The European Commission has approved, under EU State aid rules, a DKK5.4bn (€724m) Danish scheme to lower the rate of a new greenhouse gas (GHG) emissions tax for certain companies. The measure will benefit companies that are subject to the EU emission trading system, are active in sectors listed in the EU ETS Carbon Leakage List, and 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.
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 GHG emissions globally.
As part its 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 in line with the goal of reducing Denmark's emissions by 70% in 2030 compared to 1990 levels.
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