Denmark, the European Union's largest oil producer after Great Britain exited the bloc, agreed Thursday to cancel future licensing rounds, put an end to all North Sea oil and gas exploration, and to end extraction by 2050.
The future of Denmark's oil and gas operations in the North Sea has been a political issue since the Nordic country agreed last year on one of the world's most ambitious climate targets of reducing emissions by 70% by 2030 and being climate neutral in 2050.
The deal agreed by lawmakers late on Thursday will cancel a planned eighth licensing round and any future tenders, while also making 2050 the last year in which to extract fossil fuels in the North Sea.
Existing licence holders will be allowed to continue exploring for now, and extracting ahead of that 2050 deadline.
“We’re the European Union’s biggest oil producer and this decision will therefore resonate around the world," Climate Minister Dan Joergensen said in a statement. "We are now putting a final end to the fossil era."
Denmark's move follows fellow EU member France, which agreed in 2017 to phase out fossil fuel production by 2040 and stop issuing new exploration permits.
Irish Taoiseach (Prime Minister) Leo Varadkar also said at a September 2019 UN Climate Action Summit that Ireland would ban future offshore oil exploration licences.
Elsewhere, New Zealand decided in April 2018 to ban the issue of new offshore oil and gas exploration permits.
Denmark's eighth licensing round faced large uncertainty after energy major Total withdrew from the tender process in October, leaving only one applicant remaining.
While Denmark is the largest EU producer of oil and gas, Norway and the UK are both much larger producers.
The cancelled tender and an end-date in 2050 would translate into a total loss of 13 billion Danish krone ($2.1 billion), the Ministry of Climate, Energy and Utilities estimated, but it said this amount was subject to substantial uncertainty.
In June, an independent government adviser recommended ending any future oil and gas exploration in the North Sea, saying a continuation would hurt the country's ambitions as a front-runner on fighting climate change.
Reacting to the news, Helene Hagel, head of climate and environmental policy at Greenpeace Denmark, said: “This is a watershed moment. Denmark will now set an end date to oil and gas production and bid farewell to the future licensing rounds for oil in the North Sea, so the country can assert itself as a green front-runner and inspire other countries to end our dependence on climate-wrecking fossil fuels.
"This is a huge victory for the climate movement and all the people who have pushed for many years to make it happen.
“As a major oil producer in the EU and one of the richest countries in the world, Denmark has a moral obligation to end the search for new oil to send a clear signal that the world can and must act to meet the Paris Agreement and mitigate the climate crisis.
"Denmark is a small country but has potential to punch above its weight and pave the way for the necessary transition to green, renewable energy.
"Now, the government and political parties need to take the next step and plan a phase-out of existing oil production in the Danish part of the North Sea by 2040.”
Greenpeace UK senior climate campaigner Mel Evans added: “This is what climate leadership looks like. All eyes will be on the UK next year as we host crucial climate talks, so our Prime Minister [Boris Johnson] should take note."