Denmark: Hydropower to Play an Important Role in the Green Transition of Greenlandic Energy Supply
Increased focus on the green transition in Greenland
On November 9, 2021, the Greenlandic parliament adopted a new act on general conditions for financing, operation, and construction of hydroelectric power stations in Greenland. The act determines that, in connection with a new hydropower project, the Greenlandic government is entitled to raise loans of a maximum of DKK 3.1bn.
Within the legal framework, the Greenlandic government intends to extend the already existing hydroelectric power station in Buksefjorden and establish a new hydroelectric power station. The project is to speed up the green transition in Greenland.
On March 15, 2022, Mette Frederiksen, the Danish Prime Minister, together with Múte B. Egede, Greenland Prime Minister, signed a joint declaration of intent to investigate the details of the financing options in respect of the planned project, including any loan options for Denmark to grant a loan to Greenland. The said investigation of financing options is expected to be completed in the autumn of 2022.
At the climate summit in Glasgow in 2021, the Greenland Prime Minister announced that Greenland was going to adopt the Paris Agreement of 2015. The objects of the Paris Agreement are to provide for a reduction of greenhouse gases on a global scale and to create long-term balance between greenhouse gas emission and absorption.
The extension of Buksefjorden hydroelectric power station as well as the construction of a new hydroelectric power station are intended to contribute to the green transition in Greenland and thus ensure a more sustainable society in accordance with the UN Global Goals and the Paris Agreement. Other than the climate and environmental gains, the project is expected to also contribute positively to the business conditions in Greenland and thus provide a basis for higher economic growth.
Increasing temperatures establish favorable conditions for hydropower
The globally increasing temperatures imply that the Greenlandic ice melts at an accelerating pace. The Greenland ice sheet is melting both at the surface and at its base. The meltwater flowing from the surface of the ice sheet to the base releases energy in the form of heat, causing the meltwater to accelerate the melting of the ice. At the Greenland ice sheet base, meltwater streams are formed with high-speed currents, which will also release energy.
The increasing meltwater creates favorable conditions for hydroelectric power stations using the meltwater for energy production. When considering the geographical conditions of Greenland, including the options of using other renewable energy sources, it is clear that hydropower is a key energy source in the green transition in Greenland.
Use of hydropower is thoroughly tested in Greenland currently having five hydroelectric power stations in operation. When extending Buksefjorden hydroelectric power station and constructing a new power station, the use of renewable energy in the public supply of energy will increase from 70% to around 90%. Consequently, the project will have a significant impact on Greenland's transition to a more sustainable energy production.
Energy law advice in Greenland
Bech-Bruun has long-term experience advising on Greenlandic law, including in particular on energy and raw material law issues.
We monitor the Greenlandic transition into renewable energy closely.
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