Background

In October 2018 the government published a new proposal regarding climate and air policy. The proposal contains 38 specific initiatives which should put Denmark on course for reaching its EU climate goals by 2030.

The Danish Energy Agency estimates that Denmark must reduce its greenhouse gas emissions by between 32 million and 37 million tons by 2030 to meet the EU climate goals. The proposal aims to reduce carbon dioxide emissions by 31 million tons and is part of the greater plan of becoming a climate-neutral country by 2050.

The proposal mainly addresses four areas:

  • the transport sector;
  • agricultural production;
  • shipping; and
  • green transitioning in housing and industry.

Key initiatives

There are 38 initiatives covering a wide area, but the main focus is on the transport sector.

Almost 25% of Denmark's total greenhouse gas emissions come from the transport sector, meaning that most of the initiatives are in respect of cleaner transport. The government wants to encourage the population to buy green cars, which primarily run on electricity rather than diesel and petrol. The goal is to make it easier to buy and own a green vehicle. The proposal also contains initiatives such as easier access to battery-charging and parking facilities for green cars.

The initiatives include the following:

  • A phase out of the sale of new diesel and petrol cars up to 2030. From 2030 all new cars bought in Denmark will be low-emission vehicles, and from 2035 all new cars will be zero-emission vehicles.
  • The removal of the vehicle registration fee on selected low-emission cars bought in 2019 and 2020.
  • A tax reduction for low-emission company cars by introducing a Dkr30,000 tax allowance.
  • The implementation of a new regulation regarding environmental zones in cities. Pollution limits for trucks and delivery vans will be increased within the zones.
  • Increased control of nitrogen oxide (NOx) pollution to prevent fraud with NOx information.
  • Increased monitoring and control of NOx and sulphur emissions from ships in Danish waters. The names of the shipping companies violating the international emission limits in the oceans will be published.
  • Increased regulation of 'F-gasses', which are considered to be some of the most harmful greenhouse gasses (often used as cooling agents in the retail trade), in order to promote the use of the more climate-friendly alternatives on the market.
  • A new strategy for a market-based and commercial gas system that addresses the potential of biogas and other green gasses.
  • Scrapping furnaces (eg, wood burners) dating from before 2000 through an obligatory replacement scheme in case of a change in building ownership and the introduction of a scrapping bonus for old furnaces.

Challenge

One key challenge to the proposal will be the lack of income from car-related taxes. Presently, approximately 5% of the state's income is related to tax on diesel and petrol cars. A new source of income must be found before Denmark can fully transition to electric cars. A commission has been formed to follow up on the technological development of green cars and to solve the financial challenges.

For further information on this topic please contact Nicolaj Kleist at Bruun & Hjejle by telephone (+45 33 34 50 00) or email ([email protected]). The Bruun & Hjejle website can be accessed at www.bruunhjejle.com.

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