Abstract
As a model for energy transition to low-carbon economy, Denmark is of great importance for studying internal relationships between economic growth, both energy consumption and production, and Carbon emissions. Based on Denmark’s data for the total consumption of petroleum oil and gas resources, total production of oil and gas resources, gross domestic product(constant 2010 US$) and CO2 emissions over the time span 1984-2016, Johansen test shows that there is no cointegration relationship between CO2 emissions and oil and gas consumption, and the autoregressive distributed lag (ARDL) boundary cointegration test shows that there is no cointegration relationship between CO2 emissions and economic growth. Nevertheless, ARDL boundary cointegration test is used to confirm the existence of cointegration between economic growth and both the energy production and consumption. We then establish an error correction model to analyze the short-term relationship between these two cointegrated metrics. The Granger causality test indicates that there is one-way causality between economic growth and energy consumption and energy production; in particular, economic changes help explain changes of energy consumption and production in the future. Finally, the empirical analysis results are further discussed with consideration of Denmark’s energy policies and the current state of its energy economy. The results of the present study can help the other countries in the design of energy development, the clean and low carbon energy transition policies for sustainable and long-term economic development.
Highlights
In the early 1970s, Denmark had a single energy structure with a self-sufficiency rate of less than 2%
The autoregressive distributed lag (ARDL) boundary cointegration test proposed by Pesaran, Shin & Smith (PSS) is robust when applied to small samples
The demand for energy production was mainly based on the need to adjust the energy structure, and the income from its oil and natural gas and the main efforts were invested into green energy, which means that Denmark still need to maintain the production of its oilfield to ensure that the income from the oil and gas business would be invested in renewable energy
Summary
In the early 1970s, Denmark had a single energy structure with a self-sufficiency rate of less than 2%. In 2005, the proportion of oil consumption in Denmark’s total energy consumption was 42% and was nearly 10 million tons less than in the early 1970s, while the proportions of natural gas, coal, and renewable energy increased from less than 1% to 22.76%, 19.53%, and 15.35%, respectively. Judging the interrelationship between energy production, consumption and economic growth requires certain economic theoretical basis, and empirical analysis based on orderly data. On the basis of analyzing and judging the relationship between energy consumption and production data and economic growth data, this paper analyzes the impact of Denmark's energy policy on its economy in the corresponding period and the role of the relationship between economic development and energy use in promoting or inhibiting its energy policy-making, and provide effective reference basis for its energy policy. This paper analyzes the impact of Danish energy policy on energy production and consumption in order to provide a mathematical and economic basis for future energy policy formulation
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