Denmark expands renewable energy and CO2 tax

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Denmark expands renewable energy and CO2 tax

In June, the Danish government reached three agreements with parliament covering a green investment fund of 7.2 bn. EUR, a new unified carbon tax, and a renewable energy package that will quadruple the production of solar and land wind energy by 2030 and permit a fivefold increase of offshore wind power.

Russia’s invasion of Ukraine has left the EU in a new geopolitical situation and the need for sustainable solutions and more renewable energy is more urgent than ever. The Danish government has put several initiatives forward that will fast track the green transition. With a new renewable package, it is the ambition that all gas in Denmark will be green by 2030 as well as completely phase out gas heating in Danish households from 2035.

“With these agreements, Denmark will become a green power hub for Europe, with an enormous expansion of our renewable energy sector. It is crucial for the climate as well as to become independent of Russian energy. We are setting a clear ambition that all gas must be green by 2030, and by 2035 we will completely get rid of gas heating in Danish homes."

Dan Jørgensen
Minister of Climate, Energy and Utilities

At the same time, Denmark will send a clear message to the private sector with an ambitious CO2 tax and new a green fund. With the green tax reform, Denmark's CO2 emissions are reduced by 4.3 million ton by 2030. The tax reform is thus the largest single contribution to Denmark's 2030 climate goals.

Offshore wind developers apply for open-door scheme

The establishment of offshore wind turbines can follow a tender procedure run by the Danish Energy Agency or an open-door procedure. In the open-door procedure, the project developer takes the initiative to establish an offshore wind farm. From 4 April to 30 June 2022, the Danish Energy Agency received 43 applications, of which 16 have been rejected due to overlap with state land reservations, as reported last month.

The Danish Energy Agency has sent nine new offshore wind applications received through its open door scheme for regulatory consultation. If the results of the preliminary investigations show that the suggested project can be approved, the project developer can obtain a license to establish the project.

Illustration: Overview of new open-door applications.

Renewable energy package: A broad majority has agreed on a historic expansion of renewable energy. The parties agree to offer 4 GW of extra offshore win by 2030 at the latest. In addition to 2 GW already agreed Denmark can now fivefold the production of offshore wind power over the next eight years. The agreement also aims for a quadrupling of the total electricity production from solar energy and onshore wind until 2030.

CO2 tax: The tax reform is the largest single contribution to Denmark's 2030 climate goals of reducing emissions by 70 % by 2030 compared to 1990. With the reform, Denmark's emissions of CO2 will be reduced by 4.3 million ton towards 2030. When the CO2 tax is fully phased in ny 2030, the tax rate will be 750 DKK per ton of emitted CO2 for the companies that are not covered by the EU's quota trading system and 375 DKK for the companies that are covered by the EU's quota trading system. The reform is a long-term decision that creates predictable framework conditions and allows companies to adapt.

The new green fund: The fund will support the green transition of Denmark and the phasing out of fossil fuels. It covers 7.2 billion EUR investments from 2024 to 2040 prioritizing larger and longer-term investments in climate, green energy and the environment. This applies to e.g. offshore wind development, afforestation, pyrolysis and CO2 capture.

Expansion of renewable energy in numbers

Offshore wind

Fivefold increase of offshore wind power.

Today In 2030
2,3 GW 12,9 GW

Onshore wind and solar

Expansion of green electricity onshore is technology neutral and the combination of onshore wind turbines and solar in 2030 will therefore not be adopted in the framework conditions. This is an example from the official factsheet of onshore wind and solar capacity to quadruple the production by 2030.