Denmark Does U-Turn on Electric Cars to Reach Fossil-Free Future

(Bloomberg) -- Denmark plans to postpone tax increases on electric vehicles as part of a slew of new measures the government is seeking to consolidate the country’s reputation as a “green pioneer” and help it achieve its climate goals.

“I’m convinced that many Danes want to drive a green car if it’s affordable,” Tax Minister Karsten Lauritzen said in a statement. “So we want to support that development.”

The measures are among 38 proposals that ministers in Prime Minister Lars Lokke Rasmussen’s center-right government put forward on Tuesday to reduce CO2 emissions by as much as 37 million tons.

Specifically, the government is delaying some registration taxes and increasing subsidies to make buying the vehicles more affordable. It’s aiming to ban the sale of new fossil-fueled cars entirely from 2030.

The tax break means households buying an electric or hybrid car for less than 400,000 kroner ($61,000) won’t have to pay fees for the next couple of years, while non-polluting company cars will get a discount. The policy U-turn follows a dramatic drop in sales of electric vehicles as a result of the government phasing out subsidies.

The measures announced on Tuesday also include extra funding for electric car chargers, a ban on polluting buses from 2020, lower ammonia and greenhouse gas emissions in farming, and an end to old wood-burning stoves.

Denmark is home to the world’s biggest turbine maker, Vestas Wind Systems A/S, and Orsted A/S, the world’s biggest operator of offshore wind parks. The Nordic country set a record last year by obtaining 43.4 percent of its electricity from wind. Its government wants renewable energy sources to provide more than half of the country’s total consumption by 2030 and to abandon fossil fuels completely by 2050. The government is setting aside 250 million kroner per year to help meet that objective.

©2018 Bloomberg L.P.