Danish emissions of CO2(1975-92)
The EC leaves it largely to Member States to work with environmental levies. There are no declared common EC environmental levies, even though the Commission has been working for the imposition of a CO2 levy. Member States can impose environmental levies on whatever they want, just as long as they respect the normal EC rules. Environmental levies must not be a hidden discrimination against foreign goods and they may not be associated with border control. Moreover, they may not have the character of state subsidies unless the permission of the EC has been granted. A state subsidy could, for example, comprise allowing an extremely energy-heavy enterprise to pay a reduced CO2 levy.
Nevertheless, by setting minimum levies on petroleum products through a number of Directives promulgated in 1992, the EC has in effect paid heed to environmental interests. For example, the minimum levy on unleaded petrol is DKK 2.20 per litre, while that on leaded petrol is DKK 2.58.
Denmark’s first experience in the environmental levy area stems from 1986, when the levy on unleaded petrol was reduced in order to encourage motorists to switch to it as far as possible. In 1987 the waste levy was introduced, originally because the Treasury needed a source of income, but at the same time with an idea that the levy could promote recycling.
Of the levies that have since been imposed, those on CO2, water, SO2 and pesticides are particularly interesting.
Until 1988, environmental levies were the province of the Ministry of Taxation. From 1988 to 1993 they were the province of the Minister for the Environment, but in 1993 were returned to the Minister for Taxation. Who’s province they are makes little difference in practice, however. The shift of province in 1993 is perhaps a signal to the Minister for the Environment that he should not expect to be able to dispose over the increasing sums yielded by the environmental levies.
I have chosen to deal with the main levies in the order in which they were introduced (Sections 12.2.1-12.2.6). Finally I deal with the remaining minor levies (Section 12.2.7).
12.2.1. Vehicle fuel:
A start was made in 1986 with a levy rebate on unleaded petrol of DKK 0.25 per litre. The differential with respect to leaded petrol is now DKK 0.65 per litre. It is the importers and refineries who are liable for the levy, and the differential does not cause any administrative problems. At the beginning, unleaded petrol made only slow headway because motorists did not feel secure about doing without the lead. However, in recent years unleaded petrol has made considerable headway and has overtaken nearly the whole market (see Section 6.2). The increase in the market share of unleaded petrol has been accompanied by a corresponding fall in the lead content of the air. Total petrol sales in Denmark amount to 2,100 million litres annually, so in reality the State has relinquished an income of over DKK 1,000 million per year. However, when one talks about the price of petrol in Denmark, one now only thinks of the price of unleaded petrol.
The levy rebate on ultralow emission road diesel used in coaches and busses was introduced in 1991, at a time when the Greater Copenhagen Transport Authority was switching over to using this fuel in its busses. The levy rebate is DKK 0.30, which corresponds to the additional cost of ultralow emission road diesel compared with ordinary diesel. Ultralow emission road diesel causes less pollution of the air with SO2 and particulates.
In 1995 a levy rebate of DKK 0.03 per litre was introduced for petrol stations that recycle petrol fumes.
It should also be mentioned that in 1995 the Danish government put forward a proposal for an environmental levy on fuel for national flights and ferries. The government had to give up the proposal, however, because it contravened the EC rules on levies on petroleum products.
Progress: The levy rebate on unleaded petrol has been a success from the environmental point of view. The levy rebate is not solely responsible for the disappearance of leaded petrol, though. It is part of a general European trend that is promoted by the fact that cars fitted with catalytic converters require unleaded petrol. However, the levy rebate has advanced the process considerably.
12.2.2. Waste levy:
The levy is currently DKK 195 per tonne for waste that is deposited, and DKK 160 per tonne for waste that is incinerated12. In 1997 the levy will be increased to DKK 285 per tonne for deposition, DKK 210 per tonne for ordinary incineration and DKK 160 per tonne for incineration in combination with electricity generation. It is the owner of the landfill/incineration plant who is liable for the levy. If the material is removed again, the levy is refunded. The annual yield (1994) is DKK 575 million.
There have been a few problems with the definition of the term "waste". For example, whereas unsorted demolition material is considered as waste, sorted bricks, etc., are not. However, by tying the levy to landfills and incineration plants it has been possible to create rather a simple levy.
Progress: I have previously mentioned that the waste levy has led to increased recycling of sewage sludge on fields (Section 6.4) and to a marked increase in the recycling of building and construction waste (Section 5.3.7). The total amount of waste deposited and incinerated has also been affected - slightly in the beginning, when the levy was modest, and more markedly when the levy was increased: The waste levy was introduced in 1987 at DKK 40 per tonne.
In 1987, a total of 4.0 million tonnes waste were disposed of at landfills and incineration plants. The corresponding figure for 1990 was 3.8 million tonnes. In 1990 the levy was raised to DKK 130 per tonne. In 1993 the amount of waste disposed of at landfills and incineration plants had fallen to 3.1 million tonnes. In 1994 the levy was increased again, and is now DKK 195 per tonne.
12.2.3. CO2 levy:
This levy was introduced in 1993 and was increased in 1995 with effect from 1 January 1996. The principle encompassed by the new rules is as follows: Households have to pay DKK 100 per tonne CO2 emitted, while enterprises pay DKK 90 (previously DKK 50). Enterprises using energy-heavy processes only have to pay DKK 25 per tonne CO2, however. Finally, enterprises with an especially great energy consumption can enter into an agreement with the Energy Agency about increasing energy effectiveness, and thereby only pay DKK 3 per tonne CO2. With respect to space heating enterprises have now been placed on an equal footing with households. Thus in future they have to pay both the energy levies and the CO2 levy. The energy levy corresponds to approx. DKK 500 per tonne CO2, and with the CO2 levy of DKK 100 per tonne the total levy amounts to DKK 600 per tonne CO2.
The proceeds of the CO2 levy has previously been DKK 3,400 million per year but are now expected to increase to approx. DKK 5,000 million per year. The new levies is expected to lead to a reduction in CO2 emissions of 2.7 million tonnes. Total Danish CO2 emissions amount to approx. 60 million tonnes and the reduction target is a 20% decrease by the year 2005, i.e. a reduction of 12 million tonnes. Hence there is still a long way to go. It might help, though, that natural gas is becoming increasingly popular as a fuel.
Danish industry is strongly opposed to the CO2 levy because it only exists in very few of the countries with which it competes. The increase in 1995 resulted in further dissatisfaction because the levy is considered simply as a tax, despite the fact that part of the proceeds is returned to industry in the form of various compensation schemes. Danish industry thinks that it is already extremely energy effective, and the possibilities to further increase efficiency are few.
Danish emissions of CO2(1975-92)
In summer 1995 the EC Commission very rapidly approved the new Danish levies. They lie within what the Commission would like to see apply throughout Europe.
Progress: No attempt seems to have been made to evaluate the impact of the CO2 levy since its introduction in 1993. However, there is some information that energy supervision has led to a reduction in energy consumption of 1.8% in enterprises with a total consumption of 64 PJ.
12.2.4. Water supply and sewage disposal levies:
Since 1994 a water levy of DKK 1 per m3 has been imposed over and above the service charges. The levy will increase stepwise to reach DKK 5 per m3 in 199815. The annual yield was DKK 340 million in 1994. The levy is collected on water from the water supply network, i.e. that supplied by the waterworks, water used for field sprinkling not being subject to the levy as it is always abstracted on the farm. In the case of enterprises undertaking industrial production, the levy is refunded. The levy is therefore to all intents and purposes a consumer levy.
The political decision has already been made to impose a sewage levy from 1997. The yield will be DKK 340 million in 1997 and DKK 675 million in 1998.
12.2.5. SO2 levy:
A levy of DKK 10 per kg SO2 emitted has been introduced with effect from 1996. This will provide an incentive to use low-sulphur fuels such as natural gas, or to implement flue gas abatement measures. It is expected that the levy will have such a great effect that Danish SO2 emissions will fall to less than 90,000 tonnes by the year 2000. Denmark will thereby have fulfilled its international obligations to reduce SO2 emissions to 20% of the level in 1980.
12.2.6. Pesticides:
A new levy on pesticides has also been introduced with effect from 1996. Hitherto the levy has been 3% of turnover, and this will continue to apply to wood protection products, rat poisons and microbial plant protection products. However, the levy on all other plant protection products will be increased - to 27% for insecticides and soil disinfectants, and to 13% for other plant protection products (herbicides, etc.). The reason for the difference is that the first group of substances are far cheaper than the second. This means that the levy per treatment dose will be roughly the same. The levy is intended to make farmers spray less often. The proceeds of the levy are expected to be DKK 250 million per year.
12.2.7. Miscellaneous levies:
There are also environmental levies on carrier bags,
glass bottles and other containers used in retail sales, disposable tableware, CFCs and
chlorinated organic solvents. The total yield is approx. DKK 1,000 million. The
environmental impact of these levies has only been partly investigated. It can be noted,
though, that since 1988 consumption of cardboard drink containers (juice, etc. but excl.
milk) has only increased by 15% whereas that of recyclable glass bottles increased 55% in
the same period.
