by Devon Rowcliffe
A rapid increase in oil prices during the 1970s caused Denmark to radically alter its national energy policy, with the goal of replacing fossil fuels entirely with renewable energy. More than 40 years later, will the notable drop in oil prices ironically lead Canada to a similar shift?
The 1973 oil crisis, caused by a sudden and significant increase in the price of oil, shocked many Western economies. Denmark was hit particularly hard, as imported oil had accounted for more than 92 percent of the country's energy. The danger of being overly reliant upon one source of energy controlled by external forces was brutally exposed, and the Danes vowed never to repeat their oliekrisen (“the oil crisis”) experience.
Denmark began an aggressive, long-term transition to eliminate its oil dependency, replacing it with renewable energy and district heating. The Nordic country is currently on track to have renewables cover 70 per cent of its national energy needs by 2025. Rather ambitiously, Denmark aims to be entirely fossil-fuel free by 2050, including in its transportation sector.
This was an example of an oil-importing country that fell victim to high oil prices. But what about the flip side of the coin? What happens to oil-producing countries such as Canada when the price of oil suddenly plummets? Will there be an increased political will to diversify Canada’s energy sector, for fear of boom-and-bust economic cycles?