The government of Denmark unveiled on Wednesday a standard carbon tax for businesses as a method to meet the country’s climate goal.
The proposed carbon tax is set at a rate of 1,125 Danish crowns (US$164.21) per tonne of carbon dioxide equivalent, including a predicted 2030 price of 750 Danish crowns (US$110) per tonne for EU carbon permits. The tax would be imposed on heavy sectors and the energy industry, according to the government.
The government suggested a charge of 750 crowns per tonne for smaller businesses that are not part of the EU emissions trading scheme. The introduction of carbon tax is expected to help Denmark reduce carbon emissions by 3.7 million tonnes per year by 2030.
“This initiative is meant to ensure that the companies that impact the climate pay for their own emissions,” stated Tax Minister Jeppe Bruus.
According to Bruus, the government also proposed investing 7 billion crowns to help businesses with the green transition, in a bid to avoid the possibility of their moving overseas to escape the carbon price.
According to the government, cement and stone wool companies would benefit from a lower tax rate under the plan. Denmark's biggest polluter, cement maker Aalborg Portland will also be one of the beneficiaries. The company alone contributed over 2 million tonnes of carbon dioxide out of the 6.5 million tonnes industry total in 2020.
Denmark has committed to reducing greenhouse gas emissions by 70% by 2030, or around 20 million tonnes of carbon dioxide equivalent, and to reach net zero by 2050.
In order to speed up to reach this goal, the parliament of Denmark approved in October a plan to reduce greenhouse gas emissions in agriculture and forestry sectors by 55% and 65% respectively by 2030. The government promised to earmark 3.8 billion Danish crowns to pay farmers incentive for adapting less carbon-dense systems of production.