Denmark last year outlined a series of energy policies meant to make the country independent of fossil fuels by 2050. The International Energy Agency said some of Denmark's policies are "well-designed" for a green economy.
"The IEA commends Denmark and its people for the scope of their vision and their many successes in adopting sustainable energy policies," IEA Executive Director Maria van der Hoeven said.
Short-term initiatives focus on energy efficiency and renewable energy while long-term strategies outline a green transportation sector and the use of so-called smart grids.
Van der Hoeven warned, however, that Denmark's electricity network needs a major overhaul that would require substantial investments.
"The radical transformation of the energy sector will not be cheap," the IEA said. The agency estimates it would cost Denmark around $1 billion to transition to a green economy and called on Danish consumers to ensure they're paying for "optimal policy outcomes."
Van der Hoeven said that even with Denmark's "exemplary record" there is "room for further enhancement if Denmark is to remain at the top of the class."