Denmark proposed on Wednesday, April 20th, the introduction of a carbon tax in an effort to meet the country’s ambitious climate target by 2030. The new carbon tax would be on top of the current EU Emissions Trading Scheme, that would target heavy emitters like energy and industries.
The carbon tax comes to a total of up to $164.21 or 1,125 Danish crowns per ton of carbon dioxide equivalent emission.
Under the proposed tax plan, companies will be required to pay a levy that would start at about $10 per ton (DKK 75 per ton) in 2025 and will rise gradually to around $55/t (DKK 375/t) by 2030 for a total price of $164.21/t (DKK 1,125/t) based on current price expectations for CO2 allowances.
For industries like cement producers, the carbon tax will require a payment of $10/t (DKK 75/t) in 2025, which will rise to only $15/t (DKK 100/t) in 2030 in an effort to avoid relocation of the business abroad.
Companies from non-ETS sectors such as farming would have to pay a $51/t (DKK 350/t) fee in 2025 that would rise to $110 (DKK 750/t) by 2030.
Some Danish companies in the industry sector currently owe as part of the European Union Emissions Trading System (ETS) $87 per ton for their pollution and emissions. The average tax that businesses across all sectors now pay is about $28 per ton of carbon equivalent.
The measures still require backing from other parties in Parliament. The carbon tax is designed in a way to cut 3.7 million tons of annual emissions by 2030 which is part of Denmark’s goal to cut its emissions by 70% from 1990 levels by then.
Despite the reduced tax rate for cement producers, the new carbon tax proposal plan in Denmark is a testimony of governments attempting to place policies behind their climate change commitments. Bold actions are needed to reach the net zero commitments and minimize the effects of climate change.