make the transition affordable.

Denmark offers a useful reference point, not because it can be copied, but because it shows how a country can turn constraint into focus. Its energy transition was born not from abundance, but vulnerability.

In the early 1970s, Denmark relied heavily on imported oil; the oil crises of 1973 and 1979 made energy security a national priority and pushed the country toward efficiency, domestic energy and renewables. It is a reminder of the old maxim: never waste a good crisis.

The results are well documented. From 1990 to 2020, renewable power generation rose from 3 per cent of Denmark’s generation mix to more than 80 per cent, while carbon dioxide emissions from power and heat fell by 76 per cent.

In 2024, Eurostat recorded Denmark’s renewable share of net electricity generation at 88.4 per cent – the highest in the EU. Australia’s geography, federal system and market scale are different, but several observations are useful, and the current crisis may provide a similar opportunity for Australia.

Local participation can be a delivery tool

Denmark did not simply deploy wind turbines; it created mechanisms for communities to participate in wind projects. Since 2009, the Danish Renewable Energy Act has required at least 20 per cent local ownership for new wind projects.

The Middelgrunden offshore wind farm near Copenhagen illustrates the point: according to the International Energy Agency, 8,650 Danes raised €23 million to finance half the project cost, with the municipal utility owning the other half.

For Australia, the suggestion is not to transplant Denmark’s ownership model unchanged. Instead, participation should be part of project design, not a late-stage consultation exercise.

That could mean local investment opportunities, community funds, Indigenous partnership models, local procurement commitments and long-term stewardship arrangements that are visible from the start.

If host communities are expected to carry local impacts for national benefit, benefit-sharing needs to be credible, specific and durable.

Investor confidence depends on certainty, not just ambition

Another useful observation from Denmark is that policy durability reduces risk. Successive governments have maintained broad support for the direction of travel, while adjusting instruments over time.

The 2020 Danish Climate Act legally binds Denmark to reduce greenhouse gas emissions by 70 per cent by 2030 compared with 1990, and to achieve climate neutrality by 2050 at the latest. That kind of signal matters because investors price uncertainty.

Australia has made important progress through Renewable Energy Zones, underwriting mechanisms and the Commonwealth Capacity Investment Scheme. But investors still face fragmented jurisdictional processes, uncertain timelines and gaps in key areas, including predictable auction frameworks, visibility on curtailment and congestion risks, stable revenue assumptions and grid connection complexity.

Additional uncertainty stems from shifting assumptions about coal closures, transmission access and community acceptance. 

Capital does not need to be convinced that clean energy is attractive; it needs confidence that projects can move from development to operation without being stranded in process risk. A practical step is to reduce the risks that governments are best placed to manage. 

Denmark’s streamlined, one-stop-shop permitting approach is most directly relevant to offshore wind: the Danish Energy Agency acts as the central coordinating authority for offshore wind permits, bringing together inputs from other public authorities. Australia could draw from that principle for offshore wind precincts by clarifying responsibilities, sequencing approvals, undertaking early baseline studies and publishing transparent grid and connection pathways. This would reduce the upfront investment for investors – the broader message for all technologies is the same: the cheapest capital follows the clearest rules.

R&D and collaboration can turn policy into industry

Denmark did not just buy renewable energy technology; it built capability around it. The World Resources Institute notes that Denmark expanded wind energy research and development in response to the 1970s oil crisis and later became one of the strongest investors in wind R&D as a share of GDP. That sustained effort helped create a domestic industry, export capability and a workforce able to improve performance over decades.

For Australia, this may be the most strategic implication. We have wind, sun, land, critical minerals, ports and proximity to growing Asian markets. But resource abundance alone does not create industrial advantage. Without sustained investment in skills, research, manufacturing capability, digital systems, grid integration and demonstration projects, Australia risks exporting raw materials while importing much of the value-added technology.

This is where cross-industry collaboration becomes practical, not aspirational. Government, developers, network businesses, lenders, manufacturers, universities, Traditional Owners and communities need standing forums with a delivery mandate — not just advisory panels. The purpose should be to identify opportunities and resolve bottlenecks before they become project failures: workforce shortages, supply chain gaps, connection constraints, planning duplication and unclear community benefit expectations.

A practical way forward

Denmark’s story is not a fairytale. It was triggered by crisis, sustained by political discipline and built on community trust. Australia’s crisis is different: climate risk, ageing coal assets, energy security concerns, global competition for clean capital and the need to electrify much of the economy. But the useful observation is the same: moments of pressure can become moments of institutional renewal.

For policymakers, the opportunity is to make the transition more investable and buildable through clearer project pipelines, time-bound approvals, better-resourced agencies, stronger spatial planning and transparent grid development. For industry, the opportunity is to engage earlier, share benefits credibly and collaborate across the value chain rather than optimising project by project.

Australia does not need to become Denmark. But it can borrow Denmark’s habit of turning constraint into focus.

Marc Revault is team lead WtE, BE, CC Ramboll Australia