## Denmark’s Ambitious Green Vision

_IMF Blog, January 11, 2021_

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## Bibliographic details
- Authors: Nicoletta Batini, Miguel Segoviano
- Published: January 11, 2021

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### Climate targets and context
- Denmark aims to reduce greenhouse gas emissions by 70 percent below 1990 levels by 2030.
- Net zero emissions are targeted for 2050.
- This goal is more ambitious than the EU’s target to cut emissions by 55 percent over the same time period.

### IMF staff paper: overview and strategic emphasis
- The IMF staff paper examines Denmark’s green strategy and proposes adjustments to help realize its goals.
- It recommends a comprehensive strategy with enhanced carbon pricing, reinforced by fiscal incentives across different sectors.
- The paper urges using revenues from carbon pricing to cut labor taxes.

### Carbon pricing design and economic implications
- The proposed package aims to provide powerful incentives for climate mitigation while shielding households and firms from higher energy prices.
- Measures would be spread across different sectors to avoid carbon prices that are too high, capping them at half the level currently suggested by the Danish Council for Climate Change.
- The economic cost from this lower carbon price is estimated at about 0.2 percent of GDP.

### Sectoral instruments: feebates and agriculture
- The paper recommends “feebates”—fees on products with high emissions combined with rebates on products with low emissions—for sectors with high emissions.
- Feebates could be especially useful to curb Denmark’s large agricultural emissions from the country’s huge number of farmed animals.
- Because feebates raise the costs of producers who farm unsustainably but reward them as they shift to sustainable farming, this program can deliver a fair low-carbon transition that preserves profitability and jobs.

### Policy rationale and attainability
- By crafting an effective climate policy that protects the majority of people, Denmark’s strategy to make large cuts in its emissions could be more attainable.

*Denmark’s Ambitious Green Vision — Nicoletta Batini, Miguel Segoviano; January 11, 2021*

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## References

- [EU’s target to cut emissions by 55 percent](https://blogs.imf.org/2020/09/24/how-to-meet-the-european-unions-ambitious-climate-mitigation-goals/)
- [IMF staff paper](https://www.imf.org/en/Publications/WP/Issues/2020/11/12/Climate-Mitigation-Policy-in-Denmark-A-Prototype-for-Other-Countries-49882)

_Source: https://www.imf.org/en/blogs/articles/2021/01/11/denmarks-green-vision-a-model-for-other-countries_