Denmark to give 320,000 households money for heating bills

Around 320,000 households in Denmark are to be given money to help cover the costs of soaring heating bills after a majority in parliament backed spending on the issue.

Danish energy minister Dan Jørgensen
Danish energy minister Dan Jørgensen on February 11th announced a subsidy for over 300,000 households who will receive money to help pay for expensive heating bills. Photo: Liselotte Sabroe/Ritzau Scanpix

Steep increases in energy prices over the last year have affected a large number of households in Denmark, and political parties have in recent weeks urged the government to respond and put forward proposals for how to tackle the problem.

“We think it’s fair that we give this helping hand because we’re in such a unique situation. We are not used to helping people pay these types of bills,” climate, energy and critical supplies minister Dan Jørgensen said at a briefing.

“We have not chosen, as others have proposed, to give a broad tax break to all Danes. That would result in us helping many Danes with a small amount. The effects of this need to be felt be the people who receive the cheques,” he said.

According to the agreement, which was presented on Friday, the government along with its traditional allies on the left wing, as well as the Christian Democrats, support a deal which spends around one billion kroner on one-off subsidies for households affected by high heating bills.

Around 320,000 households will receive 3,750 kroner under the scheme. Payouts will occur automatically, so eligible households do not need to go through an application process.

Conditions for receiving the support include the home being located in an area with district heating driven primarily by gas power plants, or the home having individual gas heating.

Households must have overall annual incomes under 550,000 kroner to qualify for the scheme.

The political agreement also provides for expedited replacement of individual gas heating systems. Spending on this will be 250 million kroner, which means the total value of the agreement is 1.25 billion kroner.

Conservative parties on Thursday evening withdrew from negotiations over a deal, saying the government was not prepared to spend enough and that too few households would therefore receive funds.

“We have left the negotiations because the amount that was proposed was too low. We wanted a model with a higher income threshold so normal families also get help,” Liberal (Venstre) party energy spokesperson Carsten Kissmeyer told news wire Ritzau.

Parties on the right wanted money saved by the government on sustainable energy subsidies – which have not been realised by energy companies due to their increased revenues resulting from high energy prices – to be diverted to the household benefits, to the total of four billion kroner.

Jørgensen said on Friday that this was not possible because those funds were tied in to other areas.

READ ALSO: Why some homes in Denmark are more affected by rocketing heating bills

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Denmark to reduce electricity tax in 2022 and 2023

A majority in the Danish parliament has agreed to reduce the amount of tax charged on electricity, beginning this year.

Denmark to reduce electricity tax in 2022 and 2023

The deal was presented on Friday in the form of a political agreement between enough parties to vote it through parliament.

The reduced electricity tax, which will be temporary, is expected to cost the Danish state 475 million kroner and is part of a wider deal which aims to compensate the public for increasing living costs.

Tax on electricity will be eased by 4 øre per kilowatt hour for the last three months of 2022 (1 øre is one hundredth of a krone), and by 4.3 øre per kilowatt hour in 2023.

As such, the electricity tax rate will be 72.3 øre per kilowatt hour for the last quarter of 2022, and 68.8 øre per kilowatt hour throughout 2023.

Electricity taxes were already scheduled for reduction under the terms of a 2018 political agreement.

Prior to Friday’s agreement, the plan was for electricity tax to fall from 76.3 øre per kilowatt hour in 2022 to 63.9 øre per kilowatt hour in 2025.

The temporary cuts announced on Friday are separate from that deal and mean that the tax will be lower than planned in 2023, but will rise at the beginning of 2024.

Friday’s agreement also includes provisions to increase tax subsidies for people in employment and to give a one-off lump sum of 5,000 kroner to elderly people who receive the ældrecheck welfare benefit.

The overall cost to the state of the deal is 3.1 billion kroner.

Parties from both sides of the political aisle have pledged to back the agreement in parliament. They include the Socialist People’s Party (SF), the Red Green Alliance, Social Liberals (Radikale Venstre), Conservative and Liberal parties along with the Social Democratic government.

The increasing cost of energy is cited in the agreement as the primary reason for the necessity of the deal.

The Danish Chamber of Commerce praised the political agreement in comments to news wire Ritzau.

“A reduced electricity tax means both consumers and businesses get an incentive to switch to green electricity,” the interest organisation’s director Brian Mikkelsen said.