At KPMG, we are pleased that the majority of the Danish Parliament has agreed on an ambitious green tax reform. The final agreement sets a good direction and is more ambitious than several of the measures that have been mentioned during the negotiation process.
Certain elements will of course still be up for debate, including the reduced tax and the transition support for companies that are CO2-heavy, including those that use mineralogical processes.
The agreement in brief
The primary part of the agreement is the new CO2 tax, which entails a tax of DKK 750 per ton of emitted CO2. This applies from 2030, for the companies that are not covered by EU's quota trading system.
The companies covered by EU's quota trading system must pay a tax of DKK 375 per ton of CO2. This means that the companies covered by both agreements must pay DKK 1,125 per ton of CO2.
The charge is introduced over time, increasing from DKK 350 in 2025 to DKK 750 per ton in 2030. For the companies covered by the quota, the price starts at DKK 75 per ton and increases by DKK 60.
The agreement also means that new business types are included in the quota system, including certain types of electricity production, North Sea activities and oil refineries, domestic flights, fishing, and ferry services.
It is positive with a focus on CO2 capture and storage
One of the things that I see as particularly important is the continued focus on CO2 capture and storage. Approx. DKK 3 billion is set aside towards 2030 and will be used as a subsidy for the capture and storage of CO2. The expectation is that this will result in a reduction of 1.8 million tons of CO2 in 2030.
We talk about Net Zero a lot, and some mention that focusing on CO2 capture may remove some of the incentive to switch to green technologies quickly. There may be a point in that, and it will generally be a big challenge to create the right balance in the measures that are rolled out.
However, it is also the case that we already have a high level of CO2 in the atmosphere measured in parts per million (PPM). It is so high that we have hundreds of thousands of years to go before we can find such high values again. The climate changes all the time, but the big changes slowly take action. Therefore, it can be assumed that we have not seen the worst effects of our emissions yet.
We must also be aware that Net Zero is not enough. It is the first step. CO2 must also be taken out of the atmosphere, so we end up with negative emissions at some point. Therefore, the development and phase-in of CO2 capture are necessary. Even if it might push incentives to a small degree in the short term.
No one has an exact model for what works. The climate is complex, and we must therefore also seek to identify many opportunities at the same time. With this work, the agreement can be seen as a step in the right direction. One of many, and it is only now that the agreements and rules are in place that the real work begins.