EC approves state aid to Denmark to prevent carbon leakage risk

Companies that qualify for the aid will receive a reduced rate of CO2 tax

Last week, the European Commission approved a €724 million (DKK 5.4 billion) aid scheme to reduce the rate of the new greenhouse gas emissions tax for certain companies. This is stated in a statement on the institution’s website.

As reported, as part of a broader green tax reform agreed in 2022, Denmark has decided to introduce a tax on greenhouse gas emissions from activities covered by the EU Emissions Trading System Directive.

At the same time, the Danish measure is aimed at preventing the risk of carbon leakage when companies move production outside the EU to countries with less ambitious climate policies.

It will benefit companies that are subject to the EU ETS, operate in sectors listed on the EU ETS carbon leakage list and generate emissions through the relevant production processes.

Eligible companies will receive a reduced tax rate, which will be set at 33% of the standard rate. The scheme will be valid until December 31, 2033. Denmark aims to reduce carbon emissions by 70% in 2030 compared to 1990 levels.

As GMK Center reported earlier, analysts expect carbon prices in the EU to rise by 2027 as supply declines due to policy measures. This is evidenced by the quarterly Reuters survey. The average forecast was €111.14/t, the first time experts were asked about this period.

At the same time, analysts hardly changed their forecasts for 2025 and 2026. The EUA price is expected to average €76.88/t in 2025 and €92.48/t – in 2026. This forecast is 0.2% and 1% higher, respectively, compared to the July forecast.