Denmark Raises CO2 Taxes on Businesses to Fund Green Transition

A broad majority in Denmark’s parliament has agreed to raise energy taxes on businesses and boost investment incentives in order to accelerate the green energy transition and help the Nordic country meet its ambitious emission targets.

Taxes on CO2 emissions will be standardized and progressively raised from 2023, with industry eventually seeing their tax bill doubled. The agricultural sector will see its tax bill increase fivefold. Green incentives worth 6 billion kroner ($1 billion) will be introduced over the 2021-2025 period, to be financed in part with money from the European Union’s Recovery Fund and unused money earmarked to counter the economic impact of the Covid-19 pandemic.

The new taxes will reduce carbon emissions by 0.5 million tons by 2025, the Finance Ministry said in a statement Tuesday.

The reform “will help Denmark leave the corona crisis stronger and greener,” Finance Minister Nicolai Wammen told reporters in Copenhagen.

The proposed tax reform follows a series of political agreements designed to help Denmark reduce its carbon emissions by 70%, when compared to their 1990 levels, by 2030. The government recently announced an end to its North Sea oil production in 2050 and unveiled plans to increase the fleet of electric cars to 775,000 by 2030. The 2021 budget also includes proposals to phase out oil and gas burners.

The Social Democrat-led government said the measures it has introduced since assuming office in June 2019 will reduce carbon emissions by 6.7 million tons by 2030.

©2020 Bloomberg L.P.

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