The European Commission has approved, under EU State aid rules, a €724 million (DKK 5.4 billion) Danish scheme to lower the rate of a new greenhouse gas (GHG) emissions tax for certain companies. The measure aims to prevent the risk of carbon leakage, where companies relocate production outside of the EU to countries with less ambitious climate policies, resulting in increased greenhouse gas emissions globally.
As part of a broader ‘Green Tax Reform’ agreed in 2022, Denmark decided to introduce a tax on GHG emissions from activities covered by the EU Emissions Trading System Directive (‘CO2 emissions tax’) in line with the goal of reducing Denmark’s emissions by 70% in 2030 compared to 1990 levels. The CO2 emissions tax is calculated based on the number of emission allowances that operators must surrender each year under the EU emission trading system (‘ETS1′). The tax aims to further encourage the reduction of CO2 emissions in Denmark, boosting the impact of ETS1 by providing operators with a stronger financial incentive to cut their CO2 emissions.
Denmark notified the Commission of its plans to introduce an estimated €724 million (DKK 5.4 billion) scheme to lower the CO2 emissions tax rate for certain companies to mitigate the risk of carbon leakage.
The measure will benefit companies that (i) are subject to ETS1, (ii) are active in sectors listed in the EU ETS Carbon Leakage List, and (iii) cause CO2 emissions through eligible production processes, namely mineralogical and metallurgical processes, chemical reduction and electrolysis. Eligible companies will benefit from a reduced tax rate which will be set at 33% of the standard rate. The scheme will run until 31 December 2033.
Source: European Commission
The post Commission approves €724 million Danish State aid greenhouse gas tax reduction scheme for companies at risk of carbon leakage appeared first on Vastuullisuusuutiset.fi.