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    Denmark Focuses on CO2 Tax and Green Aviation

    Stockholm (NordSIP) – During her new year’s speech, Danish Prime Minister Mette Frederiksen announced a new tax on CO2 emissions and a roadmap to ensure green aviation became a reality within Denmark by 2030.

    Echoing back to ealier comments about her memories of the labout market uncertainty that pervaded in Denmark when she grew up in the 1980s the PM noted “Rising temperatures are destroying our planet. I know many are worried. What will our future be like? And the children’s? And the grandchildren’s?”

    “When other countries in the world are too slow, then Denmark must take the lead and raise the bar even more,” Frederiksen  said.

    CO2 Tax

    According to her, the starting point for Denmark is simple. “The Danish principle that the widest shoulders should carry the most must also apply in the green transition: If you emit CO2 – then you have to pay,” she argued. “That is the most reasonable thing,” she added.

    This year we will decide on a new and ambitious tax on CO2. It must ensure that companies that pollute pay for their emissions themselves. Many are already in the process of adjusting. For others, it will take longer,” she continued.

    According to the OECD, “Denmark introduced a carbon tax on fossil fuels in 1992. (…) The current energy taxation system is in three parts: energy taxes, carbon dioxide taxes and a tax on sulphur dioxide and nitrogen oxide emissions”

    However, there still seems to be some room for improving the system. Carbon taxes apply to all energy products used by businesses and “applies at a rate that is based on the emissions associated wit the use of each fuel,” according to the OECD.

    “Biofuels are not taxed as they are regarded as emission neutral on a lifecycle basis. The carbon tax element is not levied on fuels used by sectors subject to the EU Emissions Trading Scheme (ETS). As a general rule, fuels used for generation of power are therefore not taxed. However, a CO2 component is still levied on eectricity consumption through the energy saving tax,” the OECD continues.

    Green Aviation

    The other green focus of the PM’s speech was aviation. “To travel is to live, and that is why we fly. But at the same time it is harmful to our climate. Imagine if Denmark could help solve that problem. We need to make it green to fly,” Fredricksen said.

    In that spirit, she announced that her “government will set an ambitious goal: By 2025, Danes must have the opportunity to fly green on a domestic route. And by 2030 at the latest, we must be able to fly completely green when we fly domestically in Denmark.”

    “Will it be difficult? Yes. Is it possible? Yes, I think so. We are already on our way. Skilled researchers and companies are working on the solutions,” she argued.

    “If we succeed, then it will be a green breakthrough, not just for Denmark but for the whole world. If there is anything the past few years have taught us in dealing with major crises, it is that we must never hesitate,” she concluded.

    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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