The green tax reform is designed to support the financial recovery from the COVID-19 recession while creating incentives to lower greenhouse gas (GHG) emissions. This reform will be implemented in two phases: redirecting current energy taxes towards CO2 emissions, and rewriting the tax system code and introducing broad tax on all GHG emissions, including those not related to energy in the agricultural sector.
The first phase of the green tax reform is expected to lower GHG emissions by 0.5 Mt by 2030, due to taxes targeting industries' processing on fossil fuels. The tax reform would also include tax deduction for companies investing in capacity costs (technology and software).
In June 20222, the Government and 4 other political parties found an agreement on a major green tax reform:
- The agreement introduces a new CO2 tax at a rate of:
- DKK 750/tCO2 in 2030 for companies outside the EU ETS system
- and DKK 350/tCO2 for companies in the ETS
- In addition, mineralogical processes will be taxed at a rate of DKK 125 for each ton of CO2 emitted as of 2030
- A national price floor is also proposed for the EU ETS, should it not yield sufficient abatement
- The current energy taxes on fossil fuels will be converted to a total CO2 tax from 2025 of up to DKK 750/tCO2.