The European Commission has announced that it has approved Danish state aid worth €724 million 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.
The measure will benefit companies that are subject to the EU Emissions Trading System (EU ETS), are active in sectors listed in the EU ETS Carbon Leakage List, and cause carbon emissions through eligible production processes. Eligible companies will benefit from a reduced tax rate which will be set at 33 percent of the standard rate. The scheme will run until December 31, 2033.
Denmark aims to reduce carbon emissions by 70 percent in 2030 compared to 1990 levels.