The Green Tax Package

The Green Tax Package was introduced in 1996.

The objectives were twofold: On one hand taxes had to be high enough to have an effect on reduction of the CO2-emissions; on the other it was essential that the tax burden did not affect the competitiveness of the companies.

A balance of the two conflicting objectives was reached by:

  • Redirecting the additional tax revenue from the green tax to trade and industry
  • Increasing the tax rates gradually, thus giving companies time to improve energy efficiency, switch to fuels with lower emissions, et cetera
  • Applying differential tax rates depending on the use of energy, thus lowering rates for energy intensive production methods

    The Green Tax Package for trade and industry comprises three different taxes: A CO2 tax, a SO2 tax and an energy tax.

An evaluation in 1999 showed that the Green Tax Package has contributed significantly to the attainment of the expected targets for CO2 emissions. It also concluded that the additional taxes on trade and industry had no noticeable consequences for the economy or competitiveness of the companies as a whole. This is mainly due to the redirection of revenue to trade and industry and tax rebates for energy-intensive enterprises.

Read more about the Green tax Package in the pamphlet Green Taxes in Trade and Industry – Danish Experiences (pdf - 12 pages)

Read the report: Green Taxes for Trade and Industry - description and evaluation (pdf - 44 pages)