Denmark

Denmark

Reduces CO2 emissions tax rate for certain production processes

11 Jun 2024

On 25 October 2024, the European Commission approved a €724 million State aid scheme of Denmark aimed at reducing greenhouse gas (GHG) tax rates. This initiative forms part of Denmark's Green Tax Reform, which introduces a CO₂ emissions tax, adopted on 4 June 2024 and set to enter into force on 1 January 2025.

To address concerns about companies relocating to regions with less stringent climate policies, the scheme provides a reduced tax rate of 33 per cent of the standard rate for specific high-emission processes in energy-intensive industries. These include mineralogical, metallurgical, and chemical processes, which are classified as at risk of carbon leakage under the European Union Emissions Trading System (ETS) Carbon Leakage List.

The scheme incentivizes industries to remain in Denmark while transitioning to greener technologies. It is expected to impact fewer than 17 key emitters and contribute to reducing emissions by three million tonnes by 2030. The measure, administered by the Danish Tax Agency, will remain in effect until 2033.

Nature of measure:
  • Incentives
Type:
  • Promotion and facilitation (Investment incentives)
Industry:
  • Manufacturing (Manufacture of chemicals and chemical products)
  • Manufacturing (Manufacture of chemicals and chemical products)
  • Services (Electricity, gas, steam and air conditioning supply)
Inward FDI:
No
Outward FDI:
No
Sources: