Denmark proposes uniform CO2 tax for most businesses

Denmark’s government on Wednesday proposed a “uniform” carbon dioxide emissions tax for businesses. But not all companies will pay the same rate according to the proposal.

Climate activists outside Denmark's tax ministry
Climate activists outside Denmark's tax ministry, where a new CO2 tax proposal was presented on April 20th. Photo: Mads Claus Rasmussen/Ritzau Scanpix

The government proposal, entitled Grøn skattereform or Green Tax Reform, was presented by ministers on Wednesday.

“The ambitious CO2 tax which we are now presenting is… an important step on the way to fulfilling our climate targets. We must phase out gas and other fossil fuels and replace them with green energy,” climate, energy and critical supplies minister Dan Jørgensen said in a press statement.

The government claims that the measures included in the plan will reduce CO2 emissions by 3.7 million tonnes by 2030.

That represents around one third of the 9.4 million tonnes needed to hit the national target of a 70 percent reduction of total emissions by the end of the current decade.

Specifically, the government proposes a CO2 tax of 750 kroner per tonne of emission. Companies covered by an EU quota system will however receive a deduction and will only be required to pay half of the full amount, 375 kroner per tonne.

According to a government expert advisory board, the five largest CO2-emitting companies in Denmark are responsible for over 40 percent of the country’s industrial emissions.

A number of these companies could be due for additional deductions to the CO2 tax.

Companies in the “mineralogical processing” sector are to be given further discounts on the tax and will only pay 100 kroner per tonne of emissions, according to the proposal. Companies covered by this definition include Aalborg Portland and Rockwool.

“The tax for mineralogical processes etcetera is related to this sector being subject to competition and there is therefore a risk of relocation abroad due to a large tax increase,” the government writes.

“The sector is given a special tax with a natural expectation that genuine reductions towards the 2030 climate target are delivered,” it added.

Seven billion kroner has been set aside under the proposal for investment in green energy in the sector in a bid to reduce its emissions.

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Danish waste company forced to import rubbish from abroad

The high-tech Amager Bakke waste-to-energy plant is running out of rubbish supplies from the local region and will have to start importing from outside Denmark. 

Danish waste company forced to import rubbish from abroad

When ARC’s incinerator, Amager Bakke, opened in March 2017, it was one of the most modern green energy plants Denmark had ever seen.

The high-tech waste plant is designed to destroy huge amounts of trash from Copenhagen and convert it into energy which is used to heat thousands of homes in the region. It is one of two plants which play a major role in Copenhagen’s ambitions of meeting zero carbon requirements by 2025.

But now, ironically, as municipalities have become very efficient in waste sorting and recycling, the plant is quickly running out of its most important raw material: rubbish.

This has impacted the plant’s finances, so now the five municipalities behind ARC have agreed on a plan that will both improve the economy and provide heat for the capital’s homes: waste from surrounding countries will be shipped to Denmark and burned at the Amager Bakke plant.

READ ALSO: EU countries need better recycling, Copenhagen agency finds

Until now, the owner municipalities had blocked ARC’s ability to source waste through imports, but the agreement provides a waiver to allow imports to be increased until the end of 2025 to keep the furnaces running. 

In a press release, the five owner municipalities state that the increased imports will also increase CO2 emissions – but: “The alternative is that the municipalities will have to recycle less waste, that ARC’s finances will be worse – and even that there may be a need to import gas, which comes from Russia, among other places.”