Denmark to present plan that could end use of Russian gas

A new economic reform plan, expected to be presented next week, could set out a roadmap for Denmark to phase out its use of Russian gas.

A district heating power station in Denmark
A district heating power station in Denmark. The Nordic country wants to reduce the number homes using individual gas heating systems. Photo: Tim Kildeborg Jensen/Ritzau Scanpix

The reform proposals are to be presented at a press briefing on Tuesday following the Easter break, the Prime Minister’s Office confirmed in a statement on Wednesday.

“The proposal will address issues including how Denmark can accelerate conversion to green energy and become more quickly independent of Russian gas,” the statement read.

Prime Minister Mette Frederiksen has already given some detail of the proposal in an interview with newspaper Berlingske.

One element is a plan to convert 400,000 individually gas heated homes to an alternative energy source.

“We must move them to district heating or individual heating pumps where this is viable. We must ensure Danes move away from natural gas,” she said.

The proposal will contain an additional four parts as well as the plan related to gas heating.

More will be spent on developing sustainable energy under the plan, while a tax reform will include a unified tax on CO2 emissions. An effort will be made to export technology that promotes efficient energy use, while the government will also look into the use of increasing natural gas production in Denmark.

The process of converting individually gas heated homes to other sources could take years, according to industry organisations including Dansk Fjernvarme, which represents the interests of the district heating sector.

Around 250,000 of the 400,000 currently-individually heated homes could be offered district heating, according to the organisation.

That would take a considerable amount of time, however, the organisation’s director said after Frederiksen’s comments were published.

“I would like to be able to say that it would take a maximum of five years. But it’s probably more realistic to say between five and seven years before this is complete,” Kim Mortensen, director of Dansk Fjernvarme, said.

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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.