The new carbon tax in Denmark will see heavy polluters pay an additional fee on top of the EU carbon quota as the country seeks to cut 70% greenhouse gas emissions by 2030.
The government of Denmark has proposed introducing a carbon tax targeting high-emitting companies in an effort to meet the country’s ambitious climate target.
In the proposed tax plan, companies are required to pay a levy of $1,125 Danish crowns (USD$164.21) per tonne of carbon dioxide equivalent, and will mostly be imposed on heavy industries and the energy sector.
A number of Danish companies in the industry sector currently pay for their pollution and emissions in the European Union quota system, otherwise known as Emissions Trading System (ETS), at USD$87 per tonne. But a vast majority remain exempt from it. The new tax will see large emitters pay an additional $55 per tonne of carbon equivalent on top of the expected new EU price to be implemented in 2030.
Once implemented, the new carbon tax could reduce the nation’s carbon emissions by 3.7 million tonnes per year by 2030, according to the government. A carbon tax plan for agricultural and transportation sectors is also expected later this year.
“This initiative is meant to ensure that the companies that impact the climate pay for their own emissions,” said Danish Tax Minister Jeppe Bruus.
Despite being home of one of the most sustainable cities in the world – Copenhagen – Denmark has set down an ambitious climate target of cutting greenhouse gas emissions by 70% from 1990 levels, or around 20 million tonnes of CO2 equivalent, by the end of the decade. The new measure is a major step up from its current fragmented emission regulations where the average tax businesses across all sectors pay about $USD28 per tonne of carbon equivalent, and will help the country achieve its ambitious climate goal.
The proposal however, does provide a reduced tax rate for cement and stone wool industries, which include Denmark’s biggest polluter, cement producer Aalborg Portland. The company contributed over 2 million CO2 tonnes of the 6.5 million tonnes industry total in 2020 alone.
The government has also proposed a 7 billion crown-investment to aid companies with their green transition in hopes to boost climate action and minimise the risk of businesses moving abroad to avoid paying carbon taxes.
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