kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Europaudvalget 2020-21
KOM (2020) 0408 Bilag 9
Offentligt

april 2021

Denmark's

Recovery and

Resillience Plan

– accelerating the green transition

Ministry of Finance

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Denmark's

Recovery and

Resillience Plan

– accelerating the green transition

april 2021

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Content

Preface ........................................................................................................................

Introduction .............................................................................................................

1.1

Economic Outlook ........................................................................................

1.2

General objectives/Executive summary ......................................................

1.3

Comprehensive and adequately balanced response to the economic

and social situation ......................................................................................

1.4

Links with the European Semester ..............................................................

1.5

Gender equality and equal opportunities for all ...........................................

1.6

Cohesion ......................................................................................................

100

104

106

113

115

116

118

120

122

126

2. Components............................................................................................................

2.1 Strengthening the resilience of the healthcare system...........................................

2.1.1 Main challenges ...........................................................................................

2.1.2 Objectives ....................................................................................................

2.1.3 Clinical study on effect of COVID-19 vaccines ............................................

2.1.4 Measures to ensure stocks of critical drugs ................................................

2.1.5 Digital solutions in the healthcare sector .....................................................

2.1.6 Emergency management & monitoring of critical medical products ...........

2.2 Green Transition of Agriculture and Environment ..................................................

2.2.1 Main challenges ...........................................................................................

2.2.2 Objectives ....................................................................................................

2.2.3 Carbon rich soils ..........................................................................................

2.2.4 Organic Farming ..........................................................................................

2.2.5 Climate technologies in agriculture ..............................................................

2.2.6 Rehabilitation of industrial sites and contaminated land .............................

2.3 Energy Efficiency, Green Heating and Carbon Capture and Storage ....................

2.3.1 Main challenges ...........................................................................................

2.3.2 Objective ......................................................................................................

2.3.3 Replacing Oil Burners and Gas Furnaces ...................................................

2.3.4 Energy efficiency in industry ........................................................................

2.3.5 Energy savings in public buildings ...............................................................

2.3.6 CCS Storage Potential .................................................................................

2.3.7 Energy Efficiency in Households .................................................................

2.4 Green Tax Reform ..................................................................................................

2.4.1 Main challenges ...........................................................................................

2.4.2 Objectives ....................................................................................................

2.4.3 Emission taxes on industries .......................................................................

2.4.4 Expert group to prepare proposals for a CO2e-tax .....................................

2.4.5 Investment window ......................................................................................

2.4.6 Accelerated depreciation .............................................................................

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

2.5 Sustainable road transport ....................................................................................

2.5.1 Main challenges ...........................................................................................

2.5.2 Objective ......................................................................................................

2.5.3 Incentives to choose green cars ..................................................................

2.5.4 Analyses, tests and campaigns for greener transport .................................

2.5.5 Green transportation and infrastructure .......................................................

2.6 Digitalisation............................................................................................................

2.6.1 Main challenges ...........................................................................................

2.6.2 Objectives ....................................................................................................

2.6.3 Digital strategy .............................................................................................

2.6.4 SME’s digital transition and export ..............................................................

2.6.5 Broadband pool............................................................................................

2.7 Investing in Green Research and Development .....................................................

2.7.1 Main challenges ...........................................................................................

2.7.2 Objective ......................................................................................................

2.7.3 Carbon capture and storage or use of CO2 (CCUS)...................................

2.7.4 Green fuels for transport and industry (i.e. Power-to-X)..............................

2.7.5 Climate- and environment friendly agriculture and food production ............

2.7.6 Circular economy focusing on reuse and reduction of plastic and

textile waste .................................................................................................

2.7.7 Incentives to boost R&D in companies ........................................................

Complementarity and Implementation ....................................................................

3.1

Pre-financing request ...................................................................................

3.2

Consistency with other initiatives .................................................................

3.3

Complementarity of funding .........................................................................

3.4

Implementation ............................................................................................

3.5

Consultation process ...................................................................................

3.6

Control and audit..........................................................................................

3.7

Communication ............................................................................................

Overall impact .........................................................................................................

4.1

Macroeconomic and social outlook..............................................................

4.2

Macroeconomic and social impact of the plan.............................................

4.3

Comparison of the investment expenditure with the spending baseline .....

Appendix. Sustainable Development Goals .........................................................

135

136

137

139

144

151

165

167

169

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188

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197

202

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kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Preface

”As a response to the COVID-19 crisis,

the Danish government and Parliament have

adopted a number of comprehensive green

deals that will kick-start the Danish econ-

omy and accelerate the green transition. Den-

mark’s Recovery and Resilience Plan will se-

cure a large part of the financing for these

green deals and will thus first and foremost

support massive investments that will acceler-

ate the green transition. The investments will

both stimulate the growth of a more green

economy and support jobs and companies.

At the same time, the plan contributes to re-

alising Denmark’s ambitious climate targets

on reducing greenhouse gas emissions by 70

per cent in 2030.”

Nicolai Wammen, Minister of Finance for Denmark

Global, European and Danish context

In July 2020, the EU heads of states and governments adopted a historical 750 bn.

euro recovery package. The package, Next Generation EU, is the joint answer to

the severe health and economic crisis caused by COVID-19. The decision to sup-

plement national crisis management with the ambitious and common recovery is a

strong signal of solidarity showing that that we must find our way out of the crisis

together.

The consequences from COVID-19 are enormous. Globally more than 3 million

have died of the virus. Assembly bans have limited the scope of social activities,

and many have had to avoid physical contact with friends, family and loved ones

for several months. At the same time, the virus has caused a recession in the

global economy – the first recession since the financial crisis in 2007-08 and just

the second in recent history. In 2020, global economic activity fell by 3.3 per cent

and the EU countries experienced an economic setback of 6.1 per cent.

In Denmark too, the pandemic has had large negative consequences. The latest

data shows a contraction in the Danish economy of 2.7 per cent of GDP in 2020.

However, through an unprecedented expansive fiscal policy response that in-

cluded emergency relief packages, liquidity support and stimulus, it has been pos-

sible to support tens of thousands of jobs and companies. This has limited the

drop in employment to 0.7 per cent in 2020.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

As an open and export-oriented economy, Denmark has a significant interest in

the recovery of the European economies. One out of four Danish jobs is directly

linked to the export sector and approximately 60 per cent of Danish exports goes

to countries in the Single Market. In 2020, Danish exports fell by 7.7 per cent. Re-

gaining momentum in exports crucially depends on the recovery of Denmark’s

closest trading partners. EU’s common recovery package is thus not only an ex-

pression of European solidarity. It is also a recognition of the fact that each coun-

try has a large interest in securing a strong recovery throughout the EU.

Denmark’s Recovery and Resilience Plan:

Accelerating the green transition

Denmark is expected to receive approximately 11�½ bn. DKK from the EU’s Re-

covery and Resilience Facility. The Danish recovery plan shows how Denmark in-

tends to utilise the funds in accordance with the criteria. The funds in the Danish

recovery plan are supplemented by approximately the same amount of national

funds.

The key cornerstone in the Danish plan is to support the massive investments in

the green transition, which are necessary to reach the target of lowering green-

house gas emissions in Denmark by 70 per cent in 2030. This reduction target is

one of the most ambitious in the world.

The foundation for the Danish Recovery Plan is thus to utilise the need to stimu-

late the economy to support and accelerate investments in the green transition.

While the funds in the short run will help stimulate the economy and support jobs

and companies, they will also contribute to speeding up the green transition in the

medium to long run. This effort is crucial to realise Denmark’s ambitious climate

target and to underpin the common European climate targets. Since the Govern-

ment came into office a year and a half ago, decisions and political agreements has

been made, which contributes to a reduction of Denmark’s greenhouse gas emis-

sions by 9.1 Mt in 2030, of which the initiatives in the recovery plan contribute

with 2.8 Mt. This amounts to one third of the way towards the 70 per cent reduc-

tion target.

Getting all the way to 70 per cent will require large investments in inter alia re-

search, technology and infrastructure. The Danish recovery plan therefore chan-

nels 60 per cent of the funds towards green initiatives, according to the Commis-

sion’s definition. This is significantly above the EU’s criteria that at least 37 per

cent of the allocation should contribute to the green transition.

The Danish plan builds on a close dialogue with civil society as well as business

and industry. Last summer, the Danish government set up eight “restart teams”

on central lines of business with participation from the social partners. They in-

vestigated possible initiatives with a special emphasis on strengthening Danish ex-

port opportunities and regularly reported to the government on their conclusions.

In addition, the Danish recovery plan builds on the recommendations from the 13

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

climate partnerships with business and industry. The climate partnerships were

tasked with identifying and developing new green solutions, which would both re-

duce business and industry’s emissions and strengthen companies’ green competi-

tiveness. Each of the 13 climate partnerships presented their recommendations to

the government and several have been incorporated into the Danish recovery

plan. Furthermore, the Ministry of Finance has had dialogue with a wide range of

stakeholders and has received many proposals in this context. These have been

taken into consideration during the preparation of the plan.

The Danish Recovery and Resilience Plan is categorised into seven components,

which will contribute to reaching the Danish climate targets, job-creation, digitali-

sation and health.

Figure 1

Overview of the Danish Recovery and Resilience Plan

Bn. DKK

1,3

0,2

Strengthening the Green transition of Energy Efficiency, Green Tax Reform Sustainable Road

Resilience of the

Agriculture and green heating and

Transport

Health Care

Environment

CCS

System

Digitalisation

Green R&D

0,7

1,6

1,8

3,9

Bn.DKK

Strengthening the Resilience of the Health Care

System

Health care systems all over the globe have been - and

are - under immense pressure due to the COVID-19

crisis. Uncertainty of sufficient supply chains for critical

pharmaceutical products has spread, as Denmark - as

well as other countries - has been highly dependent on

deliveries from abroad. The Danish recovery plan will

therefore contribute to making the health care system

more resilient and better prepared for unexpected crises

like COVID-19. This includes ensuring strategic stor-

ages of medicine, which can reduce the vulnerability of

supply chains. Furthermore, Denmark will strengthen

the digitalisation of the health system, making it ready

for the future today.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Green Transition of Agriculture and Environment

The agricultural sector produces approximately a third

of Denmark’s greenhouse gas emissions. To reduce the

carbon footprint from the agricultural sector the Dan-

ish recovery plan supports the conversion to organic

agriculture, rewetting and taking carbon rich soils out

of production and it invests in demonstration of con-

crete and promising green research solutions. The re-

covery plan will also provide part of the funding for

cleaning up large generational pollutions across the

Danish landscape.

Energy Efficiency, Green Heating and Carbon

Capture and Storage

Securing energy efficiency is a crucial component in re-

alising both the EU’s and Denmark’s ambitious climate

targets in a cost-effective way. At the same time, invest-

ments in energy efficiency in inter alia buildings have

the potential to stimulate the economy and promote

job creation. Based on the recommendations from the

Danish climate partnerships, Denmark will accelerate

the conversion from oil- and gas furnaces to electrical

heat pumps, district heating as well as energy renova-

tions in private and public buildings. Furthermore, car-

bon capture and storage (CCS) is a key tool to reach

Danish reductions targets.

Green Tax Reform

Greenhouse gasses from service and industry accounts

for approximately one fifth of Denmark’s emissions. A

uniform tax on greenhouse gasses is one of the most

cost-effective ways of reducing these emissions. The

Danish recovery plan provides funding for the first

phase of the green tax reform, which contains a win-

dow of opportunity for green and digital investments.

This will create clear incentives and make it possible for

companies to accelerate the green transformation of

production capabilities, reducing their emissions up

front and adapt to phase two of the tax reform and a

future tax on carbon emissions. This two-phased ap-

proach ensures that jobs and competitiveness will not

be jeopardised.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Sustainable Road Transport

The transport sector produces approximately a third of

Denmark’s greenhouse gas emissions. The Danish re-

covery plan therefore provides financing for a more

sustainable road transport, aiming towards 1 m. green

cars on Danish roads in 2030, and to reduce CO

emissions with 2.1 Mt. A cornerstone in this endeavour

is the reprioritisation of the registration tax on cars,

which ensures significant financial support for increas-

ing the uptake of green cars. This is coupled with e.g. a

premium for scrapping old, polluting diesel cars. The

recovery plan also contains financing for investments in

green infrastructure and technology, more bicycle lanes,

more climate friendly ferries and car-sharing.

Digitalisation

A crucial precondition for rebooting the economies af-

ter COVID-19 is harnessing the potential of digitalisa-

tion in both the private and public sector. Digitalisation

is thus central in the Danish recovery plan. With a new

digital strategy, Denmark will promote the digital trans-

formation across sectors to strengthen welfare, equality,

growth, employment and the green transition. A new

digital strategy will be implemented, building upon the

recommendations from a digitalisation partnership. The

digitalisation partnership consists of high-level repre-

sentatives of the Danish business community, trade un-

ions, government and a range of other central actors.

Green Research and Development

Denmark is a world leader on green solutions and tech-

nology. Denmark’s recovery plan contributes to main-

tain this position with investments in new technologies

with significant green potentials. This includes carbon

capture and storage and green fuels for transport and

industry (e.g. Power-to-X as proposed by the climate

partnerships). These technologies possess great poten-

tial to contribute to the green transformations, to pro-

mote digitalisation as well as maintain and create new

jobs in the green sector. At the same time, the Danish

recovery plan provides clear financial incentives for

companies to increase their green R&D spending to de-

velop the solutions for a greener economy.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Part 1. Introduction

The COVID-19 pandemic poses an unprecedented challenge to world health,

economy and society as a whole. It has had profound impact on all activities in

societies all over the world. In Denmark, the economic activity dropped as social

distancing measures were put in place, which led to a massive decline in supply

and demand.

The most recent estimate puts GDP growth at -2.7 per cent in 2020 while unem-

ployment went up by 29,000 persons. During the first wave of COVID-19, the

economy was severely affected by the pandemic and the restrictions adopted to

control it. However, during the spring and summer, the economy started to re-

cover. During the renewed wave of infections in fall and winter, when renewed

restrictions have been necessary, the setback to the economy has been markedly

smaller than during the first wave. Beginning in March, restrictions are being grad-

ually lifted. The reopening has led to increasing economic activity, which accord-

ing to high-frequency indicators is reflected in, among other things, rising private

consumption and falling unemployment.

The Danish Recovery and Resilience Plan combined with national stimulus funds

aims at ensuring a swift and green recovery from the pandemic. The combined

stimulus funds will simultaneously accelerate the green transition of the Danish

society. Massive investments are necessary to ensure 70 per cent reductions of

greenhouse gas emissions by 2030 and climate neutrality by 2050, which is why

more than 90 per cent of the funds in the Danish Recovery and Resilience Plan

are allocated to initiatives that support the green transition

cf. Table 1.1

. The Dan-

ish Recovery and Resilience Plan combined with national funds contributes signif-

icantly to these overall goals of a swift and green recovery.

The Danish approach to the green recovery has been recognised by the UN Envi-

ronment Programme and Global Recovery Observatory

. They estimate that

among the 50 largest economies in the world, Denmark has used the largest share

of recovery spending on the green transition. Furthermore, they estimate that ap-

proximately 60 per cent of the

total

Danish recovery spending is used on green ini-

tiatives.

According to the Commission’s official tagging methodology, 60 per cent of the funds can be tagged as

green.

O’Callaghan, B. J. & Murdock, E. (2021): Are we building back better? evidence from 2020 and pathways

for inclusive green recovery spending; UN Environment Programme and Global Recovery Observatory.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Table 1.1

Initiatives in the Danish Recovery and Resilience Plan

Bn. DKK

(pct.)

2.1

11.4

17.6

33.7

14.0

5.7

15.5

100

2030 (Mt)

-0.1

-0.5

-2.1

-2.8

GDP

(%, 2 yrs)

0.00

0.03

0.22

0.02

0.01

0.03

0.31

1.1. Strengthening the Resilience of the Healthcare System

1.2. Green transition of Agriculture and Environment

1.3. Energy Efficiency, green heating and CCS

1.4. Green Tax Reform (phase 1)

1.5. Sustainable Road Transport

1.6. Digitalisation

1.7. Green Research and Development

Initiatives in total

0.2

1.3

2.0

3.9

1.6

0.7

1.8

11.6

Note: CO

e reduction effects are the total effects of the combined national stimulus funds and the funds from the

Recovery and Resilience Facility. The reduction effects are estimated partially and the estimated effects may

thus be overlapping.

The initiatives in the recovery plan are in line with the priorities in the European

Green Deal and contributes to Denmark’s climate targets. By adopting the Danish

Climate Act, the Danish government along with a large majority in parliament

committed itself to the world’s most ambitious climate target of reducing green-

house gas emissions by 70 per cent in 2030 compared to the 1990 level, and

achieving climate neutrality in 2050. When the law came into effect on July 2020,

it was estimated that Denmark needed to reduce its domestic greenhouse gas

emissions by 20 Mt by 2030 to reach this target. This scenario is depicted in

figure

1.1.

Figure 1.1

Total emissions by sector 1990-2030m.

Mt. CO2e.

-10

Energy

1990

2018

2025

2030

70 pct. target

-10

CCS

Mt. CO2e.

Agriculture and forestry

Industry

Transport

Waste and F-gasses

Note: The figure shows emissions under a frozen-policy scenario.

Source: Danish Energy Agency.

Under the incumbent government, annual greenhouse gas emissions have been re-

duced by approximately 9.1 Mt of CO

e by 2030. This corresponds to approxi-

mately 41 per cent of what must be achieved by 2030 to fulfil the Danish Climate

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Act, and has lowered the reduction residual from 20 to 11.8 Mt. Of these reduc-

tions, the initiatives in the Danish Recovery and Resilience Plan contributes with

1.7 Mt in 2025 and 2.8 Mt in 2030. The plan thus makes a significant contribution

to the Danish and European climate reduction target in 2030,

cf. figure 1.2.

Figure 1.2

e-reductions in the Danish Recovery and Resilience Plan

Mt CO

Mt CO2e

2025

Sustainable Road Transport

Green Tax Reform (phase 1)

Energy Efficiency

2030

Agriculture and Environment

Note: CO

e-reduction effects are the total effects of the combined national stimulus funds and the funds from the

Recovery and Resilience Facility. The reduction effects are estimated partially and the estimated effects may

thus be overlapping.

In addition to the concrete reductions from the initiatives in the plan, the differ-

ent measures pave the way for further reductions. The component on green tax

reform regards the first phase of the reform, and prepare industry to future higher

and more uniform taxes on greenhouse gasses. In the end of 2021, an expert

group will deliver its roadmap on how to implement a uniform tax on greenhouse

gas emissions. This tax is expected to be a key element in fulfilling the Danish cli-

mate targets.

Furthermore, the plan contributes to realising the large technical reduction poten-

tials of promising technologies, which are crucial to reach the climate targets.

Table 1.2

shows an overview of all the components and measures in the Danish

Recovery and Resilience Plan.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Table 1.2

Overview of the Danish Recovery and Resilience Plan

Expenditures

M. DKK (2021-prices)

1. Strengthening the Resilience of the Healthcare System

1.1. Measures to ensure stocks of critical drugs

1.2. Digital solutions in the healthcare sector

1.3. Clinical study on effect of COVID-19 vaccines

1.4. Emergency management & monitoring of critical medical

products

2. Green transition of Agriculture and Environment

2.1. Organic farming

2.2. Plant based organic projects

2.3. Organic transition of public kitchens

2.4. Organic Innovation Centre

2.5. Climate technologies in agriculture

2.6. Carbon rich soils

2.7. Rehabilitation of industrial sites and contaminated land

2021

153

2022

2023

2024

2025

Total

244

102

360

100

165

360

100

165

260

165

265

165

1,320

200

660

280

3. Energy Efficiency, Green Heating and CCS

3.1. Replacing oil burners and gas furnaces

3.2. Energy efficiency in industry

3.3. Energy renovations in public buildings

3.4. Energy efficiency in households

3.5. CCS-storage potential

775

225

150

300

100

600

170

100

150

100

275

125

100

290

105

115

100

2,040

645

315

565

200

4. Green Tax Reform

4.1. Investment window

4.2. Accelerated depreciation

4.3. Expert group to prepare proposals for a CO

e-tax

4.4. Emission taxes on industries

1,039

626

410

1,351

1,038

310

758

608

240

-90

539

439

180

-80

218

318

140

-240

3,905

3,029

1,280

-410

5. Sustainable Road Transport

5.1. Incentives to choose green cars

5.2. Analysis, tests and campaigns for greener transport

5.3. Green transportation and infrastructure

589

254

330

422

182

220

333

163

170

151

141

132

1,625

870

730

6. Digitalisation

6.1. Digital strategy

6.2. Broadband pool

6.3. SME's digital transition and export

125

100

145

125

145

125

665

500

100

7. Green Research and Development

7.1. Research in green solutions

7.2. Incentives to boost R&D in companies

700

1,100

1,800

700

1,100

Initiatives in total

3,741

4,044

1,795

1,370

650

11,600

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

The Danish Recovery and Resilience Plan contributes significantly more to ful-

filling green and digital objectives

Table 1.3

shows the share with which each

component contributes to fulfilling the green and digital objectives respectively.

Table 1.3

Green and digital

M. DKK

1.1. Strengthening the Resilience of the Healthcare System

1.2. Green transition of Agriculture and Environment

1.3. Energy Efficiency, green heating and CCS

1.4. Green Tax Reform (phase 1)

1.5. Sustainable Road Transport

1.6. Digitalisation

1.7. Green Research and Development

Total

244

1,320

2,040

3,905

1,625

665

1,800

11,600

Green transition

1,040

2,040

1,628

1,550

700

60 %

Digital

1,724

665

440

25 %

The Danish recovery plan thus contains measures where 60 per cent of the plan’s

total allocation contributes to the green transition and 25 per cent contribute to

the digital transition.

Figure 1.3

provides an overview of the green and digital

shares of the plan

figure 1.4

shows how each component contributes to the fulfil-

ment of the objectives.

Figure 1.3

Green and digital share of costs

B. DKK

25 %

15 %

Total

Green

transition

Digital

Other

60 %

B. DKK

Total

Green transition

Digital

Health

Energy Efficiency etc.

Road Transport

Green R&D

Agriculture and Environment

Green Tax Reform

Digitalisation

Figur 1.4

Green and digital - decomposed

B. DKK

The Danish Recovery and Resilience Plan thus contains measures that effectively contribute to the green

transition which represents 60 per cent of the recovery and resilience plan’s total allocation, based on the

methodology for climate tracking set out in Annex VI of Regulation (EU) 2021/241. Furthermore, the Dan-

ish recovery plan contains measures that effectively contribute to the digital transition which represents 25 %

of the total allocation, based on the methodology for digital tracking set out in Annex VII.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

1.1 Economic outlook

Table 1.4

lists key figures from the latest economic forecast in the development in

the real GDP and unemployment during the pandemic.

The Danish economy contracted in 2020 as a consequence of the pandemic.

However, the setback is expected to be relatively short-lived and the recovery fast.

Thus, real GDP is expected to grow by more than 2 per cent in 2021 and almost 4

per cent in 2022. The unemployment rate is set to remain above pre-pandemic

levels but on a declining path.

Table 1.4

Key figures from Denmark’s Convergence Programme, April 2021

2019

Real GDP, growth, per cent

Inflation, per cent

Nominal wages, growth, per cent

Employment, 1,000 persons

Employment, change, 1,000 persons

Unemployment, 1,000 persons

Unemployment, change, 1,000 persons

Unemployment, per cent of labour force

Labour force, 1.000 persons

Labour force participation rate, per cent

2.8

0.7

2.5

3,003

104

-4

3.4

3,105

82.9

2020

-2.7

0.4

2.2

2,981

-22

133

4.3

3,113

82.3

2021

2.1

1.1

2.4

2,988

124

-9

4.0

3,109

81.4

2022

3.8

1.5

2.6

3,025

118

-7

3.8

3,140

81.3

Source:

Denmark's Convergence Programme,

April 2021.

Similar to Denmark, other EU Member States as well as non-EU countries have

experienced contractions of GDP and spikes in unemployment rates. Countries

are now generally facing and trying to curb the spread of different mutations of

the coronavirus. The global economy remains in a vulnerable situation.

As a small open economy, Denmark is reliant on both the EU’s Single Market and

the global market. The recovery of the economies in the Single Market is there-

fore crucial to the recovery of the Danish economy. Next Generation EU will un-

derpin the recovery of the European economies and therefore the Danish econ-

omy. Up to 500.000 jobs – equivalent to every sixth Danish job – are connected

to trade within the single market. This indicates how important a common Euro-

pean effort is. The EU Recovery and Resilience Facility will help the Danish and

other European economies recover.

Mitigating measures to recover

The Danish government has initiated measures to mitigate the consequences of

the pandemic by introducing historically large financial support packages in order

to avoid a deep and lasting economic crisis. For instance, the government has fi-

nanced parts of the salaries for workers during lockdowns in order to ensure that

companies can keep workers employed until the economy opens up again. The

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government has also introduced tax-related liquidity measures that have immedi-

ately increased companies’ liquidity and thereby resilience. Combined, the efforts

are estimated to support around 55.000 jobs in 2020, around 85.000 jobs in 2021

and around 40.000 jobs in 2022.

The support packages have saved jobs and helped to secure that no one is left be-

hind. Mitigating the consequences in a socially just and balanced way has been of

great importance, and will be a strength during the recovery, as it has avoided big

layoffs and job destruction. This leaves Denmark with a solid foundation when

the recovery begins.

More needs to be done – a unique opportunity to accelerate the green tran-

sition

Despite successful support packages, the Danish, European, and global econo-

mies enter a period of economic uncertainty as second and third waves of

COVID-19 hit during winter season in the northern hemisphere as well as new

mutations of the coronavirus. Economic forecasts are marked with a high level of

uncertainty and further state interventions in the economy are necessary to pull

countries out of the recession that the pandemic has caused.

This calls for further action and economic stimuli across the European Union.

Ensuring an immediate recovery is pivotal in national recovery and resilience

plans to avoid that the COVID-19 pandemic develops into a lasting economic cri-

sis. Hence, recovery and resilience plans should have a great emphasis on job cre-

ation. Furthermore, governments all over the EU have an exceptional opportunity

to use the crisis to invest in solving the issue of climate change. By investing in

green growth, it is possible to bring the EU out of the crisis stronger, greener,

more coherent and more resilient than ever before. These are the guiding princi-

ples of the Danish Recovery and Resilience Plan.

The recovery of the European economy provides a unique opportunity to invest

in a greener future. The focus must be to prioritise measures that will kick-start a

green and rapid recovery of the European economy. This includes underpinning

the objectives of agreement of The European Council in December 2020 on a

new binding EU reduction target of at least 55 per cent in greenhouse gas emis-

sions by 2030 compared to 1990. This will set the EU on track to become climate

neutral by 2050.

A broad variety of Danish and European companies possesses unique knowledge

and knowhow on green and digital technologies. Investing in new green and digi-

tal technologies will contribute to the EU being a world leader within green tech-

nology and future job creation. Because of the high level of knowledge and green

entrepreneurship amongst Danish and other European companies, investing in

new green and digital solutions will benefit all European citizens as new technolo-

gies and products will be broadened globally. This provides a great potential for

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the Danish and European economy to enter a period of significant green growth

providing a contribution of great importance to the mitigation of climate change.

The Danish economy was well balanced and resistant to crises before the pan-

demic hit. Combined with the funds from the Recovery and Resilience Facility,

Denmark is now making the necessary investments that will push the Danish

economy out of the recession and into a greener and more digital future.

Box 1.1

Examples of green reforms and investments in the Danish Recovery and Resilience Plan

Reforms



The first phase of The Green Tax Reform creates strong incentives for companies to immediate invest in green

and digital technology, which at the same time leaves a smaller carbon footprint. This is done by increasing

taxes on the industries' process fossil energy while easing companies’ transition to clean energy.

Initiatives in the Sustainable Road Transport include reforms such as the re-prioritization of registration taxes

that incentivises consumers to shift to zero- or low-emission vehicles. This is combined with a subsidy scheme to

increase incentives to change old cars into new, greener cars.

Less productive carbon rich soils are taken out of production in order to reform the agricultural sector because

growing crops on carbon rich soils entails larger emissions of greenhouse gasses and nitrogen compared to pro-

duction elsewhere. Furthermore, the agricultural sector is reformed to focus more on organic production than

today.



Investments



Initiatives in the component on Energy Efficiency, green heating and CCS concern for instance the replacement

of gas and oil furnaces with electric heat pumps and district heating. Furthermore, subsidy schemes are target-

ing green renovations of buildings with poor energy performance and private households.

Large investments are made in research and development of green technologies. This includes projects such as

brown bio-refining utilising pyrolysis technology that will be able to deliver large reductions in the future within

areas that have shown the greatest reduction potentials, e.g.1) Carbon Capture and Storage and use of CO2, 2)

Green fuels, 3) Climate friendly agriculture and 4) Circular economy.



1.2 General objectives/Executive summary

The Danish Recovery Plan consists of seven components. The main focus of the

recovery plan is the transition to a green and climate-neutral society, which is one

of the biggest structural challenges in Denmark. Massive investments are neces-

sary to underpin the green transition. Therefore, the plan entails fundamental re-

forms and investments in the green transition within the sectors with the largest

greenhouse gas emissions in Denmark and underpins potential significant green-

house gas reductions.

Furthermore, the plan includes a variety of initiatives supporting a more resilient,

cohesive and socially just society. This is done by stimulating growth and job crea-

tion as well as strengthening the resilience of the healthcare system, thereby miti-

gating the consequences of the COVID-19 pandemic. The plan also includes

wide-ranging reforms and investments that will promote a digital transformation

across sectors of society advancing welfare and equality, growth and employment,

the green transition and the recovery of the Danish economy.

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The composition of the Danish Recovery and Resilience Plan is described below.

Component 2.1: Strengthening the Resilience of the Healthcare System

Investments in new technology in the healthcare sector

in order to broaden the use of digital solutions is

needed. This will help vulnerable and elderly people

with safe medical consultations during a pandemic. Fur-

thermore, investments will ensure the management of

sufficient stocks of critical medical products to avoid

depletion during potential future rises in demand for

medical products. Monitoring and reporting of the sup-

ply of critical medical products will also be strength-

ened with recovery funds. In addition, a large-scale clin-

ical cohort study of the various COVID-19 vaccines is

conducted in order to increase the knowledge on the

effects and side effects of the vaccines. The study will

increase the resilience and sustainability of the

healthcare system by targeting the vaccines towards the

population groups where they are most efficient.

Table 1.5

Component 2.1: Strengthening the Resilience of the Healthcare System

M. DKK, 2021-prices

1.1 Measures to ensure stocks of critical drugs

1.2 Digital solutions in the healthcare sector

1.3 Clinical study on effect of Covid-19 vaccine

1.4 Emergency management & monitoring of criti-

cal medical products

In total

Total

102

244

2021

153

2022

2023

2024

2025

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Component: 2.2: Green transition of Agriculture and Environment

The agricultural sector is a key sector in the green tran-

sition. The Danish agricultural sector is responsible for

approximately one third of the Danish emission of

greenhouse gasses. By initiating a green transition in the

agricultural sector, investments will cut greenhouse gas

emissions immediately. Further, investments in con-

crete research and development projects such as brown

bio-refining will be able to potentially deliver large re-

ductions in the future. In total, the component will re-

duce the greenhouse gas emissions by estimated 0.1 Mt

by 2030 while minimising the reduction in production

output. Additionally, new technologies in the agricul-

tural sector – primarily brown bio-refining utilising py-

rolysis technology – are estimated to hold a technical

potential for further reductions of greenhouse gas emis-

sion by 2 Mt in 2030. Investments in research and de-

velopment will help these potentials to materialise. Fur-

thermore, the green transition of the agriculture indus-

try will lead to significant reductions of nitrogen emis-

sions. The transition is possible due to measures taking

carbon rich soils out of production and promoting

transition to organic farming. Additionally, funds are

provided to rehabilitate industrial sites and contami-

nated lands thereby removing dangerous substances

and hazardous waste from the nature.

Table 1.6

Component 2.2: Green transition of Agriculture and Environment

M. DKK, 2021-prices

2.1 Organic Farming

2.2 Organic transition of public kitchens

2.3 Organic Innovation Centre

2.4 Plant based organic projects

2.5 Climate technologies in agriculture

2.6 Carbon rich soils

2.7 Rehabilitation of industrial sites and contaminated land

In total

Total

200

660

280

1,320

2021

100

165

360

2022

100

165

360

2023

165

260

2024

165

265

2025

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Component 2.3: Energy Efficiency, Green Heating and Carbon Capture and Storage

This component follows up on the recommendations

from the 13 climate partnerships representing key ac-

tors from across the society on a financially sustainable

green transition. To this end, Denmark seeks to priori-

tise additional initiatives based on the recommenda-

tions by the Danish climate partnerships to generate so-

cial, environmental and economic benefits by stimulat-

ing job-creation and growth potentials, and at the same

time contribute to the green transition by reducing

greenhouse emissions with 0.1 Mt in 2030.

One of the initiatives in this component is the replacement of gas and oil furnaces

with electric heat pumps and district heating.

Many of the initiatives are targeted at green energy renovations of buildings with

poor energy performance. Several of the initiatives in this component include re-

placement of oil burners and gas furnaces with electric heat pumps and district

heating in order to reduce energy consumption and greenhouse gas emissions. As

also highlighted in the Commission’s

Renovation Wave,

investing in buildings will

inject a much-needed stimulus in the construction ecosystem and the broader

economy. These investments are in alignment with the EU Green Deal and

COVID-19 recovery and kick-start a green and rapid recovery of the European

economy.

Table 1.7

Component 2.3: Energy Efficiency, green heating and CCS

M. DKK, 2021-prices

3.1 Replacing oil burners and gas furnaces

3.2 Energy efficiency in industry

3.3 Energy renovations in public buildings

3.4 CCS-storage potential

3.5 Energy efficiency in households

In total

Total

645

315

200

565

2,040

2021

225

150

100

300

775

2022

170

100

150

100

600

2023

125

100

275

2024

105

115

290

2025

100

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Component 2.4: Green Tax Reform

The tax system is one of the most efficient instruments

in creating incentives for citizens and businesses to

lower greenhouse gas emissions. However, fundamen-

tally reforming the tax system is not done overnight.

That is why a broad parliamentary coalition, consisting

of three fourths of the Danish parliament, has made a

politically binding agreement to enact a Green Tax Re-

form in two phases. Phase 1 will take the initial steps of

redirecting current energy taxes towards CO

e-emis-

sions, while providing incentives for frontloading green

and digital investments. Phase 2 will fundamentally re-

write the tax code by introducing a broad tax on all

greenhouse gas emissions including the non-energy re-

lated emissions in the agricultural sector. The ambition

is that the second phase will be the determining factor

in delivering a 70 per cent reduction in Danish emis-

sions in 2030.

The subcomponents under the green tax reform should be seen in context: The

increased emissions tax on industry in first phase of the green tax reform, and the

broadly anchored political ambition to implement a uniform, economy-wide car-

bon tax in the second phase, sends a strong message to market participants that

now is the time to transition away from carbon emission activities.

To provide companies with the incentive and the opportunity to accelerate this

transition and prepare for such a carbon tax, the green tax reform includes tax de-

ductions for frontloading green investments. The strong incentives for companies

to immediately invest in green and digital technologies will simultaneously assist

Denmark in recovering from the COVID-19 recession. This will lead to an in-

creased demand and a rise in employment as well as a reduction of greenhouse gas

emissions and further digitalisation of the Danish society.

The first phase of the green tax reform will lower greenhouse gas emissions by 0.5

Mt by 2030. This is due to the increased taxes on the industries' process fossil en-

ergy. The intention is that this initial increase in fossil energy taxation will become

directly targeted at the CO

-content of the different fossil fuels before the Green

Tax Reform moves to the second phase.

To ease companies’ transition to clean energy and boost growth potentials, the tax

reform also implies an increased tax deduction for companies investing in capacity

costs, e.g. technology and software.

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The investment window will not include machinery running on fossil fuels to en-

sure a green transition of industry. This will boost the companies’ growth poten-

tial and job creation, while encouraging companies to invest in new hardware and

technology that can reduce emissions in the longer run.

For the second phase of the Green Tax Reform, an expert group has been estab-

lished, which will draw the road map for the next phase of CO

e taxation in a

manner consistent with protecting competitiveness, social balance and minimising

leakage. It is the ambition in the long term to make a comprehensive tax reform

with a high and uniform CO

e tax on all emissions, but it will require significant

development work, especially with regard to emissions that are not currently sub-

ject to taxation.

Table 1.8

Component 2.4: Green Tax Reform

M. DKK, 2021-prices

4.1 Investment window

4.2. Accelerated depreciation

4.3. Expert group to prepare proposals for a uni-

form CO

e-tax

4.4 Emission taxes on industries

In total

Total

3,029

1,280

-410

3,905

2021

626

410

1,039

2022

1,038

310

1,351

2023

608

240

-90

758

2024

439

180

-80

539

2025

318

140

-240

218

Component 2.5: Sustainable Road Transport

The transport sector is one of the largest emitters of

greenhouse gasses in Denmark. The sector alone is re-

sponsible for approximately 25 per cent of the Danish

emissions. In order to reach the ambitious target of re-

ducing greenhouse gas emissions by 70 per cent by

2030, reductions in the transport sector are essential.

Within road transportation, new technology allows for

a transition towards greener and more environmentally

sustainable solutions. With this component, new tech-

nologies are utilised to reach a reduction in greenhouse

gas emissions by 2.1 Mt in 2030 and sets forth the am-

bition of having 1 m. zero- and low-emission cars by

2030.

This is achieved by re-prioritising the registration tax to incentivise more consum-

ers to choose zero and low-emission cars. Furthermore, the tax on electricity for

zero and low-emission vehicles is lowered and a premium for scrapping old diesel

cars is introduced to ensure that older cars are rapidly changed into new and less

polluting cars.

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Significant investments and subsidies in green infrastructure and new technologies

further incentivises green mobility, supporting public health and reducing conges-

tion.

Table 1.9

Component 2.5: Sustainable Road Transport

M. DKK, 2021-prices

5.1. Incentives to choose green cars

5.2. Analyses, tests and campaigns for greener

transport

5.3. Green transportation and infrastructure

In total

Total

870

730

1,625

2021

254

330

589

2022

182

220

422

2023

163

170

333

2024

141

151

2025

132

Component 2.6: Digitalisation

Denmark is among the leading digital countries in the

world and therefore has a strong foundation to build

upon. This has resulted in the UN labelling Denmark as

the global leader in terms of digital government – cap-

turing the scope and quality of online services, status of

telecommunication infrastructure and existing human

capacity – among the 193 UN member states

. Through

a new digital strategy that will cover a set of wide-rang-

ing reforms and investments, the aim is to promote a

digital transformation across all sectors of society ad-

vancing welfare and equality, growth and employment,

the green transition and the restart of the Danish econ-

omy after the COVID-19 crisis.

As part of this process, the Danish government has established a digitalisation

partnership consisting of top managers and experts from the Danish business

community, municipalities and regions, academia, and social partners. The broad

anchoring and involvement of stakeholders across society can qualify digital as-

pects and needs broadly in society in relation to citizens, businesses and the wel-

fare state, and will contribute with recommendations for a new digital strategy.

Such a process involving all relevant actors is needed to ensure a consistent and

cross-sectoral digital strategy for Denmark.

In addition to the digital partnership leading to a new digital strategy, the Recov-

ery and Resilience Plan will support the digital transition through investments in

strengthened connectivity and increased digital export opportunities for SMEs.

https://publicadministration.un.org/egovkb/en-us/Reports/UN-E-Government-Survey-2020

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Table 1.10

Component 2.6: Digitalisation

M. DKK, 2021-prices

6.1. Digital strategy

6.2. Broadband pool

6.3. SME’s digital transition and export

In total

Total

500

100

665

2021

100

125

2022

125

145

2023

125

145

2024

125

2025

125

Component 2.7: Green Research and Development

In order to realise Denmark’s high climate ambitions,

new technologies and tools to reduce emissions of

greenhouse gasses have to be developed. Therefore, a

component on investing in the development of new

green technologies is a crucial part of the Danish Re-

covery and Resilience Plan. The funding will be tar-

geted towards four research and development mis-

sions and support for private R&D. The four mis-

sions focus on 1) CCS and use of CO

, 2) Green

fuels, 3) Climate friendly agriculture and 4) Circular

economy. These areas have shown big potential in re-

ducing greenhouse gas emissions and the Danish cli-

mate partnerships’ have recommended targeting re-

search, development and demonstration efforts within

these four missions. The intention with the missions

is to build green public-private partnerships of re-

search institutions, private businesses, public institu-

tions and innovation actors. The green partnerships is

a new instrument in the Danish research and innova-

tion system, where private and public institutions will

cooperate by sharing knowledge and best practice to

focus and accelerate innovations targeted specific

challenges of the green transition.

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Table 1.11

Component 2.7: Green Research and Development

M. DKK, 2021-prices

7.1. Research in green solutions

7.2. Incentives to boost R&D in companies

In total

Total

700

1,100

1,800

2021

700

2022

1,100

2023

2024

2025

1.3 Comprehensive and adequately balanced response to the economic and

social situation

The Danish recovery and resilience plan has a clear and strong focus on initiatives

that support the green transition. That includes both reforms and investments

that deliver immediate reductions in greenhouse gas emissions as well as initiatives

that will provide the basis for significant further reductions in the future. As men-

tioned, Denmark has committed to the world’s most ambitious climate target of

reducing greenhouse gas emissions by 70 per cent by 2030, and the Danish recov-

ery plan contributes significantly to the achievement of that target. The Danish re-

covery plan therefore provides a sustainable recovery of the Danish economy fac-

ing the largest challenge.

It is estimated that the components in the Danish recovery plan contribute to

e reductions of 1.7 Mt in 2025 and 2.8 Mt in 2030 and thus make a significant

contribution to the Danish and European climate reduction target in 2030,

cf. table

1.12.

Table 1.12

e-reductions in the Danish Recovery and Resilience Plan

Reductions

Mt CO

Components

Agriculture and Environment

Energy Efficiency, Green heating and CCS

Green Tax Reform

Sustainable Road Transport

Reductions, in total

2025

0.04

0.1

0.5

1.0

1.7

2030

0.1

0.5

2.1

2.8

Note: CO

e-reduction effects are the total effects of the combined national stimulus funds and the

funds from the Recovery and Resilience Facility. The reduction effects are estimated partially

and the estimated effects may thus be overlapping. Total reductions may diverge from the sum

of individual reductions due to roundings of decimals.

In addition, significant future reduction contributions from the green research and

development programs must be expected

cf. table 1.13.

For instance, development

of brown and green refinery can potentially deliver a reduction of 2 Mt CO

2030 if the preliminary results hold true.

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Furthermore, the four green research missions might lead to significant potential

greenhouse gas reductions in the near future, e.g. new Power-to-X solutions have

the potential of reducing the Danish greenhouse gas emission with somewhere

between 0.5 and 3.5 Mt CO

per year in 2030.

Table 1.13

Technical reduction potentials in key technologies

Research and development programs

CCUS

PtX

Brown bio-refinement

Agriculture

Reduction of plastic and textile waste

Total

Mt CO

e in 2030

4-9

0.5-3.5

0.2

8.7-16.7

Note:

Total does not reflect the aggregate technical reduction potential. The technical potentials for CO

e-reductions

are estimated separately and the potentials may overlap. This is especially pertinant for PtX and CCUS. The

estimates signal the theorically possible reductions and are subject to a very high degree of uncertainty.

Greenhouse gas emissions is not the only target of the recovery plan. The envi-

ronment will benefit from the plan as well, as the plan consists of initiatives,

which also lowers the amount of harmful substances and particles emitted to the

atmosphere and the aquatic environment. The reforms and investments in the

transition of the car-stock from conventional cars to zero- or low-emission vehi-

cles are examples hereof due to the mitigation of particulate matter and NOx.

Hence, the recovery plan targets emission of particles to the atmosphere and ni-

trogen to the aquatic environment.

The Danish Recovery and Resilience Plan will prove that economic growth and

green transition are not opposites. The solution to both climate change and the

restoration of the economy following the COVID-19 pandemic is to invest in the

creation of green jobs and growth. For the economy to recover, it is crucial that

the Danish government contributes to bring back the lost jobs by restoring de-

mand. The Danish recovery plan contains measures that will contribute to job cre-

ation in 2021 and 2022 as well as investments in technologies that will potentially

create many more jobs in the future. Job creation will contribute to maintaining a

high degree of social cohesion and making sure that no one will be left behind as

the economy recovers from the pandemic. The macroeconomic effects of the re-

covery plan are set out in

Part 4: Overall impact.

The plan addresses the green transition by spreading out initiatives to different

sectors and industries as well as securing a good regional and social balance. Fur-

thermore, investments are made in initiatives that have the potential to become

important contributors to the green transition on the EU-level and globally. For

instance, research and innovation in the partnership of the mission regarding car-

bon capture and storage or use of CO

will strengthen research in the geological

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preconditions for storing CO

in Denmark. It will also contribute to the reduction

of the general price of carbon capture, utilisation and storage, which is a necessity

in order to implement cost-effective solutions that can be carried out on a larger

scale.

Hence, while this plan is time limited and geographically targeted to Denmark

specifically, the impact of the plan on the green transition will be both lasting and

global. Thereby, the plan aims at responding to the great challenges of the next

decades, and making sure that Denmark will deliver on the promise and common

obligation to transition the economy to being greener and more sustainable.

The green transition has beneficial effects on the quality of life of all Danish citi-

zens as it supports public health and reduces congestion. At the same time, it en-

sures new opportunities in the form of Danish jobs with equal opportunities for

all. With the Budget Bill for 2021, the Danish government has decided to set aside

a pool for upskilling and education in climate transition and green transition in a

broad sense. This ensures that everyone has equal access to participate in the em-

ployment opportunities that will arise with the green transition.

The COVID-19 pandemic has shown how important a broad and resistant digital

infrastructure is. Denmark is among the leading digital countries in the world with

almost all contact between citizens, businesses, and the public sector being digital-

ised. This plan strengthens Denmark’s position as a pioneering digital country, as

it contains ambitious initiatives to further promote digitalisation and improve ex-

isting digital solutions. The initiatives on digitalisation are aimed at both the public

and the private sector with a strong focus on incentivising private businesses to

invest directly in digital solutions already from this year. This will contribute to job

creation and an even more digitalised and productive economy.

Finally, the plan comprises initiatives aimed at strengthening the resilience of the

healthcare system, which has been challenged by the large numbers of hospitalisa-

tions during the COVID-19 pandemic. It is important that the healthcare system

has the necessary resources to handle the aftermaths of the COVID-19 pandemic

as well as being ready to handle future pandemics or other large disease outbreaks.

1.4 Links with the European Semester

As part of the European Semester, Denmark received the Council´s opinion on

Denmark’s economic policy on 20 July 2020. The opinion was based on Den-

mark´s 2020 Convergence Programme and Denmark´s 2020 National Reform

Programme. Denmark received three recommendations

cf. Box 1.2.

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Box 1.2

The Country Specific Recommendations for Denmark 2020

The Council recommends that Denmark take action in 2020 and 2021 to:

1. Take all necessary measures, in line with the general escape clause of the Stability and Growth Pact, to effec-

tively address the COVID-19 pandemic, sustain the economy and support the ensuing recovery. When eco-

nomic conditions allow, pursue fiscal policies aimed at achieving prudent medium-term fiscal positions and en-

suring debt sustainability, while enhancing investment. Enhance the resilience of the health system, including by

ensuring sufficient critical medical products and addressing the shortage of health workers.

2. Front-load mature public investment projects and promote private investment to foster the economic recovery.

Focus investment on the green and digital transition, in particular on clean and efficient production and use of

energy, sustainable transport as well as research and innovation. Support an integrated innovation strategy with

a broader investment base.

3. Improve the effectiveness of anti-money laundering supervision and effectively enforce the anti-money launder-

ing framework.

The Country Specific Recommendations addressed to Denmark generally reflects

the priorities of the Danish government and its efforts to ensure the recovery of

the Danish economy with great emphasis on the green transition.

The Country Specific Recommendations addressed to Denmark in 2019 cover the

same policy areas as for 2020, including research and innovation, sustainable

transport and anti-money laundering. However, in 2019, Denmark also received a

recommendation to focus investment-related economic policy on education and

skills.

Below is a description of how Denmark addresses the Country Specific Recom-

mendations with the Danish Recovery and Resilience Plan, but also other efforts

to address the Country Specific Recommendations that have been implemented.

1.4.1 Addressing of the CSRs in the Danish Recovery and Resilience Plan

The Danish Recovery and Resilience Plan seeks to respond to the recommenda-

tions that Denmark has received through the European Semester. The most im-

portant Country Specific Recommendation for Denmark is to support and imple-

ment the necessary reforms and investments in relation to the green transition.

The Danish government has a clear ambition to be a pioneering country and lead

the way in this process for the rest of the world.

Box 1.3

gives and overview of how the different components of the recovery and

resilience plan addresses the Country Specific Recommendations for Denmark.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Box 1.3

Compliance with Country Specific Recommendations in the Danish recovery plan

The reforms and investments in the Danish recovery plan contribute to the compliance with the Country Specific

Recommendations addressed to Denmark. Below, the recommendations are listed together with the components

that address the recommendations:



Recommendation to effectively address the pandemic, sustain the economy, support the ensuing recov-

ery, and enhance resilience of the health system:

Since the COVID-19 crisis hit Denmark in the spring of 2020, a pronounced expansive fiscal policy strategy has

been implemented to support the economy and the labour market through the crisis. Fiscal policy efforts include

a wide range of policy agreements that contribute to a green, fair and socially just recovery of the Danish econ-

omy. Political agreements have been made ensuring more than 160 bn. DKK in compensation and relief pack-

ages for businesses and employees. In addition, the initiatives in the component on

Strengthening the Resili-

ence of the Healthcare System

comply with the Country Specific Recommendations by investing in the Danish

healthcare system. The investments have a focus on ensuring availability of critical medical products, strength-

ening the digitisation, and utilising telemedicine in order to ensure a more resilient health system that are pre-

pared to handle this and future epidemics.

Recommendation to front-load mature public investment projects and promote private investments to

foster the economic recovery. Focus investment of the green and digital transition. Support an inte-

grated green innovation strategy with a broader investment base:

The initiatives in components

Green Transition of Agricultural and Environment; Energy Efficiency, green heating

and CCS; Green Tax Reform; Sustainable Road Transport; Digitalisation; Green Research and Development

all

comply with the Country Specific Recommendations. This is by investing and introducing reforms that support

the green and digital transition through various efficient measures that contribute to reducing CO

e emissions in

all the most emitting sectors in Denmark and in a cost-effective and socially just way. This includes green and

digital investments supported by the Danish government through various subsidy schemes as well as tax deduc-

tions for citizens and enterprises investing in new green and digital technology, research and development.

Recommendation to improve the effectiveness of anti-money laundering supervision and effectively en-

force the anti-money laundering framework:

Denmark has made significant progress in its efforts against money laundering and financing of terrorism. The

Danish government, together with a broad majority in the Danish Parliament, has significantly strengthened the

Danish Financial Supervisory Agency by increasing staff by 60 per cent. This has led to an increase in inspec-

tions from 35 in 2019 to 45 in 2020 and the inspections have been targeted at areas with increased risk of

money laundering. Furthermore, the Danish Financial Intelligence unit has doubled its number of employees

between 2017 and 2020 and fines have been raised by up to 700 per cent.



Denmark was recommended to frontload public and private investments in green

and digital transition. The Danish Recovery and Resilience Plan has a great em-

phasis on both elements, and with the funds from the Recovery and Resilience

Facility it has been possible to further accelerate the accomplishment of Den-

mark’s extremely high green ambitions. With the green transition of agriculture

and the environment (component 2.2) and the Green Tax Reform (component

2.4), the plan includes incentivising businesses to frontload their investments in

green and digital technologies and thereby supporting efficient production and use

of energy. At the same time, the investments in the green transition will ensure

growth potentials and job creation both now and in the coming years.

Furthermore, the plan addresses recommendations on sustainable transport (com-

ponent 2.5) as well as an integrated innovation strategy with a broader investment

base in research and innovation within the four green research and development

missions (component 2.7). In addition, the Danish government has initiated 13

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climate partnerships with representatives from civil society that have contributed

with ideas and suggestions on how to accelerate the green transition while making

the acceleration economically sustainable. The initiatives on energy efficiency

(component 2.3) follow from these recommendations, among other things.

Moreover, The European Semester recommended Denmark to address the pan-

demic including securing sufficient critical medical equipment to prevent short-

ages (component 2.1). With the Danish Recovery and Resilience Plan, measures

are taken to ensure availability of critical medical equipment and free up extra

hands in the healthcare sector, which may be used and allocated for the handling

of COVID-19 patients etc.

The components in the Danish recovery plan regarding the green transition and

digitalisation also reflect the recommendations Denmark have received in the Na-

tional Energy and Climate Plans and the Digital Economy and Society Index. This

applies, for example, to measures to promote energy efficiency through building

renovation and sustainable heating sources (component 2.3) as well as measures

to promote a green tax reform while ensuring a just transition for the most af-

fected households and companies. In addition, measures to promote a continued

expansion of high-speed internet throughout the country and funds to support

the digital transformation of SMEs. Finally, the funds from the Recovery and Re-

silience Facility contribute to a new digital strategy (component 2.6) that will pave

the way for new advanced digital technologies for businesses and digital public

services.

Recommendation on anti-money laundering

Combatting money laundering and terrorist financing is of high priority to the

Danish government. In recent years, Denmark has made significant progress in

the efforts against money laundering and financing of terrorism. The Danish gov-

ernment, together with a broad majority in the Danish Parliament, has adopted

several measures to strengthen the Anti-Money Laundering and Counter-Terror

Financing framework and intensify supervision.

The initiatives include, among others, that:



From January 2020, the Danish Financial Supervisory Authority has broad ac-

cess to issuing administrative fine notices in cases of violation of the Anti-

Money Laundering legislation.



Fines for not being compliant with anti-money laundering and terrorist financ-

ing regulations was significantly increased in 2019.



For large banks, fines can be increased by up to 700 per cent compared to the

previous level.

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

The Danish Financial Supervisory Authority has in January 2020 been given

the option of appointing a qualified person who may monitor the daily opera-

tions of the banks where it is necessary, in order to monitor a company in risk

of being used to commit a financial crime.



In February 2021, the Danish Financial Supervisory Authority has made a de-

cision to insert independent experts in Danske Bank in relation to the supervi-

sion of the execution of the bank’s financial crime plan.



The staff in the Anti-Money Laundering/Counter-Terror Financing Division

in the Danish Financial Supervisory Authority has increased by 60 per cent

since 2019. In 2020, the Danish Financial Supervisory employed three addi-

tional full-time equivalents to conduct administrative sanctions.



The number of inspections has increased from 35 in 2019 to 45 in 2020. In

2010, the number of inspections was 0-5 per year.



The Danish Financial Intelligence Unit has since 2018 been granted additional

resources. The number of staff has increased from 28 in 2019 to 35 full-time

equivalents by the end of 2020. Since 2017, the number of employees has

more than doubled.

The number of suspicious transaction reports, suspicious activity reports and ter-

ror financing reports disseminated from the Danish Financial Intelligence Unit to

the police and the State Prosecutor of Serious Economic and International Crime

has increased significantly, from 5,234 in 2019 to 8,499 in 2020. In comparison,

the number of reports disseminated to the police and the State Prosecutor of Seri-

ous Economic and International Crime was 1,588 in 2017

In November 2019, the Danish government set up the Operational Government

Forum as part of the national strategy for combatting money laundering and ter-

ror financing. The forum was set up in an effort to strengthen the operative coop-

eration and coordination between Danish police authorities, tax authorities and

other authorities involved in combatting money laundering and terror financing.

The members of the forum convene on a monthly basis to share multilateral and

bilateral information, subjects, trends and coordination of specific cases.

With regard to the risk-based supervision, the Danish Financial Supervisory Au-

thority has built a new risk assessment model that strengthens the risk-based ap-

proach by allowing the Anti-Money Laundering /Counter-Terror Financing Divi-

sion of the Danish Financial Supervisory Authority to target its activities toward

high-risk areas. Based on data submitted by obliged entities, the scoreboard model

estimates the inherent risk on a variety of data points. In addition, it makes an es-

A single report may have been disseminated in multiple years.

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timation of the residual risk, using various indicators as proxies for control effec-

tiveness. The risk assessment is based on quarterly/annual reports from all 1,900

obliged financial entities. They will report on 26 parameters. The new databased

risk assessment will start with the first dataset in May 2021, and the model will be

used in the Danish Financial Supervisory Authority’s inspection plan from 2021.

In addition, the Danish Financial Supervisory Authority is just about to implement

a new supervisory strategy, which will encounter a more flexible use of supervisory

tools, including increased use of “deep dive” inspections and off-site investigations,

thereby giving a more efficient use of the resources.

The Anti-Money Laundering/Counter-Terror Financing supervision has only to a

very limited degree been affected by the COVID-19 situation. Hence, all inspec-

tions and other supervisory activities have been carried out. Some inspections have

been made on a virtual basis but with the normal scope in all respects.

In 2020, the Danish government put forward a draft bill containing a proposal to

include exchange services providers regarding virtual currencies, transfer of virtual

assets and providers of administration services related to virtual asset activity un-

der the scope of the Anti-Money Laundering act, in full compliance with the Fi-

nancial Action Task Force definition of virtual asset service providers. The draft

bill also includes a proposal to lower the legal limit on the size of cash transactions

from 50,000 DKK to 20,000 DKK.

In February 2021, the Danish government has set up a public-private project

group, which will examine the possibilities for the development of an effective

joint system for monitoring of cash flows across banks in the fight against money

laundering, terror financing and value added tax fraud. An initial study completed

in 2020 has shown that, by correlating banks’ transaction data with value added

tax, business and reporting data, the authorities can better identify suspicious be-

haviour, take more proactive action against criminals and discard non-relevant

cases. The project group is expected to report their findings to the Danish gov-

ernment during the summer of 2021.

By initiating all of the above-mentioned measures, Denmark has made large ef-

forts to accommodate the country specific recommendation on anti-money laun-

dering. Therefore, the Danish Recovery and Resilience plan does not contain spe-

cific measure targeted money laundering.

However, he Danish government will continue the efforts against money launder-

ing and terror financing. The government will continue to take the necessary

measures to further improve the effectiveness of the anti-money laundering su-

pervision and effectively enforce the anti-money laundering framework.

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Recommendation on investments in education and skills

The Danish government has continuously invested in new policies targeted at ed-

ucation and skills, increasing funding for these areas significantly.

Public investment in tertiary education amounted to 14 bn. DKK in 2019 (exclud-

ing SU grants and research). This is in an increase of approximately 23 per cent

since 2008. During the same period, the admission to tertiary education in Den-

mark has increased by 42 per cent.

From 2020 and onwards, the existing ”re-prioritisation contribution”(Ompri-

oriteringsbidraget) has been cancelled, increasing funding for educational institu-

tions by approximately 678 m. DKK per year. In 2020, Denmark made a law on

the minimum amount of preschool teachers per child. With this law, Denmark

will be investing an additional 1.8 bn. DKK yearly in extra preschool teachers

from 2024. From 2020, the funding for basic education increased, adding 275 m.

DKK in 2020 and an additional 807 m. DKK from 2023 and onwards.

Furthermore, the Danish government and the Danish employee and labour or-

ganisations reached a number of tripartite agreements in 2020 aimed at vocational

education and training. With these agreements, a total of 6.1 bn. DKK have been

invested in vocational education in 2020, with an additional 500 m. DKK yearly

earmarked to new initiatives from 2021 and onwards. The Danish government

and the parties in the Danish Parliament have allocated 18.2 bn. DKK on research

and development, where 2.7 bn. DKK will be targeted at research areas within the

green transition and climate change. This corresponds to an increase of 420 m.

DKK from 2020.

Further measures taken to address the pandemic, sustain the economy, and support the recovery

Since the beginning of the COVID-19 crisis, Denmark has pursued a very expan-

sive fiscal policy to support the economy. The Danish government has imple-

mented both comprehensive temporary compensation schemes and a number of

expansionary fiscal policy measures in order to stimulate the Danish economy.

In August 2020, the Danish government presented an updated framework for the

fiscal policy towards 2025. This updated framework consists of expansionary fis-

cal policy, including a boost of public investments, in the coming years, which will

support economic recovery. In 2021, the structural budget balance reaches the

limit, set by the Danish Budget Law, with a structural deficit of 0.5 per cent of

GDP (large one-offs primarily related to COVID-19 handling and disbursement

of previously saved holiday pay are not included in this measure). Towards 2025,

fiscal policy is planned based on an adjusted profile for the structural budget bal-

ance, which supports the recovery of the economy. The updated framework in-

cludes an unchanged target of the structural fiscal balance in 2025, which contrib-

utes to stabilise the development of public debt and to support the credibility of

public finances.

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Furthermore, the 2021 Budget Bill and related agreements include several

measures, which further support the recovery of economic activity. These

measures include the distribution of the remaining frozen holiday pay, support for

the experience industry, Danish exports etc.

The fiscal policy approach described above, consisting of the updated financial

framework towards 2025, the Budget Bill and related agreements, is assessed to

substantially support economic activity in the coming years. The planned fiscal

policy is considered appropriate and in line with the economic outlook.

The Danish approach to control COVID-19 has been to act timely and decisive

with actions taken both on a national level and on a local level depending on the

specific situation and severity of outbreaks. The aim is to ensure that the spread of

COVID-19 is limited and well within the available healthcare capacity. A combi-

nation of testing, tracking and isolation is the first line of defence against the

spread of the coronavirus. Funding for new measures is allocated on an ongoing

basis.

Additional measures in relation to investment actions

The expansive fiscal policy to support the economy though 2020-21 also entails

efforts to frontload public investment projects in order to stimulate the economy.

In choosing projects to frontload, there is a particular focus on investments in

municipalities and regions. In March of 2020, the Danish government made an

agreement with the Local Government Denmark and Danish Regions, which re-

leases municipalities and regions from the construction ceiling in 2020. This pro-

vides municipalities and regions the opportunity to invest in projects immediately

that would otherwise have been carried out later. Furthermore, the government

prioritized 15 bn. DKK to raise the ceiling for public investments in 2021-2025,

which will increase public investments.

During 2020, the Danish government made several agreements with a strong

green focus. This includes the Agreement on Green Renovation of Social Hous-

ing that earmarks 30.2 bn. DKK from the National Building Foundation for so-

cial housing sector renovation in 2020-2026. Furthermore, the Climate Agreement

for Energy and Industry prioritises 22.5 bn. DKK to the green transition towards

2030.

Investment in research is also a priority for Denmark. The public research and de-

velopment budget has been approximately 1 per cent of GDP since 2009, and the

public research and development budget amount to approximately 24.2 bn. DKK

in 2021. This corresponds to more than 1.03 per cent of GDP and makes Den-

mark one of the European countries that spends the most on research and inno-

vation measured in per cent of GDP.

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1.4.2 European flagship areas

The seven European flagship areas are reflected in all of the components in the

Danish Recovery and Resilience Plan. It is important to deliver a common Euro-

pean response to future challenges, and the flagships act as way to align policies

across the EU.

Box 1.4

provides an overview of how the contents of the Danish Recovery Plan

are in line with the aims of the flagship areas.

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Box 1.4

European flagships the Danish Recovery and Resilience Plan contribute to

The Danish Recovery and Resilience Plan accommodates several of the European flagships. Below, selected initia-

tives are highlighted:



Power up:

Large investments are made in increasing support schemes for replacing oil burners and gas fur-

naces with electric heat pumps. This initiative will support an electrification of society and thereby increase the

use of green power. Furthermore, an investment window will incentivise companies to frontload their invest-

ments in green and digital technologies. Deductions for R&D-expenses in 2022 will additionally promote espe-

cially SME’s to invest in the development of new green technologies.

Renovate:

The recovery plan includes subsidy schemes for energy renovations in private and public buildings in

municipalities and regions. Moreover, a subsidy scheme for energy efficiency in industry will increase the reno-

vation rate and fostering of deep renovation.

Recharge and refuel:

Re-prioritising the registration taxes and lowering the electricity tax to charging of zero-

and low emission cars will increase the demand for green cars and future construction of more charging points.

Connect:

The broadband pool will promote high-speed internet access for citizens, households, and companies

across the country, including promoted access in some less densely populated areas.

Modernise:

A strategic digitalisation effort will ensure that the new technologies and digital solutions discovered

during the COVID-19 pandemics are used to create a more resilient and sustainable healthcare system, which is

more coherent and closer to the citizen.

Scale-up:

The Danish government’s new digital strategy – funded by the Recovery and Resilience Facility – will

aim to address administrative and bureaucratic barriers, increase efficiency and growth, stimulate the competi-

tiveness and digital transition of businesses, and simultaneously strengthen the quality of the public digital ser-

vices that citizens and businesses meet.

Reskill and upskill:

The measures in the digitalisation plan aims to promote accessible and interoperable digital

public services, e.g. supporting digital skills and training.



1.5 Gender equality and equal opportunities for all

Successive Danish governments have continuously improved legislation and other

legally binding regulations in order to achieve gender equality and equal opportu-

nities for all. As a result, women share the same formal rights, obligations and op-

portunities in society as men.

The advancement of gender equality as well as equal opportunities for all is re-

garded as a prerequisite for economic growth, democracy and welfare. Women’s

full enjoyment of their human rights, their sexual and reproductive health and

rights, and gender equality is regarded as fundamental for the Danish society. To-

day, Danish women participate in the labour market almost on an equal footing

with men. The early childhood education and care system allows women – and

men – to balance their work and private life. Women generally enjoy equal oppor-

tunities in political, economic, social, cultural and civil spheres of life.

As a result, Denmark has been rated among the top of gender equal societies in

several ratings.

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However, the Danish government fully acknowledges that women still lag behind

men in a range of areas, and there is still a lot of work to be done when aiming to

achieve full equality for all women in society and to secure de facto gender equal-

ity.

Within the last 12 months, the Danish parliament has adopted legislation and

funds for combatting violence against women including widening the scope of

criminal law and allocating funds for expanding support services and raising

awareness. This includes:



New rape legislation criminalising intercourse without consent. The legislation

includes a hotline for victims of rape.



Funds for strengthening support services for female victims of domestic

abuse, including the establishment of additional permanent shelters for bat-

tered women and increased funding for NGOs providing ambulatory counsel-

ling services for victims.



Further funding to increase the capacity of ambulatory counselling and treat-

ment programs. Moreover, shelters for victims of domestic abuse will receive

funding to establish additional temporary rooms across the country in order to

mitigate the challenges caused by the crisis. This is pertinent, as the COVID-

19 pandemic has had a serious impact on victims of domestic violence.

In November 2020, the Danish government launched 14 new initiatives to com-

bat sexual harassment in the workplace and in education. The measures are broad

and cover subjects like raising awareness, prevention and monitoring of sexual

harassment. For example, Denmark has established a tripartite dialogue with so-

cial partners on how to improve the prevention of sexual harassment and

strengthen the sanctions for sexual harassment in the workplace. An alliance be-

tween relevant NGOs, organisations and social partners is also being established

to promote broad cooperation and sharing of knowledge on how to change the

culture in the workplace.

Specific initiatives to comply with recommendations

Women’s participation in the labour market is key for their economic empower-

ment and for their access to decision-making. In Denmark, women have a high

participation rate and they are breadwinners in one third of the families. However,

Denmark is committed to promote women in decision-making, the continued

problems with the segregation on the labour market and in academia, and the gen-

der pay gap, as recommended by the Commission.

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For these reasons, Denmark has initiated a range of activities such as



A commitment to promote equality in parents’ share of their parental leave.

This will ben-

efit children, fathers, and the family as a whole as well as allow women to re-

turn to the labour market and to pursue the career they want. Likewise, shar-

ing the parental leave equally between parents can help reduce the gender pay

gap.



Promotion of female entrepreneurship.

Denmark has established a Maternity Equali-

zation Scheme for self-employed persons to increase their financial compensa-

tion during maternity, paternity and parental leave.



Promotion of women in academia.

In 2021, the Danish government has allocated

110 m. DKK to strengthen the talent program ‘Inge Lehmann’ in order to

promote a more equal gender balance in academia.



Promotion of women in STEM

and combating the gender segregated education

system. Examples of this are the yearly national campaign "Girls’ Day in Sci-

ence" and the Danish government’s Strategy for Natural Sciences from 2018.

The latter includes exploring how ‘technological comprehension’ can be

taught in ways that motivates all students, regardless of gender, age and family

background, thereby making technological studies more attractive for all – in-

cluding especially girls in primary and lower secondary school.

In sum, Denmark strives to be a frontrunner on gender equality, and the Danish

government is fully committed to continue to improve women’s empowerment

and equal opportunity for all. Therefore, the focus on gender and equality is main-

streamed across policy areas and is seen as a precondition to growth and welfare.

Furthermore, initiatives countering COVID-19 induced gender inequalities such

as increased violence against women have been funded by the state. The initiatives

in the recovery plan complement these efforts and have a positive impact on gen-

der equality. Studies show that women are more vulnerable to COVID-19 related

economic effects, as the virus inter alia increases the burden of unpaid care, which

disproportionately falls on women

. Furthermore, Danish women are more often

than men employed in the service sector, which has been severely hit by the lock-

down. By combining the ongoing Danish efforts to counter structural inequality

with the recovery plan’s investments in health and stimulus of the economy, the

COVID-19 induced economic inequalities are mitigated and will be prevented in

future health crises.

In addition to promoting equality between genders, the Danish recovery plan also

seeks to promote equal opportunities for all. To illustrate, the terms of reference

for the Danish government’s

digitalisation partnership

state, that the partnership

McKinsey Global Institute (2020): COVID-19 and gender equality: Countering the regressive effects.

https://www.mckinsey.com/featured-insights/future-of-work/covid-19-and-gender-equality-countering-the-

regressive-effects

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must provide recommendations on how the new digital strategy can ensure that

the digital transformation happens in a way, which ensures equal opportunities

and cohesion. Furthermore, the

health component

will improve equality within

healthcare by creating better conditions for vulnerable patients. The initiatives in

the Recovery and Resilience Plan also contribute to equal access to e.g. green

heating and broadband, as these initiatives are mostly relevant for households in

rural areas, where low-income households are overrepresented. Finally, by having

a very strong green component and accelerating the green transition, the Danish

Recovery and Resilience Plan also contributes to equality between generations. It

is thus in line with the core purpose of

Next Generation EU,

as it contributes to en-

suring, that younger generations will inherit a healthy, green society.

1.6 Cohesion

The initiatives in the Danish Recovery and Resilience Plan are assessed to broadly

support employment both across industries and geographically. This includes sev-

eral measures aimed at strengthening cohesion, e.g. a broadband initiative, which

promotes high-speed internet access for citizens, households and companies

across the country (i.e. including in some less densely populated and rural areas) as

well as support for organic farming.

The focus on cohesion also applies in investments in energy efficiency regarding

renovation and measures to ensure energy efficiency for households, private en-

terprises and public sector buildings, which are expected to temporarily increase

the number of local jobs and investments but also reduce energy bills. The effect

of the recovery plan on cohesion is set out in

Part 4: Overall impact.

Box 1.5

provides examples on how the initiatives in the Danish Recovery and Re-

silience Plan contributes to social and territorial cohesion.

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Box 1.5

Social and territorial cohesion and convergence in the Danish Recovery and Resilience Plan

Several components in the Danish Recovery and Resilience Plan support the social and territorial cohesion and

convergence:



Strengthening the Resilience of the Healthcare System:

A strategic digitalisation effort ensures that the new

technologies and digital solutions discovered during the COVID-19 pandemic are used to create a more resilient

and sustainable healthcare system, which is more coherent and closer to the citizen. This includes telemedicine,

which has potential to benefit especially people living in less densely populated areas, as the distance to medical

treatments often is longer.

Green Transition of Agriculture and Environment:

The Danish agricultural sector faces structural challenges,

which makes the sector vulnerable to increases in costs as a result of the green transition and declines in earn-

ings. The employment and social cohesion in especially rural areas is dependent on a continued competitive

agricultural sector. Therefore, the initiatives aim to provide economic incentives to farmers, in order to reduce

greenhouse gas emissions with respect to the farmers’ situation, and to ensure the social and territorial cohesion

and convergence. The agricultural reform also contains investments in research and development that promotes

sustainable growth in the agricultural sector and fosters high quality employment creation.

Energy Efficiency, Green Heating and CCS:

The additional funds provided by the Recovery and Resilience

Facility will promote improvement of essential welfare institutions, and are expected to be allocated to renovation

of e.g. day-care institutions, schools, and hospitals. This will support the coherence and resilience in society by

maintaining and ensuring the right facilities can deliver a high quality of public services. Moreover, the renova-

tions will temporarily increase the number of local jobs and investments, and reduce energy bills, which consti-

tute a larger share of less wealthy household’s income. Improving energy efficiency contributes to a cost efficient

way of realising the target of climate neutrality by 2050.

Digitalisation:

The initiatives create the digital public sector of the future by a continuous modernisation of the

digital infrastructure meeting the needs of all citizens and businesses, and strengthening connectivity. Espe-

cially, the broadband pool will promote high-speed internet access for citizens, households, and companies

across the country located in less densely populated areas, which will enable all citizens in Denmark to take part

in the upward social and economic convergence driven by the digitalisation. This is in particular the case, as the

distribution of funds and the draft digitalisation plan will be done in close collaboration with a broad range of ac-

tors in the civil society.



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Component 2.1

Strengthening the Resilience of the

Healthcare System

Healthcare systems around Europe are facing a wide variety of

unforeseen challenges in the wake of the COVID-19 pandemic.

The capacity in primary and secondary care is under pressure,

supply-chains for critical medical products are breaking, and

isolation and social distancing brings new challenges in treating

patients in risk groups.

It is therefore crucial to strengthen the resilience of the healthcare

systems. The Danish recovery plan provides funding to strengthen

the resilience and preparedness of the Danish healthcare system

e.g. by analysing the effects of COVID-19 vaccines, implementing

digital solutions, improving monitoring systems for stocks and

ensuring sufficient stocks of strategic medical supplies. The funds

will not be used for procurement of medicine.

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Description of the component

Box 2.1.1

Strengthening the resilience of the healthcare system

Policy area/domain:

Healthcare, care for the elderly, vulnerable groups, public health, primary care, secondary care, digital healthcare,

telemedicine, patient engagement, preparation plans, supply chains of critical medical products, surveillance of side

effects of vaccines.

Objective:

The overall objective of this component is to strengthen the resilience of the healthcare system through the following

measures:



Clinical study on effect of COVID-19 vaccines:

With the RRP Denmark will invest in a large-scale clinical

cohort study of the various COVID-19 vaccines in order to increase the knowledge on the effects and side

effects of the vaccines. The study will be conducted in order to examine the degree and the duration of the

immunity, as well as establishing whether the efficiency of the vaccines differs between different population

groups. Furthermore, the study will increase the expertise on the new technologies utilised in some of the

vaccines. Results from the study can help increase the resilience and sustainability of the healthcare system if

the results suggest e.g. that it will be more efficient to target the various vaccines towards specific population

groups. Hereby, the side effects are minimised for the individual and the overall strain on the healthcare system

can be reduced. Furthermore, knowledge is improved of whether re-vaccination is needed. The increased

knowledge might further improve the confidence regarding the vaccines.

Measures to ensure stocs of critical drugs:

In order to avoid critical situations with shortages of important

drugs, Denmark has established, and now extends measures to maintain and ensure strategic stocks of critical

drugs in the secondary health sector. This will help enhance the resilience of the healthcare system by ensuring

a sufficient amount of critical medical products will be at disposal.

Digital solutions in the healthcare sector:

During the COVID-19 pandemic new digital solutions have been

used to make citizens and the healthcare system more connected. That has helped to protect vulnarable patient

groups. A strategic digitalisation effort would ensure that new technologies and digital solutions developed

during the COVID-19 pandemic are used to create a more resilient and sustainable healthcare system, which is

more coherent and closer to the citizen.

Emergency management & monitoring of critical medical products:

COVID-19 has introduced a crucial

need for acute planning and monitoring both concerning shortages and supply problems and potential side

effects of the COVID-19 vaccines. A strengthening of the emergency management in the Danish Medicines

Agency can ensure sufficient monitoring of shortages and supply problems, improve overall planning, and create

robust foundation for efficient monitoring of potential side effects to the COVID-19 vaccines.



Examples of reforms and/or investments:



I. Clinical study on effect of COVID-19 vaccines: 102 m. DKK

II. Measures to ensure stocks of critical drugs: 52 m. DKK

III. Digital solutions in the healthcare sector: 14 m. DKK

IV. Emergency management & monitoring of critical medical products: 76 m. DKK

Estimated cost:

244 m. DKK, of which 100 per cent is covered by the Recovery and Resilience Facility.

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Main challenges and objectives

2.1.1 Main challenges

A pillar of the Danish healthcare sector is the delivery of efficient, and high qual-

ity care. The Danish healthcare sector has proven to be extremely adaptable in

dealing with COVID-19. However, the COVID-19 pandemic has increased the

need for digital solutions in healthcare, as in-person-care has suddenly become a

potentially lethal risk for vulnerable groups. One of the most extensive vaccina-

tion programmes in Danish history has been launched, whilst knowledge on espe-

cially the effects but also side effects of the COVID-19 vaccines are still being

elaborated. Lastly, the COVID-19 crisis increases the demand for emergency

management coordination and monitoring. To sum up, the main challenges are:

Need for further knowledge concerning effects and side effects of the

COVID-19 vaccines

The effect of the COVID-19 vaccines and their potential side effects have been

studied during the European Medicines Agency’s approval of the vaccines. How-

ever, these studies have been conducted over a relatively short period of two

months. The main areas still in need of further research are:

The long-term effects of the vaccines are unknown:

The duration of the im-

munity granted by the vaccines and the potential long-term side effects are un-

known. The currently approved vaccines have shown evidence for granting im-

munity for two months, corresponding to the duration of the previously con-

ducted clinical trials. For this reason, it is also uncertain if more than two injec-

tions with the vaccine are required to obtain enduring immunity. A clinical study

with a longer time perspective can provide knowledge of the duration of the im-

munity granted by the vaccines.

The vaccines have not yet been tested on all population groups:

It has not

yet been established for whom the different vaccines have the largest efficacy. No

study has compared the effects and side effects of the different vaccines within

different population groups. Doctors can thus not prescribe a specific vaccine

based on solid comparative clinical evidence.

Uncertainty concerning new technologies:

Some of the approved vaccines use

new technologies that have not been approved or used before. Thus, there is a

need for solid evidence of the overall efficacy and usability of these technologies.

Ensure availability of critical medical products

COVID-19 has demonstrated that the market for medicine is very dependent on

the situation and level of production in countries outside the EU. The sensitivity

stems from the fact that most active substances for medicine are produced out-

side of the EU. The supply of critical medical products is therefore extremely sus-

ceptible to new COVID-19 closures or export restrictions. Furthermore, Den-

mark is a small market for pharmaceutical companies in a global context. In order

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to avoid critical situations with a shortage of important drugs under COVID-19,

Denmark has decided to extend and maintain measures to ensure strategic stocks

of critical drugs in the secondary sector until the end of 2021.

Strategic focus on digital solutions and protection of fragile and vulner-

able patient groups

The healthcare service must continue to make efforts to adapt to the conditions

of the COVID-19 pandemic, including providing treatment and care to citizens

and patients, where physical encounters should be limited as much as possible.

We must continue to seize the opportunities that technology holds for the mitiga-

tion of the consequences of the pandemic.

When selecting new digital solutions in dealing with COVID-19 it is, however,

important to strike a balance between the need for developing new solutions and

further developing existing solutions, in order to ensure that authorities’ need for

an effective management of the pandemic is met. When implementing new tech-

nologies, it is furthermore crucial to make sure that implementation will not dis-

rupt the core resources of the healthcare system. The main challenges are:

Digital slow-down and risk of ad hoc digitalisation:

The widespread use of

technology in the healthcare sector has slowed down during the pandemic be-

cause of lacking strategic focus and political prioritisation of digital solutions.

COVID-19 has led to a higher degree of ad hoc digitalisation, which brings about

a need for a strategic direction and anchoring to ensure the sustainability of the in-

itiatives, and to ensure that they support the right long-term priorities (e.g. a co-

herent infrastructure and sustainable digital solutions in the Danish healthcare ser-

vice).

Protecting fragile and vulnerable patient groups:

It is important to protect

fragile and vulnerable patient groups with digital solutions. This is especially the

case in situations with an increasing infection rate, where vulnerable citizens have

to self-isolate, and physical consultations at the hospital and general practitioners

happen at a high risk for the patient. There is a need for further development of

video consultation solutions as many elderly and fragile patients in nursing homes

are not able to access video consultations because they do not have NemID (Na-

tional electronic identification). Furthermore, a recent analysis from the organisa-

tion Danish Patients shows that the vast majority of patients, who have experi-

ence with video consultations and other digital contact with the healthcare system,

would like to see an increased use of these types of digital solutions even after the

pandemic has ended.

Unused potential for increased patient engagement:

Digitalisation and new

channels for communication provides the possibility for a healthcare system in-

creasingly based on the needs of the individual patient. The way in which patients

interact with the health system is changing concurrent with digitalisation and the

development of new digital channels for communication. This gives patients a

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

more flexible interaction with the health system that can cater to individual needs

to a greater extent. For example, there are indications of an increasing amount of

patients suffering from unease triggered by COVID-19, which could be relieved

by adapting certain digital solutions.

Emergency management of critical medical products and monitoring on

side effects of COVID-19 vaccines

The spread of COVID-19 has put a strain on critical supply chains. At the mo-

ment, the infrastructure for monitoring of shortages and supply chain problems of

critical medical products needs a re-examination. There is a need to strengthen the

monitoring supply chains, coordinate between the primary and secondary sector,

and secure a balanced national distribution of critical medical products in times of

crisis.

Furthermore, mass-vaccination of the population creates a need for efficient and

high quality reporting, monitoring and processing of side effects of the COVID-

19 vaccines.

2.1.2 Objectives

To resolve the outlined challenges, Denmark will work towards four goals. The

four goals all contribute fulfilling the Country Specific Recommendation for Den-

mark regarding a more resilient health system. This is done by extending and

maintaining measures to ensure availability of critical medical products, implemen-

tation of digital solutions to shield elderly and vulnerable patient groups, increas-

ing the knowledge of the effects and side effects of the COVID-19 vaccines and

by strengthening of the emergency management of critical medical products:

Increase knowledge of the effects and side effects of the COVID-19

vaccines

In order to fill the gap of knowledge concerning the long term effects of the

COVID-19 vaccines and side effects Denmark will initiate a large-scale cohort

study of 10.000 patients. The study will run from 2021-2023 and will focus on the

following objectives:

Measuring the long-term effect of the vaccines:

The suggested clinical cohort

study enables the possibility of clarifying the duration of the immunity granted by

the different vaccines, and thus whether there is a need to re-vaccinate in order to

maintain the effects of the vaccine. This knowledge is instrumental in preserving

the health of the public, and especially elderly and vulnerable patient groups.

Knowledge on the long-term effects of the vaccines can furthermore qualify deci-

sions regarding how long the period between the first and second injection should

be, as decisions are currently being made on a limited amount of data.

Additionally, the study will enable systematic data collection of long-term side ef-

fects of the vaccines. The data will be compared to a control group in order to de-

termine if the vaccines cause the side effects or not. The study can thus be used to

refute some of the false information regarding the vaccines, which will improve

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the confidence in the vaccines and commitment to the continuous use of vaccines

to battle COVID-19. If a vaccine shows signs of significant side effects, the spe-

cific vaccine could be quickly removed from active use.

Determine which vaccines are most effective for different population

groups:

The clinical study enables head-to-head comparisons of the different vac-

cines in order to determine which vaccines are most effective for different popula-

tion groups. Adjustments of which groups get which vaccine can be made concur-

rent with the preliminary results of the study on a more enlightened basis.

Obtain knowledge on the effect of the new technologies:

There is a very lim-

ited amount of evidence of the effect of the new technologies utilised in some of

the COVID-19 vaccines. By examining the long-term effects it is possible to ob-

tain more knowledge on these technologies and if they could prove useful in dif-

ferent settings and in combating other viruses or diseases.

Ensure availability of critical medical products

In order to maintain and secure the Danish supply of medicines, and thus avoid

critical situations with a shortage of important medicine and drugs during the

COVID-19 pandemic, Denmark has decided to extend and maintain measures to

ensure strategic stocks of critical medicines in the secondary sectors until the end

of 2021.

Ensure availability of critical medical products in the secondary sector:

the secondary sector, the Danish regions' procurement organisation, Amgros, pro-

cures medicine for the hospitals. Amgros has taken on the task of purchasing

medicine for a stock that covers three, six and nine months' normal consumption

of all medicine. The size of stocks depends on the criticality of the drugs as well as

signals of international supply difficulties. The list of critical medicine has been

prepared based on input from the clinical pharmacologists in the regions and in-

cludes, among other things, medicine for use in anaesthesia, in intensive care

units, antibiotics and medicine for the treatment of COVID-19. Only the indirect

costs of the measures to ensure the stocks will be funded. This includes costs for

administration and logistics expenses in relation with procurement and operating

expenses regarding stocks as well as the associated risk that the extraordinary

stocks of critical medicines will lead to increased disposal, e.g. as a result of several

damaged packages or medicine exceeding the expiration date and falling prices in

relation to the purchase price. The medicine will still be sold at market rate to the

hospitals and the specific cost of the medicine is not subsidised.

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Strengthen the digitalisation of the Danish healthcare system

Digital solutions in the healthcare sector can shield vulnerable patients and ensure

effective monitoring and triage of patients. COVID-19 has demonstrated that

there is a need for strategic efforts to provide tools for healthcare professionals

and patients that support virtual treatment.

Support digital solutions:

New technologies are developing rapidly and they

promise great benefits for the healthcare sector, e.g. by enabling a more individu-

ally tailored process and increased digital communication. The technology package

will build on the already initiated measures as well as additional initiatives for digi-

tal solutions that can strengthen the healthcare system during COVID-19 with a

special focus on supporting efforts to shield vulnerable patient groups.

Video consultations:

The use of video consultations can reduce the risks associ-

ated with patients having physical contact with the healthcare system and

healthcare providers; this includes reducing the risk of contracting an infection in

the waiting room and on the way to the doctor. This is especially important for el-

derly and vulnerable patient groups. Furthermore, if doctors and healthcare pro-

fessionals become subject to home quarantine, they can continue to see patients

through video consultations.

There is a need to increase the use of video consultations with general practition-

ers, when and where it makes sense for patients. By increasing the use of video

consultations, the risks associated with physical visits to the doctor or home visits

to nursing homes, accommodation and hostels, etc. decreases.

Patient engagement and increased use of telemedicine:

Patient engagement

can be increased by further involvement of the patient in their treatment i.e.

through questionnaires and increased flexibility in the communication before and

after treatment. Furthermore, initiatives will target more widespread use of tele-

medicine, i.e. for internet-based treatment of unease caused by COVID-19.

Strengthen the infrastructure for monitoring of shortages and supply prob-

lems of medicines and side effects of COVID-19 vaccines

The objective is to strengthen the infrastructure for the monitoring of shortages

and supply problems regarding medicines and side effects of the COVID-19 vac-

cines. The initiatives concerning shortages and supply problems of medicines

would complement those initiated on EU-level. The initiatives fall into three dif-

ferent categories:

Infrastructure for monitoring supply chains:

The Danish Medicines Agency

will develop and initiate a wide variety of initiatives to create a robust infrastruc-

ture for the monitoring of shortages and supply problems of medicines. Among

other things, they will operate and further develop an IT-system that provides in-

sight in the pharmacists and wholesalers’ stocks of critical medicine. The system

will allow the Danish Medicines Agency to contact wholesalers preventively when

supply of specific medical products is low which can lower the cases of supply

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failure. Furthermore, the Danish Medicines Agency will establish a national coun-

sel for security of supply. The Counsel will be sharing knowledge between primary

and secondary sector regarding potential shortages and supply problems. The

Danish Medicines Agency will also secure a balanced distribution of critical medi-

cal products between different parts of Denmark to avert hoarding.

Monitoring of the COVID-19 vaccines:

The Danish Medicines Agency is re-

sponsible for monitoring and evaluating the new vaccines as well as processing

the many reports of potential side effects from the vaccines. As the COVID-19

vaccination program is a mass-vaccination program in a scale and pace never seen

before, there is a need to strengthen the overall monitoring of both national and

European reports of side effects of the vaccines to ensure public support for and

trust in the vaccines. Adjacently, there is a need to increase the resources going to

knowledge sharing with other European countries and EMA. There is also a need

for increasing the resources going to inspection of the vaccines. Furthermore, The

Danish Medicines Agency expect, and have already experienced, an extraordinary

amount of reports, and it is of the outmost importance that the reports can be

used swiftly to detect significant side effects. Thus, the Danish Medicines Agency

have extended the use of the IT-system “The side effect web service” to general

practitioners. The IT-system provides automation of reports of side effects, which

will support quicker and better quality reports from general practitioners. Lastly,

the Danish Medicines Agency will invest in real time monitoring of vaccines and

potential side effects through thorough data analysis, which will ensure early iden-

tification of side effects.

Strengthening general emergency planning:

An actual emergency plan con-

cerning medical products was not established until COVID-19. Thus, there is a

need to strengthen the overall emergency planning. This will be done by monitor-

ing crucial incidents, which can affect the general supply of medical products, fa-

cilitating a more flexible emergency management with possibilities of quick reac-

tions to issues, and provide guidance to municipalities and regions concerning

their emergency management plans.

Summary description of the reforms and investments of the

component

2.1.3 Clinical study on effect of COVID-19 vaccines

Addressing challenges:

To further increase the knowledge regarding the effec-

tiveness and side effects of the COVID-19 vaccines. This by examining long-term

effects of the different types of COVID-19 vaccines and improving knowledge on

whether their efficiency depend on population group.

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Objectives:

To measure long-term effects concerning immunity and side effects

of the vaccines. This information can be used to improve the COVID-19 vaccina-

tion program. Furthermore, by examining the effect within different population

groups, the study will grant insight into which vaccines are most efficient for dif-

ferent groups. The study will also result in increased knowledge on the new tech-

nologies utilised in some of the vaccines.

The conduction and the final results of the clinical study will not available until

earliest 2023. The study will be parallel to the pharmacovigilance and will not af-

fect Denmark’s other obligations regarding pharmacovigilance. Important find-

ings from the study could be shared.

Implementation:

The study is designed as an open-labelled, non-randomized,

parallel phase 4 study with a control group based on historical data. The study will

be based on approximately 10,000 trial participants and include a follow-up for

two years after vaccination. The operational components of the study will primar-

ily be undertaken by the two largest hospitals in Denmark (Rigshospitalet and

Aarhus Universitshospital). The hospitals will in association recruit, coordinate

and establish the infrastructure of the study. The collection, storage and analysis

of blood samples will also be conducted by the two hospitals. The hospitals are

supported by an operational steering group consisting of representatives from the

five Danish regions and infectious disease medicines network and a scientific

steering group consisting of several governmental bodies.

Target group:

Recipients of one of the COVID-19 vaccines. Selection will be

based on group characteristics in order to increase the external validity of the

study.

Timeline:

The study will be conducted from 2021 until 2023.

State aid:

It is the assessment, that the initiative is conform with state aid rules.

The funds from the Recovery and Resilience Facility is given to the researchers

conducting the study.

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Do no significant harm:

Table 2.1.1

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure expected to

lead to significant greenhouse gas emissions?

Yes

No Significant negative impact?

X None of the measures are expected to lead to significant greenhouse

gas emissions. The clinical study of the effects and side effects of the

COVID-19 vaccines will be undertaken by the two largest hospitals in

Denmark. The study is likely to increase operations and transport of

e.g. clinical trial subjects, but it is not expected to lead to significant

greenhouse gas emissions.

X None of the measures are expected to lead to an increased adverse

impact of the current climate or on people, nature or assets. As men-

tioned above, the study is likely to increase operations and transport

of e.g. clinical trial subjects, but it is not expected to lead to significant

adverse impact of the current climate and the expected future climate,

on the measure itself or on people, nature or assets.

X None of the measures are expected to have a direct or indirect impli-

cation for the use and protection of water services.

Climate change adaptation: Is the measure expected to

lead to an increased adverse impact of the current cli-

mate and the expected future climate, on the measure

itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of

bodies of water, including surface water and groundwa-

ter; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste

prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incin-

eration or disposal of waste, with the exception of the in-

cineration of non-recyclable hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect

use of any natural resource at any stage of its life cycle

which are not minimised by adequate measures; or

(iii) cause significant and long-term harm to the environ-

ment in respect to the circular economy?

Pollution prevention and control: Is the measure ex-

pected to lead to a significant increase in the emissions

of pollutants into air, water or land?

The protection and restoration of biodiversity and eco-

systems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and re-

silience of ecosystems; or

(ii) detrimental to the conservation status of habitats and

species, including those of Union interest?

X This measure is not expected to harm the transition to a circular econ-

omy, including waste prevention and recycling. Due to the efficiency of

the Danish waste management system, it is not expected that the clini-

cal study will have implications for the circular economy.

X None of the measures are expected to lead to a significant increase

in the emissions of pollutants into air, water or land.

X Pollutants are strictly regulated in Danish environmental laws and this

does not change with the initiatives concerned strengthening the resili-

ence of the healthcare system.

2.1.4 Measures to ensure stocks of critical drugs

Addressing challenges:

To address the challenge of a volatile and erratic global

pharmaceutical market and the uncertainty surrounding the Danish supply of

medicines. Furthermore, to ensure a supply of critical medical products in Den-

mark.

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Objectives:

In order to strengthen the Danish security of supply of medicines,

and thus avoid critical situations with a shortage of important medicine during the

COVID-19 pandemic, Denmark has decided to extend and maintain measures to

ensure strategic stocks of critical medicines in the secondary sector until the end

of 2021.

Implementation:

Amgros (the Danish Regions' procurement organisation) will

ensure a stock that covers three, six and nine months of normal consumption of

all medicine within the secondary sector. The size of stocks depends on the criti-

cality of the drugs as well as signals of international supply difficulties. The list of

critical medicines has been prepared on the basis of input from the clinical phar-

macologists in the regions and includes, although not limited to; medicines for use

in anaesthesia, in intensive care units, antibiotics and medicines for the treatment

of COVID-19.

The funds from the Recovery and Resilience Facility cover the indirect costs of

ensuring the strategic stocks. This includes the costs related to administration and

logistics expenses in relation to procurement, operating expenses regarding the

strategic stocks, as well as the associated risk that the extraordinary purchases of

medicines will lead to increased disposal. The funds will not be used for procure-

ment of medicine.

The Danish Medicines Agency will monitor the stock level. In addition, the Dan-

ish Medicine Agency will follow the development in the world market in relation

to the general security of supply. The Danish Medicines Agency will quarterly as-

sess and report to the Ministry of Health whether there is a need to scale up or

the possibility to scale down inventories. This prevents unnecessarily large stocks

of medicine and ensures that the general supply situation is considered. When de-

ciding the size of the stocks The Danish Medicines Agency will receive infor-

mation from Amgros, the Regions' procurement organisation, which re-distributes

medicine to hospitals, and data regarding the consumption of drugs in hospitals.

Target group:

The stocks will reduce risks of low supply of critical medicines e.g.

patients admitted to intensive care units or treatment of COVID-19.

Timeline:

The initiative covers a temporary setup to manage and ensure strategic

stocks of critical drugs in 2021.

State aid:

It is the assessment that ensuring stocks of critical medicine in the sec-

ondary sector conforms to the state aid rules as Amgros, the regions' purchasing

organisation, is responsible for the initiative. Amgros is already in charge of sup-

plying the Danish hospitals with sufficient medicines via procurement. The funds

from the Recovery and Resilience Facility cover the indirect costs of ensuring the

strategic stocks, e.g. the costs related to administration and logistics expenses in

relation to procurement, operating expenses regarding the strategic stocks, as well

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as the associated risk that the extraordinary purchases of medicines will lead to in-

creased disposal. The funds will not be used for procurement of medicine.

Do no significant harm:

Table 2.1.2

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure expected to lead to

significant greenhouse gas emissions?

Yes

No Significant negative impact?

X None of the measures are expected to lead to significant

greenhouse gas emissions. The measures to ensure strategic

stocks of medicines will to a limited extent increase transport,

but it is not expected to lead to significant greenhouse gas

emissions.

X None of the measures are expected to lead to an increased

adverse impact of the current climate or on people, nature or

assets.

The measures to ensure strategic stocks of medicines will to a

limited extent increase the risk of waste as of damaged or ex-

pired medicines, but the investments in strengthening the man-

agement and monitoring of critical drugs and medicines is as-

sessed to address this issue efficiently.

The sustainable use and protection of water and marine re-

sources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies

of water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste preven-

tion and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or

disposal of waste, with the exception of the incineration of non-

recyclable hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of

any natural resource at any stage of its life cycle which are not

minimised by adequate measures; or

(iii) cause significant and long-term harm to the environment in

respect to the circular economy?

Pollution prevention and control: Is the measure expected to

lead to a significant increase in the emissions of pollutants into

air, water or land?

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience

of ecosystems; or

(ii) detrimental to the conservation status of habitats and spe-

cies, including those of Union interest?

X Certain initiatives, e.g. the measures to ensure strategic stocks

of critical drugs are expected to raise the risk of waste of dam-

aged medicines packages. However, due to the efficiency of the

Danish waste management system and the strengthened man-

agement and monitoring of critical medicines and drugs, it is not

expected that the initiative will have any implications for the cir-

cular economy.

X None of the measures are expected to have a direct or indirect

implication for the use and protection of water services.

Climate change adaptation: Is the measure expected to lead to

an increased adverse impact of the current climate and the ex-

pected future climate, on the measure itself or on people, na-

ture or assets?

X None of the measures are expected to lead to a significant in-

crease in the emissions of pollutants into air, water or land.

X Pollutants are strictly regulated in Danish environmental laws

and this does not change with the initiatives concerned

strengthening the resilience of the healthcare system.

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2.1.5 Digital solutions in the healthcare sector

Addressing challenges:

Slowdown of widespread use of technology because of lack of strategic focus

and political prioritisation of the digital solutions. Risk of COVID-19 leading to a

higher degree of fragmentized ad hoc digitalisation.

Citizens not being able to

participate in video consultations.

Patients should be more involved in their

own treatment, so that the health system interacts with the patient on their own

terms. It is important to put the needs of the patient first in the treatment situa-

tion, as well as to provide more flexible interaction before and after treatment.

Objectives:

Digital solutions in the healthcare sector can shield vulnerable patients and ensure

effective monitoring and triage of patients. COVID-19 has demonstrated that

there is a need for strategic efforts to provide tools for healthcare professionals

and patients that support virtual treatment. The Ministry of Health will further de-

velop and increase the use of these new digital solutions as listed below:

A) Widespread use of digital solutions:

Across the Danish health system, there has been

an extended use of already developed digital solutions and a number of digital so-

lutions, which have been developed due to the COVID-19 pandemic. The success

of this digital transformation is critically dependent on the increasingly widespread

use of digital solutions in the health sector and the resulting development of new

forms of cooperation and models for how health services can be provided.

New technology will also make it easier for patients to take part in their own treat-

ment. Providing the patient with easier access to information enhances the possi-

bility of cooperating on more equal terms with health professionals regarding their

own treatment.

There is a need to ensure progress in and prioritisation of common digital solu-

tions to support treatment and care across the health system. In addition, the ex-

pected acceleration of both pace of treatment and the development of new tech-

nology will foster a growing need to control, prioritise, and coordinate these de-

velopments to maintain a common focus on achieving goals of proximity, higher

quality, and coherence for patients and employees throughout the Danish health

system.

There is also a need for strategic direction and anchoring to ensure the sustainabil-

ity of the initiatives, and to ensure that they support the right long-term priorities

(e.g. overall and coherent infrastructure, the most relevant focus areas etc.).

Therefore, digital efforts must be implemented so that they do not disrupt core

resources in the healthcare system. The Ministry of Health will work to ensure

that the right digital solutions are selected and implemented in collaboration with

relevant actors in the health field.

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B) Video consultations:

During the COVID-19 pandemic, a number of hospitals,

general practitioners, psychologists etc. have made the change from physical con-

sultations to video consultations. In the primary sector, the use of video consulta-

tions has risen. By now, all citizens in Denmark can be offered video consulta-

tions with their general practitioner and private practicing specialist via the app

“MinLæge”.

By expanding existing solutions for video consultations and developing and im-

plementing new solutions, the conversion of physical consultations to video con-

sultations is made possible. In the primary sector (general practice), there has been

an accelerated development of a ”virtual waiting room”, which is a prerequisite

for the primary sector to offer video consultations through the app ”MinLæge”

(MyDoctor). In 2020, 479,649 consultations have been held on the video infra-

structure VDX.

A number of citizens do not have NemID (National electronic identification) and

they can therefore not participate in video consultations with their doctor. This is

especially true of elderly and frail citizens in nursing homes and in home care, as

well as socially vulnerable citizens, etc. Therefore, the Municipality of Copenhagen

has developed a customized version of “MinLæge”, known as “KontaktLæge”.

Through this app, selected municipality workers on e.g. nursing homes can login

with their employee signature on behalf of citizens without NemID so the citizen

can have video consultations with the general practitioner.

It is a prerequisite for the desired change in the healthcare system that employees

and citizens master digital competencies that match their new roles in the

healthcare system. Authorities will therefore work to strengthen the competences

of both citizens and employees to ensure that everyone can benefit from the digi-

tal opportunities.

It is a prerequisite for the increased number of video consultations in the

healthcare system that the video infrastructure, VDX, has sufficient capacity.

Therefore, MedCom is expanding capacity through new server purchases and new

licenses. MedCom is a Non-profit organization financed and owned by The Min-

istry of Health, Danish Regions and Local Government Denmark to facilitate co-

operation between authorities, organisations and private firms linked to the Dan-

ish healthcare sector.

C) Patient involvements and widespread use of telemedicine:

The way in which patients in-

teract with the health system is changing concurrent with digitalisation and the de-

velopment of new digital channels for communication. This paves the way for a

more flexible interaction with the health system, which can consider individual

needs to a greater extent.

For example, telemedicine makes treatment and care of patients possible in or

close to the citizen's own home in a safe environment. Especially due to the

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COVID-19 situation, there is an even greater need for telemedicine solutions that

ensure effective monitoring of citizens' health in their own homes. Citizens must

have more health services closer to home, including via telemedicine solutions and

video solutions, so that citizens' physical contacts and visits to the hospital can be

reduced. Solutions with telemedicine support the need to keep as much distance

as possible and limit physical contact and it can help free up time for the neces-

sary specialised treatment that requires visits. The solutions help to shield vulnera-

ble citizens.

Another example of the many possibilities of telemedicine is the use of electronic

questionnaires in apps, where the patients before or as part of a course of treat-

ment answers questions about their health. The health professionals can use the

patient-reported data (PRO) as part of their assessment of the right treatment.

Hereby, the patient can avoid unnecessary consultations and consultations at hos-

pitals and general practitioners are more efficient.

These types of patient-reported data (PRO) are being integrated into the

”MinLæge” app. All citizens in Denmark can be offered video consultations with

their general practitioner and private practicing specialist via the app “MinLæge”.

The questionnaires can be initiated automatically by the app, e.g. based on age cri-

teria, or initiated manually by the clinic. Based on the patient’s response, the clinic

can ultimately decide whether to book an appointment for the patient to be vac-

cinated against pneumococcus, influenza, etc. The pneumococcus questionnaire is

currently being implemented and tested, while the influenza, as well as a preg-

nancy questionnaire, will be developed and implemented in Q3 and Q4 of 2021

respectively. The PRO-functionality will be further developed, making it possible

to conceptualise and implement new questionnaires as the need arises.

The COVID-19 pandemic has triggered health anxiety in some patients, who may

be isolated in their own homes due to the fear of infection. This greatly affects the

patients' handling of daily chores such as shopping, work and socialising. Funds

are used by the Central Denmark Region in collaboration with Danish Ministry of

Health and Danish Regions. The funds must be used to adapt existing internet-

based treatment program to also include anxiety about COVID-19 and health

anxiety triggered by COVID-19.

Implementation:

The Ministry of Health will organise a dialogue with relevant

actors in the field of health to ensure the implementation and dissemination of

digital initiatives. This involves both the Danish Regions, Local Government

Denmark, The Danish organisation of general practitioners, etc. A roundtable will

be set up to discuss the steps of setting up the relevant stakeholders.

Concerning the extended use of video consultations, the implementation, includ-

ing in particular the spread of KontaktLægen, will take place in close collaboration

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in a small steering group with MedCom and municipalities. MedCom provides im-

plementation support to all municipalities. In addition, a user group will be set up,

which will consist of municipal representatives, data consultants and MedCom.

Concerning the use of PRO regarding pneumococcus, influenza and pregnancy

questionnaire, the implementation are rooted in the steering committee digital

general practice. The steering group involves The Danish Health Data Authority

Danish Regions, MedCom, and the Danish Organisation of General Practitioners.

Their purpose is to strengthen the coherence and quality of treatment in general

practice and to strengthen the digital cooperation between the sectors in the

healthcare system.

Target Group:

Generally citizens who are in contact with the health service, and

particularly vulnerable patient groups.

Timeline:

The initiatives covers 2021-2022 with ongoing implementation.

State aid:

The funds will be allocated by the state directly to regions and munici-

palities, including Danish Organization of General Practitioners. The funds are

held internally within public companies. The funds support a free accessibility of-

fer for citizens in the public health service. The overall assessment is therefore

that the initiative complies with the state aid rules.

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Do no significant harm:

Table 2.1.3

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure ex-

pected to lead to significant greenhouse gas

emissions?

Yes

No Significant negative impact?

X None of the measures are expected to lead to significant greenhouse gas

emissions. With the digital solutions in the healthcare sector, the digital CO2

footprint will not be increased in Denmark. A new calculation from Danish

Chamber of Commerce and Copenhagen Economics also shows that if

every fifth consultation with a general practitioner is handled digitally, it will

save almost 8,000 tonnes of CO

annually in addition to other effects such

as time savings, better service for the user and potential for efficient use of

scarce medical resources. Therefore, telemedicine is a source to lower the

footprint.

X None of the measures are expected to lead to an increased adverse impact

of the current climate or on people, nature or assets.

Climate change adaptation: Is the measure ex-

pected to lead to an increased adverse impact of

the current climate and the expected future cli-

mate, on the measure itself or on people, nature

or assets?

The sustainable use and protection of water and

marine resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological po-

tential of bodies of water, including surface water

and groundwater; or

(ii) to the good environmental status of marine wa-

ters?

The transition to a circular economy, including

waste prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation,

incineration or disposal of waste, with the excep-

tion of the incineration of non-recyclable hazard-

ous waste; or

(ii) lead to significant inefficiencies in the direct or

indirect use of any natural resource at any stage

of its life cycle which are not minimised by ade-

quate measures; or

(iii) cause significant and long-term harm to the

environment in respect to the circular economy?

Pollution prevention and control: Is the measure

expected to lead to a significant increase in the

emissions of pollutants into air, water or land?

X None of the measures are expected to have a direct or indirect implication for

the use and protection of water services.

X This measure is not expected to harm the transition to a circular economy, in-

cluding waste prevention and recycling. Due to the efficiency of the Danish

waste management system, it is not expected that the initiative will have any

implications for the circular economy.

X None of the measures are expected to lead to a significant increase in the

emissions of pollutants into air, water or land. On the contrary, increased

digital consultations and telemedicine are expected to have positive side ef-

fects as time savings, less transport to general practitioners, better service

for the user and potential for efficient use of scarce medical resources.

X Pollutants are strictly regulated in Danish environmental laws and this does

not change with the initiatives concerned strengthening the resilience of the

healthcare system.

The protection and restoration of biodiversity and

ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition5

and resilience of ecosystems; or

(ii) detrimental to the conservation status of habi-

tats and species, including those of Union inter-

est?

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2.1.6 Emergency management & monitoring of critical medical products

Addressing challenges:

The COVID-19 crisis has proved that the infrastructure

of Danish emergency management of critical medical products needs a going over

to tackle the vast challenges presented. The emergency management is particularly

characterised by a lack of coordination and inflexible planning across governmen-

tal bodies, unstable supply of critical medical products and uncertainty of side ef-

fects of COVID-19 vaccines.

Objectives:

The objective is to improve the infrastructure for monitoring short-

ages and supply problems and for monitoring and acting upon potential side ef-

fects of the COVID-19 vaccines, and to strengthen the overall emergency plan-

ning.



Infrastructure for monitoring supply chains:

The Danish Medicines Agency will de-

velop and initiate a wide variety of initiatives to create a robust infrastructure

for the monitoring of shortages and supply problems of medicines. Among

other things, they will operate and further develop an IT-system that provides

insight in the pharmacists’ and wholesalers’ stocks of critical medicine. Fur-

thermore, the Danish Medicines Agency will establish a national counsel for

security of supply. The Danish Medicines Agency will also secure that the dis-

tribution of critical medical products is balanced between different parts of

Denmark to avert hoarding.



Monitoring of the COVID-19 vaccines:

There is a need to strengthen the overall

monitoring of both national and European reports of side effects of the vac-

cines to ensure public support for and trust in the vaccines. Furthermore, the

Danish Medicines Agency have extended the use of the IT-system “The side

effect web service” to general practitioners to detect significant side effects.

Lastly, the Danish Medicines Agency will invest in real time monitoring of

vaccines and potential side effects through thorough data analysis, which will

ensure early identification of side effects. The Danish Medicines Agency will

on a weekly basis provide overviews and a status on how many of the Danish

population have been vaccinated and reports of suspected side effects related

to the COVID-19 vaccines that have been assessed and reviewed.



Strengthening general emergency planning:

There is a need to strengthen the overall

emergency planning. This will be done by monitoring crucial incidents, which

can affect the general supply of medical products, facilitating a more flexible

emergency management with possibilities of quick reactions to issues, and

provide guidance to municipalities and regions concerning their emergency

management plans.

Implementation:

Most of the initiatives will be implemented within the Danish

Medicines Agency. However, the IT-system concerning efficient reporting of side

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effects of the COVID-19 vaccines have been implemented in collaboration with

the Danish General Practitioners Organisation (PLO).

Timeline:

The initiative covers 2021 and 2022.

State aid:

It is the assessment, that the initiative is conform with state aid rules.

The initiatives will be implemented by the Danish Medicines Agency, as such

funds are given from one governmental organisation to another, and covers ad-

ministration, IT-systems and operation expenses.

Do no significant harm:

Table 2.1.4

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure ex-

pected to lead to significant greenhouse gas

emissions?

Climate change adaptation: Is the measure ex-

pected to lead to an increased adverse impact

of the current climate and the expected future

climate, on the measure itself or on people, na-

ture or assets?

The sustainable use and protection of water

and marine resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological po-

tential of bodies of water, including surface wa-

ter and groundwater; or

(ii) to the good environmental status of marine

waters?

Yes

No Significant negative impact?

X None of the measures are expected to lead to significant greenhouse gas

emissions

X None of the measures are expected to lead to an increased adverse impact of

the current climate or on people, nature or assets. On the contrary, the invest-

ments in strengthening the management and monitoring of critical drugs and

medicines is expected to increase the efficient use of medicines.

X None of the measures are expected to have a direct or indirect implication for

the use and protection of water services.

The transition to a circular economy, including

waste prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the genera-

tion, incineration or disposal of waste, with the

exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct

or indirect use of any natural resource at any

stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the

environment in respect to the circular econ-

omy?

Pollution prevention and control: Is the meas-

ure expected to lead to a significant increase in

the emissions of pollutants into air, water or

land?

The protection and restoration of biodiversity

and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condi-

tion5 and resilience of ecosystems; or

(ii) detrimental to the conservation status of

habitats and species, including those of Union

interest?

X This measure is not expected to harm the transition to a circular economy, in-

cluding waste prevention and recycling. Due to the efficiency of the Danish

waste management system and the strengthened management and monitoring

of medicines, it is not expected the initiative will have any implications for the

circular economy.

X None of the measures are expected to lead to a significant increase in the

emissions of pollutants into air, water or land.

X Pollutants are strictly regulated in Danish environmental laws and this does not

change with the initiatives concerned strengthening the resilience of the

healthcare system.

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Green and digital dimensions of the component

Digital transition

The Danish health service is among the most digitalised in the world, and work-

flows at hospitals, GPs and municipal health services are already digitally sup-

ported throughout Denmark. This has improved patient treatment and safety, re-

duced paper-based workflows for employees and made better utilization of the

health systems’ resources possible.

The health system is already undergoing large-scale reorganisations to address the

demographic challenge that Denmark faces. Treatment is being centralised at

fewer, bigger and increasingly specialised hospitals, and more tasks will be per-

formed close to or in the patient’s own home. For example when home care nurse

visits the homes of elderly patients, the nurses can perform an increasingly

amount of more specialised tasks while in with a specialist at the hospital.

During the COVID-19 crisis, the healthcare system has experienced a digital shift.

The crisis has proven that digital technologies are a "driver" in transforming the

healthcare system towards more homebased treatment and care, and with patient

engagement as a key component. A great example of this is the fact that video

consultations were implemented rapidly in general practice through the MinLæge

app in the beginning of the COVID-19 pandemic to make sure that citizens had

access to a video consultation with their own doctor.

The initiatives presented in this component focus on improving conditions for

and extending use of video as a tool for providing care, increase use of PRO-data

and digitalised treatment solutions. The presented initiatives in this component

will not only strengthen the resilience of the Danish healthcare sector, it will also

most importantly pave the way for even further digitalisation of the Danish

healthcare sector, and perhaps in the long term challenge the foundations of how

care is delivered.

Open strategic autonomy and security issues

The initiatives concerning measures to ensure strategic stocks of critical medicine

and strengthening the infrastructure for monitoring supply chains of critical medi-

cine will support the strategic autonomy of the Union as the Danish medicine

supply, and thereby also the EUs medicine supply, will be less sensitive to frail

supply chains caused by COVID-19.

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It should be noted that Denmark can donate a possible surplus of medicines, in-

cluding vaccines, to countries that need help. This is stated in the Act on epidem-

ics

. The act was passed by the Danish parliament on 23 February 2021. In addi-

tion hereto, it is important that the EU legal rules on the distribution of medicines

are complied with, which i.e. includes requirements for the necessary authoriza-

tions under the Medicines Directive (Directive 2001/83).

Do no significant harm

None of the initiatives in this component will do significant harm to the ongoing

efforts concerning climate and sustainable development.

Financing and costs

The costs of the initiatives in the component regarding strengthening of the Dan-

ish healthcare system are listed in

Table 2.1.5:

Table 2.1.5

Cost of initiatives in Component 1: Strenghtening the Resilience of the Healthcare system

M. DKK, 2021-prices

Investment/

reform

Total

102

244

2021

153

2022

2023

2024

2025 Funding from

other sources

120

I. Clinical study on effect of COVID-19 vaccines Investment

II. Measures to ensure stocks of critical drugs

III. Digital solutions in the healthcare sector

IV. Emergency management & monitoring of

critical medical products

In total

Investment

Reform

Investment

Clinical study on effect of COVID-19 vaccines

The total cost of 102 m. DKK in 2021-2023 is comprised of costs to recruitment

of participants, coordination of the study, storage of plasma, serum and living

cells, analysis of antibodies ect. The higher costs in 2021 compared to the

following years are due to initial expenses concerning recruitment and

coordination.

Measures to ensure stocks of critical drugs

The estimated costs are based on the Danish Medicines Agency's dialogue,

regarding estimated costs, with Amgros. The costs for measures to ensure the

stocks in the secondary sector cover administration and logistics expenses in

relation with procurement and operating expenses regarding stocks as well as the

Lov om epidemier m.v. (epidemiloven) - https://www.ft.dk/ripdf/samling/20201/lov-

forslag/l134/20201_l134_som_vedtaget.pdf )

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associated risk that the extraordinary purchases of medicines will lead to increased

disposal, e.g. as a result of several damaged packages or medicine exceeding the

expiration date and falling prices in relation to the purchase price. The drugs will

still be sold at market rate or the hospitals and the costs do not cover

procurement of medice.

Digital solutions in the healthcare sector

The cost of the digital solutions in the healthcare sector is based on the ministry's

many years of experience working with work breakdown structure in digital

initiatives. Early in the COVID-19 phase, for example, the Ministry of Health had

expenses for video consultation, complete development of digital initiatives,

licenses, infrastructure, etc. This also applies to telemedicine solutions. These

experiences are included in the budget for the digital solutions. All the projects

have submitted clear budgets, so it is easy and clear to follow the finances.

The estimated cost to increase the spread of video consultation (KontaktLæge)

are based on the shared experience of the Danish Ministry of Health and

MedCom. The costst cover payroll for employees, activities targeted at the

municipalities so that they can use the app, information material, IT-working on

that the app should be available on at least 2 platforms etc. Furthermore

integrations, development, web app and backend support and general interfaces

are part of the budget on MinLæge.

The estimated costs on patient involvements and widespread use of telemedicine

are based on the shared experience of Central Denmark Region in collaboration

with Danish Ministry of Health and Danish Regions. The costs cover payroll for

employees, especially staff for video diagnostic assessment and 12-week treatment

with psychologist / doctor and service agreements, support, integration, mainte-

nance etc.

Emergency management & monitoring of critical medical products

The Ministry of Health are responsible for ensuring that the granted funds in

2021-2022 are used according to the plan of strengthening the emergency man-

agement of critical medical products. The estimated costs are based on the shared

experience of the Ministry of Health and the Danish Medicines Agency. The costs

cover a temporary increase in the number of staffing, as well as costs for the IT-

system for monitoring stock of critical medical products and IT-consultants.

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Component 2.2

Green Transition of Agriculture and

Environment

Without additional measures to curb emissions, the Danish

agricultural sector will be responsible for more than one third of

the greenhouse gas emissions in Denmark by 2030. Reducing

emissions in the agricultural sector is thus essential to reach the

ambitious target of reducing greenhouse gas emissions by 70 per

cent by 2030.

The initiatives in this component utilise known and effective

instruments to lower greenhouse gas emissions in the agricultural

sector by estimated 0.1 Mt CO

e while minimising the reduction in

production output.

Additionally, significant investments are made in demonstration of

new promising technologies in the agricultural sector, such as so-

called brown biorefining, which has a technical potential for

reductions of greenhouse gas emission by 2 Mt in 2030.

Further, in line with the EU’s Farm to Fork Strategy, environment-

friendly organic farming is promoted in this component. The

initiatives combined will reduce nitrogen emissions by an

estimated 198 tonnes. The RRF funds thus deliver an important

impetus to the green transition of Danish agriculture.

Finally, major investments are made in rehabilitation of the largest

soil- and groundwater polluted hot spots of national concern from

former industrial production. The investments will rehabilitate

industrial sites and land that were contaminated due to

unsustainable production in the past and thereby eliminate the

current environmental risk posed by these sites.

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Description of the component

Box 2.2.1

Green transition of agriculture and environment lowering the emission of greenhouse gasses and

nitrogen

Policy area/domain:

Climate, green transition, agriculture, environment, large-scale contaminations.

Objective:

The objective of this component is threefold:

Green transition:

The proposed initiatives will utilise known and effective instruments to lower greenhouse gas

emissions in the Danish agriculture while minimising the reduction in production output. This aims to reduce

greenhouse gas emissions by estimated 0.1 Mt CO

e by 2030. Further, emissions of nitrogen to coastal waters

will be reduced by an estimated 198 tonnes by 2030. By doing so, the Danish agricultural sector will contribute

to the achievement of Denmark’s climate target, which is to lower greenhouse gas emissions by 70 percent by

2030, as well as to improve environmental conditions. Increased organic farming serves as both a mean to

achieve this target as well as a goal in the green transition of the Danish agriculture sector.

Research and development:

As a supplement to the Danish government’s green research strategy,

significant funds in research and development towards promising tehcnologies in the agricultural sector is

introduced. The aim is to document and demonstrate the greenhouse gas effects of the so-called brown

biorefinement technology. The technology has an estimated technical potential of reductions by 2 Mt CO

e in

2030. That equals around 1/8 of the greenhouse gas emission of the agricultural sector. Hence, research and

development of such new solutions and technologies are key to the green transition of the Danish agriculture

sector – both in reducing national emissions and in showcasing the rest of the world a way for reducing

agricultural emissions without lowering the production output of the sector.

Improving environment:

Production in the past has caused severe pollutions of the environment and

contamination of soil. In some instances chemicals and harmful substances have been emitted directly into

nature. These pollutions are a result of a lack of knowledge about the harmful effect of dumping chemicals into

nature, and the harm it would cause for future generations. In this component investments are made in

rehabilitating industrial sites and land that was contaminated due to unsustainable production in the past.

Examples of reforms and/or investments:

Reforms:



I. Carbon rich soils (660 m. DKK)

Investments:



II. Organic farming (180 m. DKK)



III. Climate technologies in agriculture (200 m. DKK)

IV. Rehabilitation of industrial sites and contaminated land (280 m. DKK)

The total expenses are 1,320 m. DKK.

Main challenges and objectives

2.2.1 Main challenges

The agricultural sector (incl. land use, land-use change and forestry (LULUCF)) is

expected to be responsible for more than 1/3 of the Danish greenhouse gas emis-

sions in 2030, unless additional measures to curb emissions are implemented. Ad-

ditionally, the sector is responsible for appx. 70 per cent of nitrogen emissions to

coastal waters - despite major reductions since the 1990’s. Thus, a central goal of

this component is to draft policies that enable the agricultural sector to contribute

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significantly to the green transition in Denmark. However, the agricultural sector

faces structural challenges and competition, which makes the sector vulnerable to

increases in costs and declines in earnings. This must be taken into account when

designing initiatives to lower greenhouse gas emissions from the agricultural sec-

tor. Therefore, the aim of initiatives targeting the agricultural sector is to reduce

both greenhouse gas and nitrogen emissions while sustaining the sector’s contri-

bution to the Danish economy, employment and social coherence.

This component also focuses on the environmental challenges that production

methods in the past have caused. During the 1950’s and 1960’s, several large com-

panies emitted harmful chemicals into the nature without knowing the conse-

quences. In total, 10 sites in Denmark have been marked as so-called “generation

contaminations” and many of them are not accessible to the public today due to

contamination and the risk of spreading harmful chemicals. Summing up, this

component addresses the following challenges:



Greenhouse gas emissions:

The Danish climate law commits Denmark to achieve a

national 70 per cent reduction in greenhouse gas emissions by 2030 compared

to the emissions in 1990. The agricultural sector is one of the key sectors in

achieving this ambition. Several agricultural sources contribute to the emission

of greenhouse gases, including e.g. production of crops, utilisation of residues

and tributaries from the agricultural production through biorefining, the diges-

tion systems of cattle and handling of manure.



Aquatic environment:

Excess emission of nitrogen to the aquatic environment is

harmful to plants and animals, as it leads to oxygen depletion. Therefore, it is

essential to lower the emission of nitrogen from the agricultural sector, espe-

cially to coastal waters.



Organic farming:

The Danish government has an ambition of doubling the or-

ganic farmland area, doubling the consumption of organic goods, and dou-

bling the export of organic goods by 2030. Research shows that organic farm-

ing reduces emission of greenhouse gas and nitrogen compared to conven-

tional farming. Doubling the organic farmland area in Denmark has the poten-

tial to reduce greenhouse gas emissions by 0.5 Mt CO

e in 2030.



Contaminated land and industrial sites:

Industrial production and disposal of haz-

ardous waste and poisonous substances in the nature during the 1950’s and

1960’s has caused pollution and contamination of soil. The chemicals are still

present in the nature, and a professional and specialised effort is needed to re-

habilitate the areas.

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2.2.2 Objectives



Reducing greenhouse gas emissions:

With the initiatives in this component, the emis-

sion of greenhouse gasses will be lowered by 0.1 Mt in 2030. Furthermore,

steps are taken to provide new technologies, e.g. brown bio refining, with sig-

nificant potentials for further greenhouse gas reductions in the future.



Supporting sustainable farming methods:

The agricultural sector makes up more

than 60 per cent of the Danish land area and will be responsible for 1/3 of the

Danish greenhouse gas emissions by 2030 if further action is not taken. Im-

proving the sustainability of farming therefore has a large potential. With this

plan, investments are made to support, improve and promote the transfor-

mation towards a more sustainable agricultural industry.



Improving environment by rehabilitating contaminated industrial sites:

The rehabilitation

of industrial sites and contaminated land includes removing substantial

amounts of harmful chemicals and hazardous substances from the nature. Re-

habilitation of large contaminated lands is a challenging task that requires spe-

cialised expertise, and the Recovery and Resilience Facility makes it possible to

make the necessary investments. The aim is to provide a significant and lasting

improvement of the environment.

Summary description of the reforms and investments of the

component

2.2.3 Carbon rich soils

Addressing challenges:

The initiative addresses the challenge of land use related

emissions linked to agricultural production. Agriculture plays an important role in

obtaining reductions in greenhouse gas emissions. There exists rather few meth-

ods to reduce emission of greenhouse gasses in the agriculture without lowering

the output of the industry. However, an effective way of reducing the emission of

greenhouse gasses is by taking carbon rich agricultural soils out of production and

restoring natural hydrology. Not only is it beneficial for the climate by lowering

greenhouse gas emissions, the carbon rich soils can also be less productive than

other soils, thereby minimising the loss by taking the soils out of production. In

sum, the measure contributes to a more optimal use of Danish land resources.

Objectives:

The aim of the initiative is to provide a significant reduction in the

emission of greenhouse gasses from the production on carbon rich soils. Further-

more, rewetting and taking carbon rich soils out of production will contribute to a

reduction of nitrogen emission as well. Taking carbon rich soils out of production

is estimated to reduce the emission of greenhouse gasses by 0.1 Mt CO

e by 2030.

Furthermore, the initiative will reduce the emission of nitrogen by 198 tonnes by

2030. The estimated cost of the initiative is 660 m. DKK from 2021 to 2024.

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Implementation:

The initiative will be implemented through existing subsidy

schemes providing support to farmers to rewet and take carbon rich soils out of

production. By doing so, the farmers will be compensated for taking the carbon

rich soils out of production. The Danish authorities will closely monitor the speed

and effects of the initiative. As an integral part of the initiative, land consolidation

will often be a necessity. Land consolidation involves the redistribution of land

parcels between multitudes of actors. In this way, a multitude of benefits can be

achieved (e.g. nature, biodiversity, water quality, land development), depending on

the specific priorities.

Link to reforms:

With the climate law, Denmark has committed itself to reduc-

ing greenhouse gas emissions by 70 per cent in 2030. Furthermore, EU directives

commit Denmark to lower the emissions from nitrogen. Taking carbon rich soils

out of production contributes to both.

Target group:

The target group of the initiative is Danish farmers and landown-

ers owning land containing areas of carbon rich soil.

Timeline:

The subsidy scheme is set to start by 2021 and run until 2024. No later

than 2023, the government will evaluate, whether the subsidy scheme leads to suf-

ficient reduction of the production on carbon rich soils. The evaluation will also

be based on the effect of the current scheme e.g. in 2021.

State aid:

The existing national schemes to take out carbon rich soils are currently

in the process of being state-aid approved (SA.58791 (2020/N)). The measure

funded by the recovery plan will supplement the existing national scheme.

Do no significant harm:

In general, Denmark imposes strict regulation regarding

land use and nature protection. This includes i.e. the Nature Protection Act aimed

at the protection of existing habitats, the Planning Act regulating land use and ac-

tivities. This legislation applies to initiatives such as rewetting of carbon rich soils

in which all projects are subject to an examination of impacts on existing habitats,

surrounding areas, infrastructure etc. This includes an obligation for all authorities

to specifically estimate any potential damage to adjacent Natura2000 areas in ac-

cordance with the obligations in the Bird Protection- and Habitats Directive. Pro-

jects that are assessed not to be in compliance with relevant acts are readjusted or

not executed.

Regarding the control of the funding of specific projects, it is expected that the in-

itiative will be implemented through existing subsidy schemes with existing con-

trol mechanisms. Restored wetlands are permanently secured against conversion.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Table 1.2.1

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure ex-

pected to lead to significant greenhouse gas

emissions?

Yes

No Significant negative impact?

X Rewetting of carbon rich soils is expected to reduce emissions of green-

house gasses. Rewetting of carbon rich soils is expected to reduce annual

emissions by app. 15 tonnes CO

e pr. ha.

As such, the measure is considered compliant with DNSH for climate

change mitigation.

Climate change adaptation: Is the measure ex-

pected to lead to an increased adverse impact of

the current climate and the expected future cli-

mate, on the measure itself or on people, nature

or assets?

X Rewetting of carbon rich soils may enhance natural hydrological dynamics

allowing for improved water retention on an upland scale. The measure is

expected to reduce emissions of greenhouse gasses and therefore will not

increase adverse impact of the current climate and the expected future cli-

mate.

As such, the remediation of contaminated soil is considered compliant with

DNSH for climate change adaption.

The sustainable use and protection of water and

marine resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological po-

tential of bodies of water, including surface water

and groundwater; or

(ii) to the good environmental status of marine wa-

ters?

The transition to a circular economy, including

waste prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation,

incineration or disposal of waste, with the excep-

tion of the incineration of non-recyclable hazard-

ous waste; or

(ii) lead to significant inefficiencies in the direct or

indirect use of any natural resource at any stage

of its life cycle which are not minimised by ade-

quate measures; or

(iii) cause significant and long-term harm to the

environment in respect to the circular economy?

Pollution prevention and control: Is the measure

expected to lead to a significant increase in the

emissions of pollutants into air, water or land?

X Taking out lowland soils lowers emission of nitrogen to the marine waters.

Hence, the measure is considered to support the objective of pollution pre-

vention and control and is considered compliant with DNSH for the preven-

tion and control of pollution to air, water or land.

X In general, the rewetting of carbon rich soils and restoration of peatlands

will have a positive impact on biodiversity. Positive effects are i.a. linked to

the extensification of intensive agricultural activities including fertilisation,

drainage, tillage and the use of pesticides. The reestablishment of natural

hydrological conditions may improve the variation and dynamics between

habitats.

There may be certain situations where habitats such as rich fens may be

subject to an increased exposure to nutrient rich surface water due to in-

creased flood frequency following the reestablishment of natural hydrology.

Project involving the rewetting of carbon rich soils are required to undergo

an examination of consequences including any impacts on existing habi-

tats i.e. in connection to Natura 2000-habitats and KBAs. If negative im-

pacts are identified a project may be subject to a rejection or modification.

The measure is considered compliant with DNSH for the protection and

restoration of biodiversity and ecosystems.

X Taking carbon rich soils out of production reduces emissions of nitrogen to

the marine waters.

The measure therefore supports the improvement of the good environmen-

tal status of marine waters.

The measure is considered compliant with DNSH for sustainable use and

protection of water and marine resources.

X The measure is expected to have no or an insignificant foreseeable impact

on circular economy, including waste prevention and recycling.

The protection and restoration of biodiversity and

ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition5

and resilience of ecosystems; or

(ii) detrimental to the conservation status of habi-

tats and species, including those of Union inter-

est?

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2.2.4 Organic Farming

This component includes four separate initiatives aimed at promoting organic

farming. Promotion of organic farming is ensured by reforming the way in which

public kitchens buy food and, in general, by supporting sustainable organic food

production in Denmark through various initiatives. The initiatives also include

pools for funding of e.g. marketing of organic products, promotion of export, and

development & innovation projects regarding organic products.

Addressing challenges:

Farming of organic produce is often more environmen-

tally friendly than conventional farming. Experience shows that professional

kitchens with a clear aim of serving organic meals often serve more plant-based

meals and, as such, promote a more healthy and sustainable diet. Thus, these initi-

atives address environmental as well as climate change concerns. However, the

awareness of the benefits of organic food production has to be improved, both in

Denmark and globally, in order to make organic food the primary choice of more

consumers, thereby raising demand for organic produce compared to convention-

ally farmed agricultural products. Promotion and marketing of organic food call

for innovative solutions, which are therefore included in this initiative.

Objectives:

The aim of the measure is to incentivise more farmers to make the

transition from conventional to organic farming. The government has an ambition

of doubling the consumption of organic products in Denmark by 2030. The

achievement of that ambition relies on an expected demand-driven rise in con-

sumption of organic products. Promoting organic food and farming helps this

process underway. Moreover, the initiatives will help increase Danish export of

organic agricultural goods. Reaching the target has the potential to reduce green-

house gas emissions in Denmark by up to 0.5 Mt CO

e by 2030.

Implementation:

With the initiatives, investments in transitioning to organic

farming will be increased by investing a further 45 m. DKK per year in 2021-

2024. 10 m. DKK per year will go to an ‘organic innovation centre’, 20 m. DKK

per year will go to ‘The Foundation for Organic Farming’, 10 m. DKK per year

will go to transitioning public kitchens, and 5 m. DKK per year will fund develop-

ment of the plant-based organic sector. The initiatives regarding public kitchens

and the plant-based sector will be implemented as distinct pools of funding within

‘The Foundation for Organic Farming’.

Link to reforms:

In the long term, the reform on transitioning to organic farming

will contribute to the overall target of reducing the emission of greenhouse gasses,

nitrogen, and ammonia. The investments are consistent with the intent set out in

the EU-Commission Farm to Fork and Biodiversity Strategies that target reaching

25 per cent of agricultural land under organic farming by 2030.

Target group:

The target group will be public kitchens transitioning to organic

food, but also farmers and consumers. Through the initiatives initiated by The

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Foundation for Organic Farming, the target group will be households who are ex-

pected to demand more organic food due to the initiatives.

Timeline:

As outlined in the “implementation” section, the initiatives will lead to

an increase in the funding for organic transition by a further investment of 45 m.

DKK per year in 2021-2024. The ambition is that the land area with organic pro-

duction doubles by 2030, and the four initiatives described in this component

contributes to realising that ambition.

State aid:

The proposed initiatives complies with State Aid rules by belonging un-

der the existing aid scheme, which has already been notified (cf. SA.57228

(2020/N)).

Do no significant harm:

In 2007, the EU Council agreed Council Regulation

834/2007 setting out the principles, aims and overarching rules of organic pro-

duction and defining how organic products should be labelled. This Regulation,

still in force, is also complemented by several Commission implementing acts on

the production, distribution and marketing of organic goods. New organic legisla-

tion will enter into force on 1 January 2022. The rules will reflect the changing na-

ture of this rapidly growing sector. The new regulation is designed to ensure fair

competition for farmers whilst preventing fraud and maintaining consumer trust

through strengthening the control system with tighter precautionary measures and

robust checks along the entire supply chain. The regulation for organic agriculture

insures at least one annual inspection of each organic farm is carried out by the

Danish Agricultural Agency.

Organic production is an overall system of farm management and food produc-

tion that combines best environmental and climate action practices, a higher level

of biodiversity, the preservation of natural resources and the application of high

animal welfare standards and high production standards. This is in line with the

demand of a growing number of consumers for products produced using natural

substances and processes. Organic production thus plays a dual societal role,

where, on the one hand, it provides for a specific market responding to consumer

demand for organic products and, on the other hand, it delivers public goods con-

tributing to the protection of the environment and animal welfare, as well as to ru-

ral development.

The Foundation of Organic Farming is a public body which is run by a board of

directors appointed by the minister for food, agriculture and fisheries. The foun-

dation is funded by the Danish government and aims to support the development

and competiveness of the organic agricultural sector. The board is responsible for

the management and for distributing the subsidies in accordance with the law.

The Danish Agricultural Agency performs five accounts of supervision with the

administration of the foundation. This includes account and budget supervision in

addition to the general supervision with the administration, the effects of the

work of the foundation and an annually thematic supervision.

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Given the nature of organic farming, the measure either is contributing substan-

tially or have no or an insignificant foreseeable impact on the relevant environ-

mental objectives. This measure is considered compliant with Do No Significant

Harm for the environmental objectives, and a simplified approach to the Do No

Significant Harm assessment has been taken for the measure.

Table 2.2.2

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure expected to

lead to significant greenhouse gas emissions?

Climate change adaptation: Is the measure expected to

lead to an increased adverse impact of the current cli-

mate and the expected future climate, on the measure

itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of

bodies of water, including surface water and groundwa-

ter; or

(ii) to the good environmental status of marine waters?

Yes

No Significant negative impact?

X Organic farming have decreased greenhouse gas emissions per

hectare field compared to conventional farming.

X Organic farming maintain or increase soil organic matter through

multiannual crop rotation including mandatory leguminous crops as

the main or cover crop for rotating crops and other green manure

crops.

X Nitrate leaching is lower from organic fields than conventional

agricultural fields and far less chemicals are allowed and used for

plant protection. Also organic aquaculture must comply with the rules

set out in the organic EU-regulation.

The transition to a circular economy, including waste

prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incin-

eration or disposal of waste, with the exception of the in-

cineration of non-recyclable hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect

use of any natural resource at any stage of its life cycle

which are not minimised by adequate measures; or

(iii) cause significant and long-term harm to the environ-

ment in respect to the circular economy?

Pollution prevention and control: Is the measure ex-

pected to lead to a significant increase in the emissions

of pollutants into air, water or land?

The protection and restoration of biodiversity and eco-

systems.

Is the measure expected to be:

(i) significantly detrimental to the good condition5 and re-

silience of ecosystems; or

(ii) detrimental to the conservation status of habitats and

species, including those of Union interest?

X The measure is expected to have no or an insignificant foreseeable

impact on circular economy, including waste prevention and

recycling.

X Nitrate leaching is lower from organic fields than conventional

agricultural fields and far less chemicals are allowed and used for

plant protection.

X When converting conventional farms to organic farms the

biodiversity in the margins of the fields increases with around 30%.

Far less chemicals are allowed and used for plant protection.

Because it is existing non-organic farmland that is convertet into

organic farmland the activities do not lead to the conversion,

fragmentation or unsustainable intensification of high-nature-value

land, wetlands, forests, or other lands of high-biodiversity value.

Should the non-organic farms be located in or near to biodiversity-

sensitive areas (including the Natura 2000 network of protected

areas, UNESCO World Heritage sites and Key Biodiversity Areas

(‘KBAs’), as well as other protected areas): their conversion to

organic farming practices do not lead to the deterioration of natural

habitats and the habitats of species and to disturbance of the

species for which the protected area has been designated.

2.2.5 Climate technologies in agriculture

Addressing challenges:

There are few cost-efficient instruments to reduce

greenhouse gas emissions in the agricultural sector without lowering production

output and thereby put farmers under financial strain. In order to sustain a strong,

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modern and green agricultural sector that contributes to the Danish economy,

employment and social coherence, significant funds are allocated to research and

development of new cost-efficient solutions and technologies such as brown bio

refining through the utilisation of pyrolysis technology.

Objectives:

The overall objective is to accelerate the development of new tech-

nologies and solutions that can lower greenhouse gas emissions and, subsequently,

can be included in the Danish National Inventory Report, thereby contributing to

the green transition of the Danish and potentially the European agricultural sec-

tor. With this component, Denmark will further invest in the upscaling of the

most promising technologies on the market, e.g. biorefining using pyrolysis, in-

cluding upstream and downstream technologies and products. The estimated

technical potential to reduce the greenhouse gas emissions in the Danish agricul-

tural sector is 2 Mt CO

e before 2030. The research in new technologies not only

benefits the climate and the environment. It also benefits job creation in Denmark

by contributing to Denmark and thus the EU remaining among the leaders in the

world when it comes to green technologies. Thus, investing in new green technol-

ogies is also an investment in the creation of green jobs in the future. The invest-

ments are additional to other green research and development initiatives that have

been initiated in component 2.7 in the Danish Recovery and Resilience Plan.

The initiative can be categorised as follow-up research of a specific new technol-

ogy to reduce greenhouse gas emissions in the agriculture sector, specifically from

the production of livestock.

Biorefining is a highly promising technology. It is possible to refine different

kinds of biomass into an array of different bio-based products with a sustainable

climate and environmental profile. The refinement of “brown” and “green” bio-

mass is of special interest, where “brown” refers to the utilisation of organic waste

and residue from the agricultural sector by converting it into products such as bio-

char and bio fuels. The Danish Climate Council has estimated that if the prelimi-

nary results hold true, the technology can reduce emissions by up to 2 Mt CO

by 2030. The refinement of “green” biomass refers to converting grass and clover

to proteins for humans and monogastric animals to eat as well as fibres and sugars

for bioenergy and feed for ruminants.

Implementation:

A 200 m. DKK grant financed by the Recovery and Resilience

Facility has been allocated to the initiative in 2021-2022. When implementing the

measure and assigning funds to projects, it will be ensured that there are no over-

laps to the projects on e.g. brown biorefining in component 2.7 of the Recovery

and Resilience Plan. This is to ensure that no projects will receive double funding.

Link to reforms:

The link from the research and development initiatives to the

reforms on green transition is clear. In order to be able to reduce greenhouse gas

emissions in the Danish agricultural sector without reducing production output, it

is necessary to research and test new technologies. At the same time, Denmark

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

has developed a research strategy for green research focusing among other things

on agriculture. In order to reach the goal of reducing greenhouse gas emissions by

70 per cent by 2030 and realise the potential of new technologies, the research and

development effort is essential.

Target group:

The target group is Danish research institutions and other actors

doing research and development on green technologies, which also includes front-

runners from the private sector with regard to the development of brown biore-

finery.

Timeline:

The grant will open for applications in 2021.

State aid:

Investment in support of the development of brown bio refinement

will be implemented based on of existing state aid schemes under GBER with the

reference SA.60955, SA.40175 (GUDP) and SA.61789 (EUDP).

Do no significant harm:

Given the nature of brown bio refining the measure is

considered either as significantly supporting, or to have no or an insignificant

foreseeable impact the relevant environmental objectives. This measure is in gen-

eral considered compliant with Do No Significant Harm for the environmental

objectives, and a simplified approach to the Do No Significant Harm assessment

has been taken for the measure.

Further, the results of the R&D&I process in brown bio refining are considered

technologically neutral at the level of their application and the intended R&D&I

does not involve any form of “brown” R&D&I.

Denmark has implemented relevant directives in national legislation including the

Renewable Energy Directive 2018/2001/EU (REDII), the Air quality Directive

2008/50/EU and the Industrial Emissions Directive (Directive 2010/75/EU). All

applicants are obliged to comply with national regulations and project activities

are subject to inspection by the relevant national authority at local or national

level. Compliance is also accessed administratively by the granting authorities

(GUDP and EUDP) prior to commencement of project activities and upon pro-

ject completion.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Table 2.2.3

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the

measure expected to lead to signif-

icant greenhouse gas emissions?

Yes

No Significant negative impact?

X The measure is expected to support climate change mitigation with a coefficient of 100%

given that the output of the refining process net contributes to sustainable renewable en-

ergy production and carbon sequestration in agricultural soils.

As such, the measure is considered compliant with DNSH for climate change mitigation.

Climate change adaptation: Is the

measure expected to lead to an in-

creased adverse impact of the cur-

rent climate and the expected fu-

ture climate, on the measure itself

or on people, nature or assets?

X The measure is expected to provide for a minor improvement in climate change adaption

given that the recycling of carbon in the form of biochar to the soils will improve agricultural

soils water retention capacity.

As such, the brown biorefining is considered compliant with DNSH for climate change

adaption.

X Today, the handling and utilisation of brown biomass including livestock manure is a sub-

stantial contributor to the emission of nitrate and phosphorus to water and marine re-

sources.

The measure is expected to improve the good status or the good ecological status of fresh

and ground water and to improve the good environmental status of marine waters.

The measure is considered compliant with DNSH for sustainable use and protection of wa-

ter and marine resources.

The sustainable use and protection

of water and marine resources.

Is the measure expected to be detri-

mental:

(i) to the good status or the good

ecological potential of bodies of wa-

ter, including surface water and

groundwater; or

(ii) to the good environmental status

of marine waters?

The transition to a circular econ-

omy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in

the generation, incineration or dis-

posal of waste, with the exception of

the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in

the direct or indirect use of any nat-

ural resource at any stage of its life

cycle which are not minimised by

adequate measures; or

(iii) cause significant and long-term

harm to the environment in respect

to the circular economy?

Pollution prevention and control: Is

the measure expected to lead to a

significant increase in the emis-

sions of pollutants into air, water or

land?

X The measure is expected to substantially support the circular economy within agriculture

given that the input used to a large extent consists of waste and crop residues origination

from agriculture and that a substantial part of the output is recycled as carbon to agricul-

tural soils.

As such, it is considered compliant with DNSH for circular economy, including waste pre-

vention and recycling.

X The measure is expected to reduce emissions of pollutants from agricultural residues and

livestock manures to air, water and land by refining these into usable products in the form

of renewable energy and carbon for sequestration in agricultural soils.

Hence, the measure is considered to support the objective of pollution prevention and con-

trol and is considered compliant with DNSH for the prevention and control of pollution to

air, water or land.

X The measure has no or an insignificant foreseeable impact on the protection and restora-

tion of biodiversity and ecosystems. In this respect, the measure will not lead to activities

involving the conversion, fragmentation or unsustainable intensification of high-nature-

value land, wetlands, forests, or other lands of high-biodiversity value, including highly bio-

diverse grassland.

The measure is considered compliant with DNSH for The protection and restoration of bi-

odiversity and ecosystems.

The protection and restoration of

biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the

good condition5 and resilience of

ecosystems; or

(ii) detrimental to the conservation

status of habitats and species, in-

cluding those of Union interest?

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2.2.6 Rehabilitation of industrial sites and contaminated land

Addressing challenges:

The initiative addresses the challenge of large-scale soil

contamination on ten former industrial sites in Denmark. Due to extensive pollu-

tion from previous production activities on the sites and disposal of waste from

these industries, the contaminated sites constitute a risk for the environment. The

government and parliament agreed that at least five sites, which have already un-

dergone extensive survey, have to be prioritised, cf. the Regional Councils prior-

ity-scheme for the ten sites. However, the Regional Council still needs to survey

the last five sites according to the priority scheme. Remediating the contaminated

soil will remove the risk for harmful effects on surface water, groundwater, hu-

man health and nature in the areas. Some of the ten contaminated sites, which are

located near coastal waters, constitute a risk for the marine environment near the

sites. Rehabilitation of the sites makes recreational use possible in rural areas. Fur-

thermore, rehabilitation of industrial sites and contaminated lands will contribute

to local economic activity and restore the environmental status around the sites.

Objectives:

The aim of the initiative is to initiate the removal of the risk that the

ten large-scale soil contaminations constitute and to rehabilitate the contaminated

lands. Furthermore, rehabilitation of the areas provide a permanent improvement

of the local environment while creating economic activity in rural areas.

Implementation:

The initiative will be implemented by granting a subsidy to the

Danish Regions (administrative entity on regional level) which holds the adminis-

trative responsibility for contaminated soil. The grant will be given on the condi-

tion that the Regions submit a project description in order to ensure cost effec-

tiveness and focus on prioritised areas. In this process, the Danish state and Dan-

ish Regions will examine the possibilities of private co-funding in order to in-

crease the speed of the effort. Furthermore, the government plans to evaluate the

effort in 2023 in cooperation with parliament.

Target Group:

The target group of the initiative is the Danish Regions, in which

the former industrial sites are located.

Timeline:

The Danish government plans to agree on a subsidy scheme with Dan-

ish Regions in May 2021. Immediately thereafter, the Regional Councils begin the

process of prioritising needed actions for the specific sites according to site-status

and characteristics, e.g. prepare tenders, agreeing on terms with contractors. In

2023, the government will evaluate the initiative with parliament and decide on

whether further governmental intervention is necessary in order to ensure the re-

mediation of the contaminated sites. The rehabilitation of the industrial sites and

contaminated land is completed in steps; the first area is expected to be remedi-

ated in 2024, three areas in 2026/27, while the remediation of the last area will be

completed in approximately 2033.

State aid:

The rehabilitation of contaminated land will not constitute state aid in

the sense of Article 107 (1) TFEU since no aid is given to any particular industry.

kom (2020) 0408 - Bilag 9: Danmarks genopretningsplan iht. EU's genopretningsfacilitet

Entrepreneurs and consultants are contracted to do part of the remediation. The

normal regulation of public procurement will cover these cases. The rehabilitation

process will take place under the Act of Contaminated Soil that has been in force

since 2000. The principle in this act is that the polluter should pay for the remedi-

ation process. Public financed remediation does only occur in the cases where is it

not possible to make the polluter pay. The remediation process will reduce the

risk of the soil contamination of ground water, surface water or the present use of

the land. The public financed remediation process is not expected to increase the

value of that particular site, since it does not change the functions that the site can

be used for. If the remediated industrial land is to be developed to a more sensi-

tive use in the future, the development and further remediation of the land for e.g.

housing will be the cost of the property developer.

Do no significant harm:

Table 2.2.4

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the

measure expected to lead to signif-

icant greenhouse gas emissions?

Yes

No Significant negative impact?

X The measure is expected to have no or an insignificant foreseeable impact on climate

change mitigation, since the remediation of soil contamination is expected to be conducted

with in-situ remediation methods.

Hence, a reduction of greenhouse gas emissions is foreseen due to less transport of exca-

vated soil than with ex-site methods and a reduction of heavily contaminated excavated

soil that needs to be treated ex-situ on existing thermic plants constructed for incinerating

non-recyclable hazardous waste/soil.

As such, the measure is considered compliant with DNSH for climate change mitigation

Climate change adaptation: Is the

measure expected to lead to an in-

creased adverse impact of the cur-

rent climate and the expected fu-

ture climate, on the measure itself

or on people, nature or assets?

X The measure is expected to have no or an insignificant foreseeable impact on climate

change adaption given the nature of the measure, which is to remediate contaminated

sites and prevent harmful effects from contaminated soil on e.g. people and nature. The

remediation only last for a limited time and is not expected to lead to an increased adverse

impact of the current climate and the expected future climate.

As such, the remediation of contaminated soil is considered compliant with DNSH for cli-

mate change adaption.

The sustainable use and protection

of water and marine resources.

Is the measure expected to be detri-

mental:

(i) to the good status or the good

ecological potential of bodies of wa-

ter, including surface water and

groundwater; or

(ii) to the good environmental status

of marine waters?

X Today the ten sites of contaminated soil considered in this measure constitute a risk to ei-

ther e.g. surface water, marine water or groundwater.

The remediation of the contaminated sites is expected to remove the harmful effects of the

polluting chemicals and harmful substances, and the measure is expected to support sus-

tainable protection of water and marine resources with a coefficient of 100 per cent.

The measure is expected to improve the good status or the good ecological potential of

bodies of water, including surface water and groundwater, and to improve the good envi-

ronmental status of marine waters. The measure is considered compliant with DNSH for

sustainable use and protection of water and marine resources.

The transition to a circular econ-

omy, including waste prevention

and recycling.

X The measure is expected to have no or an insignificant foreseeable impact on circular

economy, including waste prevention and recycling related to the direct and primary indi-

rect effects of the measure across its life cycle. The activity will be carried out in accord-

ance with Danish environmental legislation on disposal and use of contaminated soil.

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Is the measure expected to:

(i) lead to a significant increase in

the generation, incineration or dis-

posal of waste, with the exception of

the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in

the direct or indirect use of any nat-

ural resource at any stage of its life

cycle which are not minimised by

adequate measures; or

(iii) cause significant and long-term

harm to the environment in respect

to the circular economy?

Pollution prevention and control: Is

the measure expected to lead to a

significant increase in the emis-

sions of pollutants into air, water or

land?

The protection and restoration of

biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the

good condition5 and resilience of

ecosystems; or

(ii) detrimental to the conservation

status of habitats and species, in-

cluding those of Union interest?

The remediation of soil contamination is expected to be conducted with possible in-situ re-

mediation methods with on-site treatment of waste water. It is not expected to lead to a

significant increase in the generation, incineration or disposal of waste. Restoration and re-

establishment of remediated sites is expected to happen in accordance with the surround-

ing environment.

Given the nature of the measure, it is considered compliant with DNSH for circular econ-

omy, including waste prevention and recycling.

X The measure prevents emissions of pollutants from contaminated sites into air, water or

land by remedial measures. Hence, the measure is considered to support the environmen-

tal objective with a coefficient of 100 per cent, and as such is considered compliant with

DNSH for the prevention and control of pollution to air, water or land.

X The activity that is supported by the measure has no or an insignificant foreseeable impact

on this environmental objective, taking into account both the direct and primary indirect ef-

fects across the life cycle. The operation is intended to prevent e.g. harmful effects on na-

ture such as biodiversity-sensitive areas, including the Natura 2000 protected areas and

sustain a good ecological and chemical condition in surface waters. This is in accordance

with Directive 2000/60/EC of the European Parliament and of the Council of 23 October

2000 establishing a framework for Community action in the field of water policy.

The measure is considered compliant with DNSH for The protection and restoration of bi-

odiversity and ecosystems.

Green and digital dimensions of the component

Green transition

The initiatives in this component on promoting a greener agricultural sector and

improving the environment target the climate- and environment challenges from

several angles and perspectives. The initiatives lower the greenhouse gas emissions

from the agriculture sector, which is crucial in realising the Danish climate target

of a 70 per cent reduction. The plan utilises well-known and cost-efficient instru-

ments to lower greenhouse gas emissions without lowering production output.

Furthermore, organic farming is promoted, which targets both greenhouse gas

emissions as well as environmental issues. The initiatives targeted the agricultural

sector lowers the greenhouse gas emissions by 0.1 Mt CO

e in 2030.

The climate action plan also contributes to an improvement of the quality of the

aquatic environment by lowering the emission of nitrogen as carbon rich soils are

not only emitting greenhouse gases. By cultivation they are also more likely to

emit nitrogen into the aquatic environment. Thus, the reform on carbon rich soils

also contributes to improving the aquatic environment. Furthermore, the environ-

ment is improved by rehabilitating industrial sites and contaminated land. This

eliminates the risk of chemicals and hazardous waste being spread into forests or

the sea.

Furthermore, the climate action plan contributes to the green transition by re-

search and development of new technologies, which have the potential of reduc-

ing the emission of greenhouse gasses in the future. This includes documenting

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the effect of existing technologies and scaling up known technologies. Thus, the

investments in research and development contribute to the green transition on a

short-term basis as well as in the long term. The Recovery and Resilience Facility

funding makes it possible to advance investments in green research and develop-

ment and heavily boost investments in green transition promptly. The invest-

ments made possible by the Recovery and Resilience Facility funding will in time

pay off in the form of job creation and constitute a large economic growth poten-

tial. Furthermore, the advancement of research in green technologies will make a

lasting impact on the green transition, as new green technologies will be imple-

mented earlier than what would have been the case without the Recovery and Re-

silience Facility funding.

Digital transition

This component is primarily focused on the green transition. Thus, the digital

transition has been addressed in other components of the Recovery and Resili-

ence Plan. However, there will be focus on a smooth and digital implementation

of initiatives.

Financing and costs

Table 2.2.5

Overview of RRF-funding for the agriculture and environment component

M. DKK, 2021-prices

Carbon rich soils

Organic Farming

Organic transition of public kitchens

Organic Innovation Centre

Plant-based organic projects

Climate technologies in agriculture

Rehabilitation of industrial sites contami-

nated land

In total

Total

660

200

280

1,320

2021

165

100

360

2022

165

100

360

2023

165

260

2024

165

265

2025

The initiative consists of initiatives of 1,320 m. DKK of which all is financed by

Recovery and Resilience Facility.

Table 2.2.5

provides an overview of the funding.

The measures in this component are financed primarily by funds from the RRF

with the rehabilitation of contaminated land being an exemption as it is also partly

financed by government or private funding. The distribution of the CAP is by

April 30 2021 not yet decided upon politically, and therefore it is not included in

the financing of the measures in this component.

Carbon rich soils

The initiative will be implemented through existing subsidy schemes (carbon rich

soil) providing compensation to support farmers rewetting and taking carbon rich

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soils out of production and existing scheme to provide land consolidation

(MUFJO). The cost are based on experience with figures from existing low land

schemes incl. national schemes. Cost pr. hectare: 1) Feasibility studies (9,300

DKK) 2) Project establishment (32,500 DKK) 3) Compensation (86,200 DKK) 4)

Land distribution (5,000 DKK). Total cost on average pr. hectare: 133,000 DKK.

The estimated cost of land consolidation is based on figures from experience with

the existing MUFJO-scheme.

Organic Farming

Funds for the organic sector will be implemented through the Foundation for Or-

ganic Farming. Projects are supported on an annual basis through one-year grants.

An application round is carried out yearly, and the projects are prioritised after the

closing of the round. The Ministry for Food, Agriculture and Fisheries annually

performs account and budget supervision of The Foundation of Organic Farm-

ing. The overall aim is to support the development and competitiveness of the or-

ganic sector by strengthening The Foundation for Organic Farming.

The sales of organic food has risen steadily in Denmark during the past fifteen

years. This budget allocation is similar to the budgets of previous efforts to de-

velop the domestic market for organic food sales in Denmark in The Foundation

of Organic Farming. For this reason, it is expected to be a fitting and effective

budget in regards to the aim of the pool.

Organic transition of public kitchens

Funds for transitioning of public kitchens will be implemented through the Foun-

dation for Organic Farming. The funds will be dedicated to a wide-ranging suite

of educational programmes and support curriculums facilitating the transition to

more organic, healthy and sustainable food in public kitchens.

Organic Innovation Centre

Funds for innovation projects will be transferred to a new Innovation Centre. The

purpose of the Innovation Centre is to conduct research, experiments and devel-

opment within organic agriculture and food and to collect and disseminate

knowledge about organic products to create development for the benefit of the

agricultural sector in a technically, economically and environmentally optimal way

in accordance with good research practice and independent of other interests. The

programs, including project descriptions and budgets, will be approved by the

Danish Agricultural Agency. The overall aim is to support organic innovation pro-

jects that include research, experiments and development of the organic sector.

Plant-based organic projects

Establishment of a yearly pool in 'The Foundation of Organic Farming' that aims

to support the development of a more organic, plant-based food system from

farm to fork.

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Climate technologies in agriculture

The possibility of co-financing from the EU Recovery and Resilience Facility has

contributed to the Danish Government and Parliament decision to increase in-

vestment in research and development in emerging technologies with large poten-

tials for synergy between CO

e reductions in the energy sector and carbon seques-

tration in agriculture and also improved circularity of carbon and nutrients from

agricultural residues and waste.

The measure has been developed in partnership and collaboration with stakehold-

ers, including the Government partnership with industry on climate and will pro-

vide for the establishment of 4-10 research and development facilities including

pilot plants and the associated research and development work.

It is expected that the measure will bring the technology to a stage ready for com-

mercial investment and implementation in 2023 and make a technical potential of

up to 2 Mt of CO

reductions feasible towards 2030.

Rehabilitation of industrial sites and contaminated land

Co-financing from the EU enables Denmarkto speed up the process of cleaning

the large-scale cases of soil pollution in Denmark.

Tabel 2.2.6

Measurable effects of the agricultural reform

Reduction

Mt CO

e per year

2030

Carbon rich soils

Organic farming

Climate technologies in agriculture

Rehabilitation of industrial sites and contaminated land

In total

0.1

Ton N per year

2030

198

The expected costs are estimated by the Danish Regions and are assessed based

on the present knowledge of the different large-scale soil contaminations. The

public clean-up of contaminated soil is the responsibility of the regions. The un-

certainty of costs and time plan is greater for the sites that are in the early stages

of investigation and clean up. Experience shows that costs and time plans will

change during the clean-up process.

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Component 2.3

Energy Efficiency, Green Heating and

Carbon Capture and Storage

To achieve the ambitious EU and Danish climate reduction targets

in the most cost-effective way, energy efficiency improvements

must be accelerated – especially in buildings. As highlighted in the

Commission’s

Renovation Wave,

investing in buildings can also

inject a much-needed stimulus in the construction ecosystem and

the broader economy in alignment with the EU Green Deal and

COVID-19 recovery.

The recovery of the European economy provides a unique oppor-

tunity to invest in a greener future. The Danish focus is to prioritise

measures that will kick-start a green and rapid recovery.

To this end, Denmark has prioritised additional actions, based on

the recommendations by the Danish climate partnerships on en-

ergy efficiency to generate social, environmental, and economic

benefits by stimulating job creation and growth potentials.

Simultaneously, these actions contribute to the green transition by

reducing greenhouse gas emissions by 0.1 Mt CO

e in 2025.

With technical reductions potential of 4-9 Mt. CO

by 2030, carbon

capture and storage (CCS) is a key tool to reach the carbon re-

ductions targets. The development and demonstrations of possi-

bilities to store CO

in depleted oil and gas fields under the North

Sea is a crucial element to secure the full CCS value chain and

holds a potential to store CO

from other EU Member States.

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Description of the component

Box 2.3.1

Energy efficiency, green heating and carbon capture and storage: Follow-up on recommendations

by the Danish Climate Partnerships

Policy area/domain:

Climate policy, energy efficiency, conversion of heat supply, building renovation, construction/housing.

Objective:

The initiatives in component 3 are aligned with the climate partnerships’ recommendations on the green transi-

tion. The initiatives in component 3 furthermore mitigate implications by COVID-19 by stimulating sustainable

growth potentials and job creation. Energy efficiency initiatives and initiatives to promote a green heating sector

will reduce greenhouse emissions by 0.1 Mt in 2025. Other initiatives such as CCS can help foster future poten-

tial reductions.

Local job creation and growth by investing in renovation, energy efficiency and CCS sites:

The financial

impact of the COVID-19 pandemic is mitigated by new investments in renovation and measures to en-

sure energy efficiency in industry, private households and public buildings. The initiatives will increase

the number of local jobs, stimulate local investments, foster the adoption of digital technologies and im-

prove the resilience and energy efficiency of the building stock.

Coherence and resilience:

Energy efficiency measures and renovation of the existing building stock will

improve the indoor environment and reduce energy bills and consumption for consumers and busi-

nesses as well as the public sector. Furthermore, CCS is a prerequisite for reaching net zero emission

targets – national and European – in a cost efficient manner without jeopardizing standard of living and

social equality.

Green and digital transition:

Investments in clean and efficient use of energy, green heating, CCS and

establishment of new development and demonstration programs will contribute to reducing Danish

greenhouse gas emissions by 70 per cent by 2030, compared with 1990, and achieve climate neutrality

by 2050 at the latest. Investments in energy efficiency measures can also encompass investments in a

better digital control of energy consumption in housing and in industry.

Investments to support the objectives



I. Replacing Oil Burners and Gas Furnaces: 645 m. DKK

II. Energy Efficiency in Industry: 315 m. DKK

IIl. Energy Savings in Public Buildings: 315 m. DKK

IV. CCS Storage Potential: 200 m. DKK

V. Energy Efficiency in Households: 565 m. DKK

Estimated costs:

Approximately 2,040 m. DKK in total in the period 2021-2025, of which 100 per cent are covered by the Recov-

ery and Resilience Facility. All of the proposed initiatives are additional and require new funding.

Main challenges and objectives

2.3.1 Main challenges

The green transition requires better solutions, new technologies, and behavioural

changes in various aspects of and across sectors and industries. It also requires im-

plementation of new greenhouse gas mitigation technologies such as CCS. The

challenges mentioned below relate to a segment of these. E.g. conversion of heat

supply and renovation of the existing building stock to make them more energy

and resource efficient.

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Building stock with poor energy rating:

Some of the existing buildings in Den-

mark were built in a time period, where there was less of a focus on energy effi-

ciency. The vast majority of the current building stock will also be in use in 2050.

Therefore, implementation of energy efficiency measures and renovation in exist-

ing buildings can support the efforts to reach the Danish and European climate

targets by reducing energy consumption in buildings and phasing out fossil fuels

for heating purposes. Energy renovations can also reduce the need for new energy

infrastructure and create better buildings through improvements of the indoor cli-

mate.

Usage of fossil fuels for heating:

In Denmark there is a widespread use of dis-

trict heating, which is almost entirely based on renewable energy sources like

wood pellets, wood chips, etc. Some households and businesses use oil burners or

gas furnaces as the main heating source. Households with oil burners are typically

placed in rural areas and small towns with an overrepresentation of low-income

households. It is a challenge to phase out and convert oil burners and gas furnaces

to alternative and green energy sources like heating pumps etc., as it can require

rather large up-front investments.

Carbon Capture and Storage – need for development and demonstration of

storage sites in depleted oil and gas fields:

The Danish government foresees

the use of CCS as a crucial component of Danish climate policy. One current ob-

stacle to this objective is the need for demonstration of possible storage sites for

in depleted oil- and gas fields. This requires further analyses, testing of injec-

tions wells and demonstration of storage possibilities.

2.3.2 Objective

The Danish Government has initiated 13 climate partnerships in cooperation with

key stakeholders from the Danish business community. The objective of the Cli-

mate Partnerships is to help Denmark reach the goal of reducing the greenhouse

gas emissions with 70 per cent by 2030 (compared to 1990). To fulfil this goal, key

stakeholders from a wide range of sectors across Denmark have taken responsibil-

ity and an active role in the partnerships.

The 13 climate partnerships each represent an industry and have presented more

than 400 recommendations to the Danish government altogether. The Danish

government has already implemented many of these recommendations in various

climate deals comprising the government’s climate action plan.

Furthermore, and as part of the ongoing collaboration with the business commu-

nity, the Danish Minister of Finance has asked the climate partnerships to select

the most urgent decisions and initiatives that would help stimulate the economy

by creating new growth potentials and jobs, and at the same time contribute to the

green transition.

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Jobs and growth:

Investing in energy efficient measures and the renovation of

buildings will support the construction sector and subcontractors. Renovation

works are labour-intensive and create jobs temporarily in supported businesses.

Because investments are often rooted in local supply chains, they can furthermore

generate demand for energy and resource-efficient equipment and bring long-term

value to properties. For these reasons, energy efficiency, including the renovation

of buildings, is a priority to support the economic recovery.

There has been great progress and development in heating and insulation technol-

ogies that are used as an integrated part of today’s construction projects that can

be integrated in older buildings, which do not comply with modern energy effi-

ciency standards.

Supporting CCS development and demonstration projects is an important step in

order to create a solid foundation for investments in cost-efficient, operational

storage sites. This holds a significant potential for creating new jobs in e.g. the

transport sector as well as for workers from the traditional oil and gas industry.

Coherence and resilience:

Subsidy schemes targeted at both public sector build-

ings with poor energy labels and energy efficiency measures in the industrial sec-

tor can support the economic recovery across Denmark. The additional funds

from the recovery fund will also promote improvement of welfare institutions and

are expected to be allocated to renovation of e.g. day care institutions, schools,

and hospitals. This will support societal coherence and resilience by ensuring facil-

ities to deliver high quality public services.

Renovation of buildings and conversion to sustainable heating sources will not

only reduce the emissions of greenhouse gases but also reduce energy bills for

households, private enterprises, and public sector building owners. A cost-effi-

cient and environmentally safe green transition is important to ensure civil sup-

port and social coherence.

Furthermore, the demographics of the expected job effects will also contribute to

national coherence and resilience, substituting jobs in the oil and gas sector.

Green transition:

Investments and subsidy schemes targeted energy efficiency

measures, conversion of oil and gas burners to sustainable heating sources and

renovation of households, industries, and public buildings will reduce energy con-

sumption and greenhouse gas emissions.

Preliminary investigation, research, and analyses exhibit promising results for stor-

age in depleted gas fields in the Danish part of the North Sea. This holds potential

for both Danish and European storage.

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In addition, there is a potential for increasing the use of digital tools in order to

ensure optimal operation of buildings and maintenance of building systems as well

as integration of renewables in buildings, which will support the digital transition.

Furthermore, the Danish government will initiate and extend different develop-

ment and demonstration programs that will address the twin transitions and con-

tribute to an even further reduction of greenhouse gases in the coming years

within some of the high-emission sectors and industries such as the transport and

maritime sector.

The policies presented below focus on clean energy supply across the economy

including measures targeted towards industry, production and consumption by:

(i) proposing more ambitious policies and measures;

(ii) substantially increasing the level of ambition for energy efficiency. Thus, the

initiatives are consistent across the different areas of the National Energy and

Climate Plan and lead to further reductions of greenhouse gas emissions.

Moreover, the initiatives delivers on the Country Specific Recommendations, as

Denmark will pursue fiscal policies aimed at achieving prudent medium-term fis-

cal positions and ensuring debt sustainability while also enhancing green invest-

ment. The initiatives will front-load new but mature and green public investment

projects and promote green private investment in order to foster the economic re-

covery. Investments are targeted the green and digital transition, in particular on

clean and efficient production and use of energy.

Summary description of the reforms and investments of the

component

Overall, the Danish government is proposing a subsidy of approximately 2.040 m.

DKK in total in 2021-2025 to increase energy efficiency in buildings and in indus-

try, green heating and CCS.

The subsidies will consist of a number of initiatives supporting a transition to-

wards green energy and an increased energy efficiency in buildings and in industry.

Among these are competitive subsidy schemes related to public sector buildings,

and increased support schemes for replacing oil burners and gas furnaces with

electric heat pumps and district heating to further this goal.

2.3.3 Replacing Oil Burners and Gas Furnaces

Addressing challenges:

Oil and natural gas are sought to be phased out of the

heating system and replaced with electric heat pumps and district heating from re-

newable sources. To speed up the phasing out of oil burners and gas furnaces and

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reduce the cost of consumers of the conversion to green heating, funds are allo-

cated to subsidies for conversions to green solutions. For instance, allocated funds

could be used to subsidize heat pumps.

The initiative follows the objectives of the European Green Deal, which also aims

to expand power production from renewable energy complemented by the rapid

phasing out of coal and by the deployment of an increasing amount of renewables

in the energy system. Moreover, the initiative supports the

Renovation Wave

recom-

mendation of addressing energy efficiency of private buildings.

Objectives:

The aim is to speed up the removal of oil burners and gas furnaces as

heat sources and support the transition to heating based on green and sustainable

sources while simultaneously promoting energy renovations.

The measure supports three subsidy schemes for replacement of oil burners and

gas furnaces. The schemes already exist in Denmark and contain 984 m. DKK

from national funds from 2021-2025 (excluding derived tax loss) with 900 m.

DKK stemming from the climate agreement for energy and industry. The total ef-

fort for phasing out oil and gas boilers in the climate agreement is estimated to re-

duce CO

e emissions by 0.5 Mt in 2025 and 0.7 Mt in 2030.

With the Recovery and Resilience Facility, these initiatives are increased by 645 m.

DKK in the period 2021-2025 (including derived tax loss) to further incentivize

the replacement of heating by oil burners and gas furnaces with renewable energy

sources in residential, commercial and public buildings. This is expected to reduce

e emissions by a further 0.04 Mt by 2025. The complementary Recovery and

Resilience Facility funding will ensure the increased support and thus more green

house gas reductions. Scaling up already an existing scheme with additional funds

is regarded the most cost-efficient use of the funding.

The proposal is also expected to mitigate pollution, create labour-intensive reno-

vation jobs, support local supply chains, while generating demand for highly en-

ergy and resource-efficient equipment, and bring long-term value to properties.

This is achieved by potentially lowering energy bills while boosting the construc-

tion sector and support SMEs and local jobs.

Furthermore, the scaling up of this support scheme accommodates the recom-

mendations of the National Energy and Climate Plan and the Country Specific

Recommendation on particularly focusing investments on clean and efficient pro-

duction and use of energy.

Finally, an existing setup is considered optimal due to the existing state aid allow-

ance. The initial experiences from the introduction of the subsidy scheme for en-

ergy efficiency in buildings in October 2020 show that there has been great inter-

est in the scheme.

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It is expected that an increase of the funds will accelerate the conversion to sus-

tainable heating sources and support energy renovations.

The application of the support scheme for replacing oil burners and gas furnaces

are distributed into the following three sub-schemes:

I. Sub-scheme for district heating (“Fjernvarmepuljen”):

Provides a subsidy to expand dis-

trict heating grids into new areas. Each project earns a subsidy at 20.000 DKK per

converted oil burner or gas furnace that constitute “the minimum connection”.

“The minimum connection” is the number of converted oil and gas heated house-

holds that bring balance in the business economy of the project. The pledge for a

subsidy is given in advance of the physical establishment and the subsidy is paid

based on the actual number of converted households, though not above the

pledge. The subsidy is paid to the district heating companies that redistribute it to

the consumers. It is expected that the subsidy will be used to lower the costs for

those consumers who are connected to the district heating grid, because it can in-

duce a higher connection share to the district heating grid and provide a better

business case for district heating.

II. Sub-scheme for decoupling (“Afkoblingsordningen”):

When decoupling from the gas

network, the Danish state gas distribution company EVIDA charges a fee of ap-

prox. 8.000 DKK to cover the cost of decoupling. With this subsidy scheme, a fi-

nite group of households can be exempted from the fee.

III. Sub-scheme for scrapping (“Skrotningsordningen”):

Gives a subsidy for companies

that offer heat pumps on subscription for private year-round housing. The

scheme is designed to support citizens who wish to convert to a heat pump but

who have limited financing opportunities for example because of low property

values. The subsidy will amount to 25.000 DKK per heat pump.

The initiatives are expected to reduce greenhouse gas emissions by 0.04 Mt CO

in 2025. The decommissioning of the remaining oil burners and gas furnaces must

be considered in the context of the fact that many gas furnaces will still be opera-

tional in 2030. Given the subsidy, more gas furnace owners will have a financial

incentive to convert to district heating or a heat pump when, or even before, the

gas furnace breaks down.

By 2030, there will be few oil burners left, which may be difficult to decommis-

sion. The difficulty arises due to the fact that for the oil burner owners in ques-

tion, there can be a great difficulty and large costs associated with changing the

type of heating, despite large average private economic benefits of replacing the

oil burners.

It is possible for all households to apply for the schemes and the schemes are tar-

geted various income groups. Most oil burners are located in rural areas and small

towns with an overrepresentation of low-income households and low property

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values. The subsidy scheme would make it financially viable for such households

to replace an oil burner, e.g. with a heat pump.

In their priority recommendations to the Danish government, the Climate Part-

nership of energy and supply, production companies, construction and the finan-

cial sector have emphasized that further measures should be taken aiming at indi-

vidual heating and energy efficiency. Increasing the existing pools will accommo-

date this. Moreover, it will comply with the National Energy and Climate Plan and

the Country Specific Recommendation providing clear policies and savings

through this measure to meet the potential for energy efficiency in the sector.

Implementation:

The support schemes will be managed by the Ministry of Cli-

mate, Energy and Utilities in coordination with other relevant ministries.

Funds have been allocated for replacing oil burners and gas furnaces with electric

heat pumps up until 2026, while the funds for district heating are allocated from

2021-2023. This distribution is due to an expectation of the demand for the differ-

ent sub-schemes. Furthermore, it is taken into consideration that it takes time to

expand the district heating network (typically between 1 to 5 years), which means

that it is advisable to focus on expanding this in the early 2020s.

State Aid compliance:

The support scheme for scrapping individual oil burners

or gas furnaces and replacing them with heat pumps is group-exempted from EU

state aid regulations under GBER article 41 regarding investment aid for the pro-

motion of energy from renewable sources (SA.59221).

The Danish Energy Agency has implemented and notified the support scheme for

aid to projects rolling out district heating schemes in accordance with Article 46

of the General Block Exemption Regulation regarding investment aid for energy

efficient district heating and cooling (SA.61697).

The temporary scheme, where households can be exempted from the fee related

to decoupling from the gas system does not constitute state aid within the mean-

ing of Treaty on the Functioning of the European Union, since it targets house-

holds without economic activity on the address in question. It is thus not covered

by EU state aid rules.

Target group:

Remaining households with gas furnaces or oil burners in opera-

tion and residential buildings in need of energy renovation. Households with oil

burners are typically located in rural areas and small towns with an overrepresen-

tation of low-income households.

Timeline:

The additional means will be allocated to eligible applicants from 2021.

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Do No Significant Harm:

Table 2.3.1

Substantive DNSH assessment

DNSHobjective

Climate change mitigation: Is the measure expected to lead

to significant greenhouse gas emissions?

Yes

No Significant negative impact?

X The activities will not lead to significant greenhouse gas emissions.

The replacement of oil burners and gas furnaces with electric heat

pumps and district heating leads to a

reduction

in greenhouse gas

emissions. The measure thus supports this objective substantially.

It should be noted that the subsidy scheme for district heating sup-

ports deployment of district heating grids in new areas – not the

facility producing heat. Furthermore, only energy efficient district

heating grids are eligible meaning they have a heat production

based on at least 50% renewable energy, 50% waste energy or

75% cogenerated heat or 50% of a combination of such energy and

heat.

Climate change adaptation: Is the measure expected to lead

to an increased adverse impact of the current climate and

the expected future climate, on the measure itself or on peo-

ple, nature or assets?

The sustainable use and protection of water and marine re-

sources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bod-

ies of water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

X This initiative is not foreseen to lead to increased adverse impacts

requiring additional climate change adaptation.

X This initiative is not foreseen to affect the ecological state of wa-

terbodies and marine resources.

The transition to a circular economy, including waste preven-

tion and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration

or disposal of waste, with the exception of the incineration of

non-recyclable hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use

of any natural resource at any stage of its life cycle which are

not minimised by adequate measures; or

(iii) cause significant and long-term harm to the environment

in respect to the circular economy?

Pollution prevention and control: Is the measure expected to

lead to a significant increase in the emissions of pollutants

into air, water or land?

The protection and restoration of biodiversity and ecosys-

tems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resili-

ence of ecosystems; or

(ii) detrimental to the conservation status of habitats and spe-

cies, including those of Union interest?

X This initiative is not expected to result in inefficiencies in use of

material or natural resources.

X Significant emissions of pollutants to the environment are not fore-

seen by any of the initiatives or by the activities supported by the

subsidy schemes.

X Adverse effects on biodiversity and ecosystems are not expected

as a result of any of the initiatives including the activities sup-

ported by the subsidy schemes.

2.3.4 Energy efficiency in industry

Addressing challenges:

Green transitioning and energy efficiency of the indus-

try’s fossil production are important elements in the green transition of society.

However, the current incentives for the industry to switch away from the use of

fossil energy and to improve energy efficiency in processes are not fully financially

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sufficient for all companies. Thus, the subsidies are targeted this transition in or-

der to incentivize businesses to convert to more energy efficient processes etc.

The initiative follows the objectives of the European Green Deal, which also aims

to expand power production from renewable energy complemented by the rapid

phasing out of coal.

Objectives:

The initiative will speed up energy efficiency measures and transition

to green energy in industry, and lead to a reduction in greenhouse gas emissions.

The measure supports a subsidy scheme for energy efficiency in industry. The

scheme already exists in Denmark and contains 2,400 m. DKK from national

funds from 2021-2025. It is estimated that these funds will have a CO

e reduction

effect of 0.1 Mt CO

e in 2025 and 0.2 Mt of CO

e in 2030.

The existing subsidy scheme for energy efficiency in industry is supplemented

with an additional 315 m. DKK from the Recovery and Resilience Facility. The

additional funds will help ensure that the full potential for the scheme is reached

in the period 2022-2024 and lead to a reduction of another 0.03 Mt CO

e in 2025

and in 2030. Scaling up an already existing scheme with additional funds is re-

garded as the most cost-efficient use of the Recovery and Resilience Facility fund-

ing.

Furthermore, the scaling up of this support scheme accommodates the recom-

mendations of the National Energy and Climate Plan and the Country Specific

Recommendations as focusing investment on clean and efficient production and

use of energy. In addition, the subsidy scheme for energy efficiency in industry is a

substantial part of the Danish contribution towards fulfilling the national energy

savings requirements of the Energy Efficiency Directive.

The initiative will enhance projects and programmes that ensure long-term value

production while creating labour-intensive jobs, support local supply chains, while

generating demand for highly energy- and resource-efficient equipment. In addi-

tion, it will result in lower energy bills, while boosting the construction sector and

supporting SMEs and local jobs.

In their priority recommendations to the Danish government, the Climate Part-

nership of production companies, construction and the financial sector have rec-

ommended that further measures should be taken to increase energy efficiency,

which is why Denmark is proposing this initiative. Moreover, it will comply with

the National Energy and Climate Plan and the Country Specific Recommenda-

tions, providing clear policies and savings through this measure to meet the po-

tential for energy efficiency in the sector.

Implementation:

The Energy Agency, under the Ministry of Climate, Energy

and Utilities, is managing the subsidy scheme for energy efficiency. The scheme

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targets energy savings in all private businesses and the funds are allocated to the

applicants after a competitive process based on a criterion of highest energy sav-

ings pr. received subsidy. With the Climate Agreement of 2020 projects with a

conversion of fossil fuels to electricity receive a competitive advantage in the allo-

cation process. The maximum level of subsidy is set at 0.07 DKK per saved kWh

over the additional lifetime of the individual savings achieved. In order to receive

the subsidy the applicant must carry out projects that result in energy savings in

the final energy consumption of the applicant company. There are five annual ap-

plication rounds. Businesses will have to apply for support under the scheme prior

to project implementation. Payments are granted subsequent to project implemen-

tation and depends on documented effects.

The Danish subsidy scheme for businesses fulfils the general state aid require-

ments as laid out in chapter III in the General Block Exemption Regulation and

more specifically is reported under Article 38 of the Regulation. The Scheme is

therefore considered compatible with the internal market in accordance with Arti-

cle 107(3) of the Treaty on the Functioning of the European Union and therefore

to be exempted from the notification requirement of Article 108(3) of the Treaty

on the Functioning of the European Union.

Target group:

Private-owned production, trade and service companies, including

agriculture, horticulture and fishery. Subsidies are distributed to projects that re-

duce the overall final energy consumption in Denmark.

Timeline:

The increased support schemes and additional means

will be allocated to eligible applicants from primo 2022.

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Do No Significant Harm:

Table 2.3.2

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure expected to lead to

significant greenhouse gas emissions?

Yes

No Significant negative impact?

X The activities are not foreseen to result in significant greenhouse

gas emissions.

The subsidy scheme for energy efficiency in industry is expected

to reduce greenhouse gas emissions by supporting the conver-

sion from fossil fuels to electricity and projects that reduce the

need for fossil fuels. It therefore supports this objective substan-

tially.

The subsidy scheme does not include subsidy to any invest-

ments that are related to district heating networks.

Climate change adaptation: Is the measure expected to lead to

an increased adverse impact of the current climate and the ex-

pected future climate, on the measure itself or on people, na-

ture or assets?

The sustainable use and protection of water and marine re-

sources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies

of water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

X This initiative is not foreseen to lead to increased adverse im-

pacts requiring additional climate change adaptation.

X This initiative is not foreseen to affect the ecological state of wa-

terbodies and marine resources.

The transition to a circular economy, including waste preven-

tion and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or

disposal of waste, with the exception of the incineration of non-

recyclable hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of

any natural resource at any stage of its life cycle which are not

minimised by adequate measures; or

(iii) cause significant and long-term harm to the environment in

respect to the circular economy?

Pollution prevention and control: Is the measure expected to

lead to a significant increase in the emissions of pollutants into

air, water or land?

X This initiative is not expected to result in inefficiencies in use of

material or natural resources.

X Significant emissions of pollutants to the environment are not

foreseen by the initiative or by the activities supported by the sub-

sidy schemes.

The subsidy scheme for energy efficiency in industry supports

the shift away from fossil fuels and will thus lead to lower air pol-

lution.

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience

of ecosystems; or

(ii) detrimental to the conservation status of habitats and spe-

cies, including those of Union interest?

X Adverse effects on biodiversity and ecosystems are not ex-

pected as a result of any of the initiatives including the activities

supported by the subsidy scheme.

2.3.5 Energy savings in public buildings

Addressing challenges:

Many public buildings are not energy efficient and some

still rely on fossil fuels for heating purposes. Around two-thirds of municipal and

regional buildings have a poor energy performance. In order to strengthen energy

renovations in public sector buildings, the Danish government is investing in en-

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ergy savings in municipal and regional buildings by renovation of schools, retire-

ment homes, nurseries and hospitals etc. and phasing out of oil burners and gas

furnaces.

Thus, this is an initiative in line with the European Green Deal focusing on boost-

ing the efficient use of energy and other resources while also decarbonizing the

energy sector and ensuring energy efficient buildings. Moreover, the initiative sup-

ports the

Renovation Wave

by extending targeted energy efficiency measures in pub-

lic buildings on the municipal and regional level, which are not covered by the ob-

ligations in the Energy Efficiency Directive. This is done by incentivizing energy

renovations of public sector buildings while boosting the construction sector and

supporting SMEs and local jobs.

Objectives:

The measure supports a subsidy scheme of 315 m. DKK, which is

targeted energy savings in public buildings. The subsidy will focus on energy reno-

vations in regional and municipal buildings with the lowest energy performance

certificate standards (D-G) as well as buildings that are heated by oil burners and

gas furnaces. It is estimated that the effort can reduce greenhouse gas emissions

by 0.004 Mt CO

e in 2025 and 2030. The initiative will also help achieving addi-

tional energy savings by 2030 as recommended by the Commission based on the

review of the Danish National Energy and Climate Plan.

Strengthening the opportunities for energy renovations will create labour-inten-

sive building renovation jobs and support local supply chains while generating de-

mand for highly energy and resource-efficient equipment. Additionally, it will

bring long-term value to properties.

This measure is new and not an existing part of the current Danish support

schemes, and will thus depend on Recovery and Resilience Facility funding. It is

regarded as an efficient tool in order to accommodate the recommendations of

the National Energy and Climate Plan and the Country Specific Recommenda-

tions as focusing investment in particular on clean and efficient production and

use of energy.

It has been taken into consideration that buildings with a poor energy perfor-

mance and/or oil burners or natural gas furnaces are the buildings that will benefit

the most from an energy renovation and contribute the most to energy savings

and CO

reductions. Part of the funds will be targeted digital solutions and intelli-

gent control of energy consumption in buildings with energy management systems

based on data.

In their priority recommendations to the Danish government, the Climate Part-

nerships for production companies, construction and the financial sector have

recommended that further measures aimed at energy efficiency should be taken.

The initiative will thus accommodate the partnerships’ recommendation.

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Moreover, it will comply with the National Energy and Climate Plan and the

Country Specific Recommendations providing clear policies and savings through

this measure to meet the potential for increased energy efficiency in the sector.

In addition, a subsidy scheme for energy renovations in public buildings could

also contribute to the fulfilment of the Danish contribution to the energy effi-

ciency obligation in the Energy Efficiency Directive.

Implementation:

The Danish Energy Agency will be managing the subsidy

scheme for energy savings in collaboration with the relevant ministries. The sub-

sidy scheme will be available for all municipalities and regions. The design of the

subsidy scheme for energy savings in existing public buildings at local and regional

level is still under development, including features like the minimum and maxi-

mum grant size for each project. The minimum and maximum grant size will be

set in order to ensure that the renovations will at least be medium-depth level ren-

ovations. The objective for the subsidy scheme is to target, but not limited to,

public infrastructure such as hospitals, schools etc. Among other considerations, it

will be designed to comply with EU state-aid rules etc. As the scheme is limited to

municipally and regionally owned and used buildings, it is considered possible to

implement the scheme so that the subsidy not will constitute State aid within the

meaning of Article 107 (1) Treaty on the Functioning of the European Union.

The covered building stock will be delimited so that the subsidy can only be

granted to energy improvement projects in those of the municipalities and re-

gions' buildings that house activities of a non-economic nature (one of the cumu-

lative criteria in the state aid assessment). It is found possible under state aid law

to determine with sufficient clarity which of the municipalities and regions' activi-

ties that can be considered as economic and non-economic, respectively. As the

vast majority of the municipalities and regions activities are of a non-economic

nature, this is also considered a sustainable solution that should not significantly

reduce the range of the scheme. For the administration of the scheme there will

be developed a non-exhaustive list of activities that will not involve economic ac-

tivity and for which subsidies can be granted.

Target group:

Buildings owned and used by municipalities and regions.

Timeline:

It is expected that a first round of subsidies can be distributed in 2021

and two further rounds will follow in 2022 for the remaining subsidies.

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Do No Significant Harm:

Table 2.3.3

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure ex-

pected to lead to significant greenhouse gas emis-

sions?

Yes

No Significant negative impact?

X The activities are not foreseen to result in significant greenhouse gas emis-

sions.

The subsidy scheme for energy renovations in public buildings are ex-

pected to reduce greenhouse gas emissions and therefore supports this

objective substantially.

The replacement of oil burners and gas furnaces with electric heat pumps

and district heating lead to a reduction in greenhouse gas emissions.

Measures that taget energy efficiency, e.g. insulation of the climate screen

(e.g. new windows), will lower the amount of energy for heating purposes

that the building uses, which especially in the short term will reduce

greenhouse gas emissions.

Climate change adaptation: Is the measure ex-

pected to lead to an increased adverse impact of

the current climate and the expected future climate,

on the measure itself or on people, nature or as-

sets?

The sustainable use and protection of water and

marine resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential

of bodies of water, including surface water and

groundwater; or

(ii) to the good environmental status of marine wa-

ters?

X This initiative is not foreseen to lead to increased adverse impacts requiring

additional climate change adaptation.

X This initiative is not foreseen to affect the ecological state of waterbodies

and marine resources.

The transition to a circular economy, including

waste prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, in-

cineration or disposal of waste, with the exception of

the incineration of non-recyclable hazardous waste;

(ii) lead to significant inefficiencies in the direct or in-

direct use of any natural resource at any stage of its

life cycle which are not minimised by adequate

measures; or

(iii) cause significant and long-term harm to the envi-

ronment in respect to the circular economy?

Pollution prevention and control: Is the measure ex-

pected to lead to a significant increase in the emis-

sions of pollutants into air, water or land?

The protection and restoration of biodiversity and

ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and

resilience of ecosystems; or

(ii) detrimental to the conservation status of habitats

and species, including those of Union interest?

X This initiative is not expected to result in inefficiencies in use of material or

natural resources.

X Significant emissions of pollutants to the environment are not foreseen by

any of the initiatives or by the activities supported by the subsidy schemes.

X Adverse effects on biodiversity and ecosystems are not expected due to

any of the initiatives including the activities supported by the subsidy

schemes.

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2.3.6 CCS Storage Potential

Addressing challenges:

Major CCS activities are essential for realising EU’s am-

bition to reach carbon neutrality by 2050.

A prerequisite to realise the mitigation potential of CCS is that the full value chain

capture-transport-storage is established and early use of CCS as a mitigation tech-

nology in Denmark and Europe is dependent on the implementation of capture

technology and the availability of operational storage sites.

This initiative targets development and demonstration of the technical and eco-

nomic feasibility of CO

storage in depleted oil and gas fields in the Danish part

of the North Sea.

The initiative is in line with the European Green Deal regarding mobilising re-

search and fostering innovation. New technologies, sustainable solutions, and dis-

ruptive innovation are critical to achieve the objectives of the European Green

Deal, and conventional approaches will not be sufficient.

Objectives:

200 m. DKK has been allocated for a subsidy scheme to support the

development and demonstration of CO

storage sites in depleted oil and gas fields

in the Danish part of the North Sea.

Description of initiative/subsidy scheme

While a growing number of countries in Europe realise the need for CCS in their

efforts to reduce greenhouse gas emissions, limited storage capacity may impede

the implementation of CCS for at least the coming decades.

Ongoing investigations and analyses in depleted gas fields in the Danish part of

the North Sea show promising results for storage of CO

and confirm that de-

pleted fields could be well suited for storage. However, further development, test-

ing, and demonstration of CO

storage need to be carried out in order to deter-

mine the technical and financial feasibility before any depleted gas and oil fields

will become operational.

The initiative will support the development and demonstration of CO

storage fa-

cilities in depleted oil and gas fields in the North Sea and its associated infrastruc-

ture development needs.

This is an important first step to secure sufficient long-term capacity for safe stor-

age of CO

from European sources and for the creation of a European infrastruc-

ture for CO

storage.

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Application and allocation

The initiative covers support to the development of one or more demonstration

projects for CO

storage facilities in suitable depleted oil and gas fields in the

Danish part of the North Sea.

The support will not cover investments needed to implement operational CO

storage facilities.

The measure is not an existing part of the CCS support scheme from the Action

Plan for Energy and Industry, and will depend on Recovery and Resilience Facility

funding. However, the use of capture and storage or usage is an essential element

of the Climate Action Plan for Energy and Industry and several Climate Partner-

ships entered by the Danish Government and relevant sectors recommend CCS

and carbon capture and usage (CCU) as important tools to mitigate emissions.

Thus, it is regarded as an efficient tool in order to accommodate the recommen-

dations of the National Energy and Climate Plan and the CSR as focusing invest-

ment in particular on clean and efficient production and use of energy, etc.

Implementation:

The Ministry of Climate, Energy and Utilities in collaboration

with relevant ministries will manage the scheme.

The support scheme for development and demonstration of CO

storage in de-

pleted oil and gas fields is group-exempted from EU state aid regulations under

article 25 regarding research, education and demonstrations.

Target group:

Private companies.

Timeline:

It is expected that subsidies can be allocated in 2021, and 2022 through

yearly allocations of 100 m. DKK each year.

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Do no significant harm:

Table 2.3.4

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure expected

to lead to significant greenhouse gas emissions?

Yes

No Significant negative impact?

X The activities are not foreseen to result in significant greenhouse gas

emissions.

The CCS-initiative will contribute to securing storage capacity for cap-

tured carbon and will not increase greenhouse gas emissions.

X This initiative is not foreseen to lead to increased adverse impacts requir-

ing additional climate change adaptation.

Climate change adaptation: Is the measure expected

to lead to an increased adverse impact of the current

climate and the expected future climate, on the meas-

ure itself or on people, nature or assets?

The sustainable use and protection of water and ma-

rine resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential

of bodies of water, including surface water and

groundwater; or

(ii) to the good environmental status of marine waters?

X This initiative is not foreseen to affect the ecological state of waterbodies

and marine resources. The preparation and demonstration of CO

-stor-

age will happen in depleted gas and oil fields for which extensive EIAs

have been performed. Foreseen activities have a similar character to

those activities carried out today in these areas and will use existing

structures and new major construction is not foreseen.

The transition to a circular economy, including waste

prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, in-

cineration or disposal of waste, with the exception of

the incineration of non-recyclable hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indi-

rect use of any natural resource at any stage of its life

cycle which are not minimised by adequate measures;

(iii) cause significant and long-term harm to the envi-

ronment in respect to the circular economy?

Pollution prevention and control: Is the measure ex-

pected to lead to a significant increase in the emis-

sions of pollutants into air, water or land?

The protection and restoration of biodiversity and

ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and

resilience of ecosystems; or

(ii) detrimental to the conservation status of habitats

and species, including those of Union interest?

X This initiative is not expected to result in inefficiencies in use of material

or natural resources. CCS activities will use existing structures and po-

tentially open possibilities for the reuse of oil and gas platforms.

X Significant emissions of pollutants to the environment are not foreseen

by any of the initiatives or by the activities supported by the subsidy

schemes.

X Adverse effects on biodiversity and ecosystems are not expected due to

any of the initiatives including the activities supported by the subsidy

schemes.

2.3.7 Energy Efficiency in Households

Addressing challenges:

Many residential buildings are not energy-efficient.

The initiative follows the objectives of the European Green Deal which also aims

to expand power production from renewable energy complemented by the rapid

phasing out of coal and by the deployment of an increasing amount of renewables

in the energy system. Moreover, it engages in the

Renovation Wave

by increasing the

renovation rate of private buildings.

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Objectives:

To ensure that residential buildings are renovated and energy effi-

cient and to speed up transition from oil burners and gas furnaces to heat pumps.

The measure supports a subsidy scheme called “the Building Pool”. The scheme

already exists in Denmark and contains 1,623 m. DKK from national funds from

2021-2025 (excluding derived tax loss).

With the RRF the Building Pool is increased by 565 m. DKK to further incentiv-

ize energy renovation and the replacement of heating by oil burners and gas fur-

naces with heat pumps in residential buildings (including derived tax loss). The in-

itiative is expected to result in a reduction of CO

e in 2025 by further 0.05 Mt

CO2. The complementary RRF funding will further ensure the increased support.

Scaling up an already existing scheme with additional funds is regarded the most

cost-efficient use of RRF funding.

The initiative will mitigate pollution, create labour-intensive renovation jobs, sup-

port local supply chains, while generating demand for highly energy and resource-

efficient equipment, and bring long-term value to properties. This is done by po-

tentially lowering energy bills while boosting the construction sector and support

SMEs and local jobs.

The Building pool targets energy savings in private year-round housing. Among

others, the subsidy pool supports insulation of the climate screen and optimiza-

tion of the operation of the building. 60 per cent of the pool is targeted at pro-

jects, which include conversion to heat pumps under the condition that the build-

ing is located outside an area, where it has been decided to establish district heat-

ing. The subsidy rates of the pool are set according to estimated marked prices

and the pool's subsidy ceiling amounts to a maximum of 27.5 per cent of the esti-

mated market prices,

Implementation:

The support schemes will be managed by the Ministry of Cli-

mate, Energy and Utilities in coordination with other relevant ministries. The sub-

sidy scheme for energy savings in existing buildings is implemented in compliance

with the conditions set in the Commission Regulation regarding de minimis aid

(1407/2013).

Target group:

Year-round homeowners. This includes amongst others private

building owners, owner’s associations, cooperative housing associations, public

housing associations, colleges and landlords.

Timeline:

The additional means will be allocated to eligible applicants from

primo 2021 (April).

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Do No Significant Harm:

Table 2.3.5

Substantive DNSH assessment

DNSH objective

Climate change mitigation: Is the measure expected

to lead to significant greenhouse gas emissions?

Yes

No Significant negative impact?

X The measure is not foreseen to result in significant greenhouse gas

emissions.

The replacement of oil burners and gas furnaces with electric heat

pumps and district heating lead to a reduction in greenhouse gas emis-

sions. Measures that alone targets energy efficiency, e.g. insulation of

the climate screen (e.g. new windows), will lower the amount of energy

for heating purposes that the building uses, which especially in the short

term will reduce greenhouse gas emissions.

By reducing greenhouse gas emissions the measure therefore supports

this objective substantially

Climate change adaptation: Is the measure expected

to lead to an increased adverse impact of the current

climate and the expected future climate, on the meas-

ure itself or on people, nature or assets?

The sustainable use and protection of water and ma-

rine resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential

of bodies of water, including surface water and

groundwater; or

(ii) to the good environmental status of marine waters?

X This initiative is not foreseen to lead to increased adverse impacts requir-

ing additional climate change adaptation.

X This initiative is not foreseen to affect the ecological state of waterbodies

and marine resources.

The transition to a circular economy, including waste

prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, in-

cineration or disposal of waste, with the exception of

the incineration of non-recyclable hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indi-

rect use of any natural resource at any stage of its life

cycle which are not minimised by adequate measures;

(iii) cause significant and long-term harm to the envi-

ronment in respect to the circular economy?

Pollution prevention and control: Is the measure ex-

pected to lead to a significant increase in the emis-

sions of pollutants into air, water or land?

X This initiative is not expected to result in inefficiencies in use of material

or natural resources.

X Significant emissions of pollutants to the environment are not foreseen

by any of the initiatives or by the activities supported by the subsidy

schemes.

The measure supports the shift away from fossil fuels, but also from

wood pellet stoves and other biomass boilers for individual heating to

electric heat pumps and will thus lead to lower air pollution.

X Adverse effects on biodiversity and ecosystems are not expected due to

any of the initiatives including the activities supported by the subsidy

schemes.

The protection and restoration of biodiversity and

ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and

resilience of ecosystems; or

(ii) detrimental to the conservation status of habitats

and species, including those of Union interest?

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Green and digital dimensions of the component

Green transition

The initiatives are a part of the Danish government’s climate action plan that aims

for a 70 per cent reduction in CO

e emissions (compared to 1990).

The energy efficiency initiatives contribute with a general reduction in greenhouse

gas emissions by approximately 0.1 Mt CO

eq. in 2025 and in 2030.

The CCS storage site development and demonstration initiative will facilitate early

implementation of CCS as a climate mitigation technology, which in a Danish

context has a technical CO

reduction potential of 4-9 m. tons CO

by 2030.

The initiatives supplement the already existing efforts focusing on a cost-effective

and market-oriented energy savings effort, a national CCS strategy and a national

CCS support scheme under preparation. Together with targeted efforts from busi-

ness, public institutions and private consumers, they have resulted in major sav-

ings in this area.

Energy efficiency efforts will continue to play a role in the overall energy system

although the reductions of greenhouse gas emissions due to energy efficiency ef-

forts will decrease as the share of renewable energy in the energy system is in-

creased. Energy efficiency contributes, among other things, to limiting the system

load associated with the increasing amount of renewable energy and changeable

energy production from, for example, wind turbines. In this way, energy efficiency

can reduce the need for investment in infrastructure and reduce the need for more

space to new wind turbines and solar cells.

Energy efficiency measures also reduces consumption of bio mass for energy pur-

poses, contributes to improved security of supply and supports a more flexible en-

ergy system where demand and supply are more easily matched. By lowering en-

ergy consumption, Denmark:



Reduces the impact on the climate and the environment

Reduces the costs of the green transition

Becomes less vulnerable to fluctuations in energy prices

Increase its security of energy supply

Reduces consumption of fossil fuels and bio mass for heating purposes

The development and demonstration of CO

storage facilities in depleted oil and

gas fields will contribute to the enabling of CCS as a cost effective CO

mitigation

tool. CCS is foreseen to contribute significantly to the achievement of Danish

greenhouse gas reduction targets of 70 per cent in 2030 and net-zero emissions by

2050.

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Further-more operating storage sites for CO

in depleted Danish oil and gas fields

could play an important role in storage of CO

from other EU member states.

Digital transition

The initiatives supports the digital transition. Better management of energy in in-

dustry and buildings through digital control systems can support reductions of

greenhouse gas emissions, while enhancing job creation.

Do no significant harm

The initiatives are in line with the do no significant harm principle. This assess-

ment accounts for the proposed initiatives in the energy efficiency component.

The proposed initiatives provides energy savings, will reduce CO

emissions, and

are not expected to lead to pollution, harm biodiversity etc.

Financing and costs

In many of the pools, the amount of the subsidy schemes are based on an analysis

of the energy savings potential. The amount applied for to the subsidy schemes to

phase out oil burners and gas furnaces is based on an assessment on a combina-

tion of the number of expected applications and the costs of the subsidy.

The assessment of the subsidy size is based on current market prices for the rele-

vant technologies and an assessment of the subsidy size needed to incentivize

possible applicants to e.g. convert from a gas furnace to a heat pump. The assess-

ment of subsidy sizes and criteria for the proposed initiatives for instance per heat

pump, retrofits of buildings etc. will be based on the knowledge and experience of

the Building Pool (“Bygningspuljen”) and the subsidy scheme for energy effi-

ciency in industry (“Erhvervspuljen”) which were both launched in October 2020.

Furthermore, the design of the subsidy scheme builds on the former agreements

on the energy companies’ energy savings effort between the minister for climate,

energy and utilities and the network of distribution companies within the fields of

electricity, natural gas, district heating and oil.

In deciding the size of the subsidy in the district heating pool it has been an im-

portant factor to approximately match the subsidy size for heating pumps so that

the customers will chose the most appropriate source of heating.

In regards to the subsidy scheme for energy savings in public buildings (munici-

palities and regions) the size of the subsidy scheme will fulfil a part of the poten-

tial for energy savings in public buildings. The projects will be prioritised accord-

ing to a principle of the most possible energy savings and a list of eligible energy

improvement measures is drawn up. The subsidy can cover up to 30 per cent of

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the eligible costs of a project in order to give the best incentives to redeem the

most possible energy savings.

The size of the subsidy scheme for development and demonstration of CO

stor-

age is based on the expected needs for support for the development and demon-

stration of at least one storage site.

There are no previous experiences of CO

storage in depleted oil- and gas field,

but current investigations supported by the Danish Technology Development and

Demonstrations Program indicate that an investigated reservoir is suitable. How-

ever, further pre final-investment-decision (FID) studies are needed. Such studies

include tests of possible reuse of infrastructure for on-site storage and proof of

concept for transport and transfer to storage site by ship. Based on results of the

ongoing study, pre-FID costs are estimated at 600 m. DKK. and it anticipated

that a grant scheme of 200 m. DKK will provide sufficient risk coverage for the

development of at least one operational of-shore storage site. Call, evaluation and

disbursement of subsidies shall be part of the Danish Technology Development

and Demonstration Program.

5-7 per cent of the subsidies has been reserved for administration by the Danish

Ministry of Climate, Energy and Utilities covering IT-systems, information and

guidance on the subsidy schemes for relevant applicants and target groups, evalua-

tions etc.

Table 2.3.6

Initiatives in Component 3: Energy efficiency, electric chargers, CCS etc.

M. DKK, 2021-prices

I. Replacing Oil Burners and Gas Furnaces

II. Energy Efficiency in Industry

III. Energy Renovations in Public Buildings

IV. CCS Storage Potential

V. Energy Efficiency in Households

Total

Investment/

reform

Investment

Total

645

315

200

565

2,040

2021

225

150

100

300

775

2022

170

100

150

100

600

2023

125

100

275

2024

105

115

290

2025

100

Funding from

other sources

981

2,400

1,623

5,004

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Component 2.4

Green Tax Reform

With the first phase of the Green Tax Reform, energy tax rates on

fossil fuel use are increased for industries to ensure a greenhouse

gas reduction by 0.5 Mt in 2025. The second phase is to introduce

a uniform carbon tax.

The Recovery and Resilience Facility funding ensures financing

for the first phase and a just transition for affected companies.

Tax deductions will provide a window of opportunity for increasing

investments in green and digital production capabilities, ensuring

that companies have the incentive and the opportunity to prepare

for increased and harmonised carbon taxation.

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Description of the component

Box 2.4.1

Green Tax Reform

Policy area/domain:

Tax reform, uniform tax on greenhouse gas emission, energy taxes, green and digital transition in production, climate

policy, investment in new technologies and job growth, avoid carbon leakage.

Objective:

The objective of this component is threefold:

1. Uniform tax on greenhouse gasses:

One of the most cost-efficient ways of regulating greenhouse gas

emissions is by imposing a uniform tax on emissions of CO

e. However, imposing a uniform tax on greenhouse

gas emissions is not technically possible in the short run. Thus, reforming the tax system to ensure the right

incentives to reduce greenhouse emissions will run in multiple steps. The green tax reform is the first step in the

making of a uniform tax on greenhouse gases, as it looks into leveling the differences in pollution taxes from

sector to sector.

2. Frontloading investments in the green and digital transition:

This component will promote the green and

digital transition by introducing stronger incentives for companies to reduce their emissions of greenhouse

gasses. Thereby, the Green Tax Reform is the first step towards a more even regulation of greenhouse gas

emissions across sectors. Furthermore, the reform aims at ensuring a just transition for the most affected

companies by creating strong incentives for frontloading investments in new and greener technologies. One of

the challenges of green and digital investments is that the up-front costs are high and the return on investment

comes in the future. The Green Tax Reform will address this issue by creating an investment window for

companies. This will provide a basis for green and digital growth in the future while avoiding carbon leakage.

3. Job creation:

The tax reform aims at immediate job creation, creating jobs related to the green transition as

companies are expected to invest in more green and digital production capabilities preparing them for the

increased carbon taxation. The first phase of the tax reform is estimated to create 2,400 jobs in 2021, 4,700 jobs

in 2022 and 1,000 in 2023, thereby providing a large contribution to driving unemployment rates down fast.

Examples of reforms and/or investments:

Reforms:



I. Emission taxes on industries: -410 m. DKK (2023-2025)

II. Expert group to prepare proposals for a CO

e-tax: 6 m. DKK

Investments:



III. Investment window: 3,029 m. DKK

IV. Accelerated depreciation: 1,280 m. DKK

Estimated cost:

Approximately 4 bn. DKK over the period 2021-2025, of which 96 per cent is covered by the Recovery and Resilience

Facility, as 6.5 per cent of the costs for the investment window initiative is not covered by the Recovery and Resilience

Facility (to ensure compliance with the DNSH-principle). The Green Tax Reform will generate fiscal losses in all years

until 2029 (due to the tail expenditures in the investment window and the depreciation allowance). However, Denmark

is only applying for the Recovery and Resilience Facility to cover the fiscal losses up until 2025. From 2029 the in-

creased taxes on emissions will be larger than the tax expenditures, but the political parties in Parliament have agreed

that any tax surplus will be redirected back to the firms most affected by the increased taxation on fossil fuels.

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Main challenges and objectives

2.4.1 Main challenges

The emissions from industry and services account for about 20 per cent of the to-

tal emissions in Denmark. Therefore, ensuring a green transition and reduction in

greenhouse gas emissions in industry is essential. One efficient tool to achieve that

is a tax reform making it more expensive to emit greenhouse gasses while sup-

porting businesses in making investments in new green technology. The main

challenges in this transition are highlighted below:



Reducing greenhouse gas emissions:

The Danish government has an ambitious target

of reducing greenhouse gas emissions by 70 per cent by 2030. One way of fur-

ther reducing greenhouse gas emissions is by creating incentives for compa-

nies and the industry sector through changes in the tax system. However, im-

posing taxes on companies potentially harms the competitiveness of the com-

panies and poses a risk of carbon leakage. Carbon leakage refers to a transfer

of production to other countries with fewer emission constraints. Thus, a tax

reform has to balance making a strong financial incentive to reduce emissions

and mitigating loss of competitiveness, carbon leakage and other interests.

Maintaining high competitiveness for Danish companies:

The current taxation of emis-

sions is rather unevenly distributed as emissions in some sectors/types of pro-

duction processes are taxed significantly harder than emissions in others.

However, a uniform CO

e-tax in all sectors is not technically feasible in the

short run. A uniform CO

e-tax will affect the competitiveness of especially the

e- and energy-intensive companies. Thus, future steps in reforming the

tax system will need to provide measures that support the transition, while

maintaining the competitiveness of the Danish companies. In the first step,

this is achieved by phasing in the increased energy taxation while providing

large investment support in a transition period. A large share of this invest-

ment support is expected to be covered by the Recovery and Resilience Facil-

ity. The Danish government has committed to refunding all tax revenue from

the green tax reform to businesses.

Incentivizing businesses to increase green investments:

The green transition is a large

expenditure for businesses and investing in new green technologies has high

up-front costs. Currently, Danish businesses invest in the green transition, but

the large costs leads to a potential loss of competitiveness in the short run.

Therefore, this component aims at speeding up the green transition in prepa-

ration for a higher CO

e-tax by increasing green investments, resulting in an

immediately greener production with a lasting effect on the climate. Moreover,

green investments creates jobs in the short run and ensure a green recovery of

the economy.



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2.4.2 Objectives

The component is in line with the Country Specific Recommendations for Den-

mark, which recommend Denmark to invest in the green transition. The tax re-

form specifically aims at lowering greenhouse gas emissions from Danish busi-

nesses. This will be achieved through a variety of changes in the incentive struc-

ture for Danish businesses focusing on incentivizing businesses to emit fewer

greenhouse gasses as well as increasing investments in new green technologies.

Funding from the Recovery and Resilience Facility ensures frontloaded invest-

ments in green and digital production while maintaining companies’ competive-

ness.



Uniform tax on greenhouse gases will reduce emissions:

The current taxes on green-

house gasses differ widely across sectors and usage, and the most energy-in-

tensive companies are offered different rebates related to fossil energy con-

sumption/emissions of carbon dioxide. A sufficiently high and uniform tax on

greenhouse gas emissions will ensure that the climate target for national emis-

sions is met at the lowest costs. However, there will be both technical difficul-

ties and large consequences for business, if the phase-in is not gradual and

well thought out. Therefore, it will require multiple steps to phase in a new tax

system with a uniform tax on greenhouse gas emissions.

Being socially just and balanced:

A green tax reform will also have to consider so-

cial equality. As the government imposes a tax on companies that produce

goods or services, customers could potentially end up bearing the cost. The

first phase of the green tax reform is expected to have no negative distribu-

tional impacts and the Danish government is committed to ensure that this

will also be the case for the following phases.

Investment window will ease companies’ transition to clean energy and boost growth poten-

tials:

The tax reform implies temporarily increased tax deduction for compa-

nies investing in capacity costs, e.g. technology and software that can help in-

crease business operations, and at the same time reduce greenhouse gas emis-

sions. The investment window will not include machinery running on fossil

fuels to ensure a green transition of industry and compliance with the “do no

significant harm” principle. The investment window will boost the companies’

growth potential and job creation, while encouraging companies to invest in

new hardware and technology that can reduce emissions in the longer run.

The investment window will moreover help ease leakage problems.



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Summary description of the reforms and investments of the

component

The tax system is one of the most efficient instruments in creating incentives for

citizens and businesses to lower greenhouse gas emissions. However, fundamen-

tally reforming the tax system is not done overnight. That is why a broad parlia-

mentary coalition, consisting of three fourths of the Danish parliament, has made

a politically binding agreement to enact a Green Tax Reform in two phases. Phase

1 will take the initial steps of redirecting current energy taxes towards CO

-emis-

sions. Phase 2 will fundamentally rewrite the tax code by introducing a broad tax

on all greenhouse gas emissions including the non-energy related emissions in the

agricultural sector. The ambition is that the second phase will be the determining

factor in delivering a 70 per cent reduction in Danish emissions in 2030 compared

to 1990.

With the first phase of the Green Tax Reform, which will assist Denmark in re-

covering from the COVID-19 recession, strong incentives are created for compa-

nies to immediate invest in green and digital technology. This will lead to an in-

crease in demand and a rise in employment as well as a reduction of greenhouse

gas emissions and further the digitalization of the Danish society. The first phase

of the Green Tax Reform will lower greenhouse gas emissions by 0.5 Mt by 2030.

This is done by increasing the taxes on industry's process fossil energy. The inten-

tion is that this initial increase in fossil energy taxation will be directly targeted at

the CO

-content of the different fossil fuels before the Green Tax Reform moves

to the second phase. To ease companies’ transition to clean energy, boost growth

potentials, and prepare for a higher carbon tax, the reform also implies an in-

creased tax deduction for companies investing in capacity costs, e.g. technology.

This investment window will not include machinery running on fossil fuels to en-

sure a green transition of industry and compliance with the “Do No Significant

Harm” principle. The investment window will boost the companies’ growth po-

tential and job creation, while encouraging companies to invest in new hardware

and technology that can reduce emissions in the longer run.

The first phase of the Green Tax Reform is primarily financed by Recovery and

Resilience Facility funds making a fast, just, and green transition possible while

avoiding carbon leakage.

To prepare for the second phase of the Green Tax Reform, an expert group

has

been established. This expert group will draw the road map for the next phase of

e taxation in a manner consistent with protecting Danish competitiveness, so-

cial balance, and minimizing leakage. The ambition is to make a comprehensive

See

https://www.skm.dk/media/8328/kommissorium-for-groen-skattereform.pdf

for the terms of refer-

ence and composition of the expert group.

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tax reform with a higher and harmonised CO

e-tax on all emissions. This will re-

quire significant development work, especially with regard to emissions that are

not currently subject to tax.

The funding from the Recovery and Resilience Facility primarily covers the costs

of Phase 1 of the Green Tax Reform, but also paves the way for Phase 2 by cov-

ering the expenses for the expert group that will draw up a road map for higher

and harmonised taxation of greenhouse gas emissions. The Recovery and Resili-

ence Facility has therefore made it possible to implement a green tax reform that

will lead to massive cost effective reductions of greenhouse gas emissions, but in a

socially just and balanced way, where Danish companies are able to maintain their

high competiveness and avoid carbon leakage. Funding from the Recovery and

Resilience Facility is thus instrumental in ensuring a green transition of the Danish

society in line with the Paris Agreement.

Reforms

2.4.3 Emission taxes on industries

Addressing challenges:

Denmark has an ambitious target of reducing green-

house gas emissions by 70 per cent in 2030 compared to 1990. Increasing the

taxes on emission will provide a financial incentive to reduce emissions. The in-

dustry energy taxes on fossils are relatively low, thus increasing these can provide

cost-efficient reductions of greenhouse gases. It is one of the recommendations in

the EU Green Deal that well-designed tax reforms can help boost economic

growth and resilience to climate shocks and providing the right incentives for sus-

tainable behaviour by producers.

Objectives:

Uniform tax rates on all CO

e emissions will be the most cost-effec-

tive way to reduce CO

e emissions. In the current tax system, the level of CO

taxation is uneven. The charges for emissions in transport are very high. There are

also high taxes on emissions from households and industry's heating, while the

taxes on emissions from production are relatively low. In addition, non-energy-re-

lated CO

emissions from, e.g. agriculture are not covered by taxes.

The Danish government and a broad coalition of parties have agreed on the

Green Tax Reform, which in the short term consists of an increase in taxes on in-

dustry' process fossil energy, which has comparatively low taxes currently. With

the first stage of the tax reform, the Danish government has increased the process

energy tax by DKK 6 / GJ/ app. 100 DKK/ton CO

. The model raises the fossil

energy taxation for all industries equally. Consequently, the existing differentia-

tions in the energy tax rates for companies will be maintained in 2025, but at a

higher level for all industries. The model is estimated to entail a CO

reduction of

0.5 Mt in 2025.

Moreover, the initiative complies with the recommendations for Denmark in the

National Energy and Climate Plan and the Country Specific Recommendations to

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promote a green tax reform while ensuring a just transition for the most affected

companies.

The second phase of the Green Tax Reform will entail a comprehensive tax re-

form with a high and harmonised CO

e tax on all emissions. This will require sig-

nificant development work, especially in regard to emissions that are not currently

subject to tax. This includes tax-exempt emissions such as oil extraction and refin-

ing, as well as agriculture's non-energy-related emissions. In addition, a high and

harmonised tax will have a number of consequences, including large shifts in the

business structure, carbon leakage in all sectors as well as distributional and fiscal

effects. These elements will need to be considered carefully, before it is possible

to implement a uniform CO

e tax on all emissions. Therefore, the full and com-

prehensive Green Tax Reform will be implemented in several stages and spread

over a number of years.

Implementation:

The tax increases are phased in gradually from 2023 to 2025.

The increase for mineralogical processes and agriculture is expected by 2025.

State aid:

The gradual increase of the taxes is to be implemented from 2023, and

the Danish tax authorities will ensure that the State aid rules and the Energy Taxa-

tion Directive are complied with. If relevant, it will be done on the basis of a dia-

logue with the Commission.

Target Group:

The first phase of the tax reform cover fossil energy emissions in

business used for processing. The next phase is targeted to cover all Danish com-

panies, uses and industries.

Timeline:

A politically binding agreement has been concluded on 8 December

2020. The tax increases will be phased in gradually from 2023.

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Do No Significant Harm:

Table 2.4.1

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to

significant greenhouse gas emissions?

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of

water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of

ecosystems; or

(ii) detrimental to the conservation status of habitats and species,

including those of Union interest?

No – the first phase of the Green Tax Reform, of which

the increased emission tax on industry is a part, has no

implication for the waste handling or the circular econ-

omy.

Yes

No Significant negative impact?

On the contrary – Increasing the emission tax on indus-

try will lower carbon emissions.

On the contrary – Increasing the emission tax on indus-

try will lower carbon emissions.

No – increasing the emission tax on industry has no

negative implication for the use and protection of water

services.

No – pollutants are strictly regulated in Danish environ-

mental laws and this does not change with the Green

Tax Reform.

No – the measure has no implication for the protection

and restauration of biodiversity and ecosystems.

2.4.4 Expert group to prepare proposals for a CO2e-tax

Addressing challenges:

The Danish government has an ambitious target of re-

ducing greenhouse gas emissions by 70 per cent by 2030 compared to 1990. A

cost-effective way to ensure reductions of greenhouse gas emissions is by creating

incentives for companies, consumers, and the industry sector through changes in

the tax system. However, imposing taxes on companies potentially harms the

competitiveness of the companies and poses a risk of carbon leakage. To assist in

designing a reform that best address these challenges, an expert group

of leading

researchers and practitioners will help draw up proposals of a broad CO

e-taxa-

tion.

Objectives:

To draw up proposals for the development of a uniform CO

e regu-

lation. The expert group will therefore help draw the road map for the second

phase of CO

e taxation in a manner consistent with protecting Danish competi-

tiveness, social balance, and minimizing leakage.

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The expert group will assess the advantages and disadvantages of a regulatory so-

lution for the agricultural sector and a CO

e tax. The expert group will also pro-

pose possible ways to construct compensation mechanisms, including, for exam-

ple, deductions, but also other possible mechanisms. The expert group will also

describe possible phase-in profiles and compensation mechanisms, including for

the 2023-2025 period.

Implementation:

The expert group has been established in January 2021 and

consists of five members who are the leading experts within CO

e-regulation. The

group is supported by a secretariat of public officials.

State aid:

An expert group has been established to make recommendations for a

uniform CO

e tax. This expert group has no links to state aid compliance.

Target Group:

All Danish CO

e emitters.

Link to reforms:

The expert group will help deliver on the Danish target of re-

ducing greenhouse gas emissions by 70 per cent by 2030 compared to 1990 in a

manner consistent with protecting competitiveness, social balance, and minimis-

ing leakage.

Timeline:

The expert group will deliver their first report at the end of 2021 de-

tailing the suggested principles of an effective, efficient, and socially just CO

e-tax

model. The first report will furthermore give practical guidance on how to trans-

form current energy-taxation to a more CO

e-targeted model. The group will de-

liver their second and final report in the fall of 2022, which details different sce-

narios for CO

e-taxation, covering all emissions including non-energy emissions

from farming. The group will detail the trade-offs between minimising the eco-

nomic cost of CO

e reductions and minimising leakage, ensuring social balance

and keeping Danish firms competitive.

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Do No Significant Harm:

Table 2.4.2

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to

significant greenhouse gas emissions?

Yes

No Significant negative impact?

On the contrary – the establishment of an expert group

is an important part of the second phase of the Green

Tax Reform. The expert group is tasked with drawing up

a roadmap for a comprehensive tax reform with a high

and uniform CO

e tax on all emissions. Such a tax re-

form can be expected to be an important driver of emis-

sion reductions.

On the contrary – the establishment of an expert group

is an important part of the second phase of the Green

Tax Reform. The expert group is tasked with drawing up

a roadmap for a comprehensive tax reform with a high

and uniform CO

e tax on all emissions. Such a tax re-

form can be expected to be an important driver of emis-

sion reductions.

No – the establishment of an expert group as a part of

the Green Tax Refom has no negative implication for

the use and protection of water services.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of

water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of

ecosystems; or

(ii) detrimental to the conservation status of habitats and species,

including those of Union interest?

No – the first phase of the Green Tax Reform has no im-

plication for the waste handling or the circular economy.

The second phase – of which the establishment of an

expert group is a part - aims to lower all carbon emis-

sions.

No – pollutants are strictly regulated in Danish environ-

mental laws and this does not change with the establish-

ment of the Green Tax Reform.

No – the measure has no implication for the protection

and restauration of biodiversity and ecosystems.

Investments

2.4.5 Investment window

Addressing challenges:

The European economies have been highly affected by

the COVID-19 crisis. The economic situation continues to be challenging and

highly uncertain and will remain so for some time. To address these challenges

and underpin the green transition, the investment window will frontload and in-

centivise companies’ investments in a green and digital transition but also mitigate

the economic consequences and unemployment.

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Objectives:

The Danish government has together with other political parties,

forming a comfortable majority in the Danish parliament, agreed to increase the

depreciation basis for investments in fixed assets (machinery, equipment, software

etc.) by a further 16 per cent of the investment cost. This applies to investments

made from November 23 2020, and in 2021 and 2022. The initiative will entail an

additional cost of 3.2 bn. DKK over the period 2021-2025 of which 3.0 bn. DKK

is financed by the Recovery and Resilience Facility while 0.2 bn. DKK is financed

by national funds.

Investments in machines that are or can be powered by fossil fuels are not cov-

ered by the investment window. Fossil fuels includes coal, petrochemicals, natural

gas, and liquefied petroleum gas. In addition, cars for passenger transport and

ships are not included in the investment window. This means that when purchas-

ing these machines and cars, the company will not benefit from the additional de-

preciation right.

However, it is possible to use the investment window on fossil driven non-pas-

senger vehicles (trucks and vans). This is due to the fact that there are no or very

limited non-fossil alternatives to fossil vans and trucks etc. yet. At the same time,

changing an old truck to a new model will increase the energy efficiency as the

available new models are more energy efficient than the old ones.

It is estimated that 6.5 per cent of the investments through the investment win-

dow will be in non-passenger vehicles. In order to ensure full compliance with the

“Do No Significant Harm”-principle, the estimated costs for investments in fossil

driven trucks and vans are excluded from the funding from the Recovery and Re-

silience Facility. Therefore, the Recovery and Resilience Facility-funding for the

investment window is lowered and readjusted with 6.5 per cent from 3.2 bn.

DKK to 3.0 bn. DKK.

The initiative entails that a company within the investment window acquires, for

example, a 3D-printer worth 1,000,000 DKK, can increase its depreciation basis

by 160,000 DKK. Each year from the acquisition, the company can deduct 25 per

cent hereof from the basis of the company’s corporate tax.

The deduction will mean that the companies' capital costs for investments in fixed

assets will be temporarily lower, and therefore it is expected to lead to an increase

in investments in 2020, 2021, and 2022. In addition, companies are expected to

advance and frontload investments that are otherwise planned for 2023 and later.

A frontloading of investments can be expected to increase employment (demand

effect) to a certain extent in the coming years, especially in a situation where Den-

mark is hit by a significant downturn. Furthermore, a temporary increase in the

depreciation basis will improve the companies' liquidity in the short and medium

term.

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Thus, the initiative delivers on the recommendations for Denmark in the National

Energy and Climate Plan and the Country Specific Recommendations to frontload

investments in a green and digital transition, also by ensuring a just transition for

the most affected companies with the implementation of the Green Tax Reform.

Implementation:

The Danish Ministry of Taxation will be managing the invest-

ment window, including the applicable depreciation basis and tax deductions for

the companies.

State aid:

An assessment has been made of whether the initiative conform to

state aid rules. The initiative applies to all undertakings on equal terms and there-

fore does not constitute state aid.

Link to reforms:

The investment window will provide companies with liquidity

and incentives to invest in fixed assets that can lead to a reduction of greenhouse

gases in production, and ease carbon leakage problems when increasing taxes on

greenhouse gases. The investment window will further allow firms to enter into

the new industrial age with smarter and greener machinery.

Target group:

The initiative entails all companies and self-employed. It is noted

that it is only enterprises with a taxable profit, which will be able to take advantage

of the increase in the short term. Companies without taxable profits will however

in general be able to utilize the increased deductions to offset profits in recent

years.

Timeline:

A politically binding agreement has been concluded on 8 December

2020. New bills were submitted to Parliament on February 24, 2021. The bill has

passed the Parliament on 13. April 2021. The investment window has entered into

force on 23 November 2020.

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Do No Significant Harm:

Table 2.4.3

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to

lead to significant greenhouse gas emissions?

Yes No

Significant negative impact?

No – to ensure no negative impacts, the investment window will not

include machinery running on fossil fuels, ships or passenger cars.

This will boost the companies’ growth potential and job creation,

while encouraging companies to invest in new hardware and tech-

nology that can reduce emissions in the longer run.

The investment window should also be viewed in the broader con-

text of the Green Tax Reform, in which companies are being incen-

tivized to frontload green investments in preparation for a higher

e-tax.

The investment window, increased R&D incentive and accelerated

depreciation will moreover help ease leakage problems since the ini-

tiatives will make a transition through green investments possible

and thus reduce the risk of production moving abroad.

Climate change adaptation:

Is the measure expected to

lead to an increased adverse impact of the current climate

and the expected future climate, on the measure itself or

on people, nature or assets?

To ensure no negative impacts, the investment window will not in-

clude machinery running on fossil fuels, ships or passenger cars to

ensure a green transition of industry. This will boost the companies’

growth potential and job creation, while encouraging companies to

invest in new hardware and technology that can reduce emissions in

the longer run.

The investment window should also be viewed in the broader con-

text of the green tax reform, in which companies are being incentiv-

ized to frontload green investments in preparation for a higher CO

tax.

The investment window, increased R&D incentive and accelerated

depreciation will moreover help ease leakage problems since the ini-

tiatives will make a transition through green investments possible

and thus reduce the risk of production moving abroad.

The sustainable use and protection of water and

marine resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of

bodies of water, including surface water and groundwater;

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste

prevention and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incinera-

tion or disposal of waste, with the exception of the incinera-

tion of non-recyclable hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect

use of any natural resource at any stage of its life cycle

which are not minimised by adequate measures; or

(iii) cause significant and long-term harm to the environ-

ment in respect to the circular economy?

Pollution prevention and control:

Is the measure ex-

pected to lead to a significant increase in the emissions of

pollutants into air, water or land?

The protection and restoration of biodiversity and

ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resili-

ence of ecosystems; or

(ii) detrimental to the conservation status of habitats and

species, including those of Union interest?

No – pollutants are strictly regulated in Danish environmental laws

and this does not change with the Green Tax Reform.

No – the measure has no implication for the protection and restaura-

tion of biodiversity and ecosystems.

No part of the Green Tax Refom has negative implications for the

use and protection of water services. The overall reduction in fossil

fuel usage as a result of the green tax reform can on the contrary

help protect pollutants from entering into marine resources.

No – the first phase of the Green Tax Reform, of which the invest-

ment window is a part, has no implications for the waste handling or

the circular economy.

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2.4.6 Accelerated depreciation

Addressing challenges:

The European economies have been highly affected by

the COVID-19 crisis. To address the challenges, the threshold for accelerated de-

preciation is increased to frontload and incentivize companies’ investments in a

green and digital transition and to mitigate the economic consequences and unem-

ployment.

Objectives:

According to current rules, companies' investments in fixed assets

(machinery, equipment, computer-hardware etc.) with an acquisition price below

14.100 DKK can be depreciated immediately. This lower limit is raised to DKK

30.000. This increased limit will be permanent. An increase in the threshold will

work as a short-term stimulus initiative, as it generates a lot of additional liquidity

for firms in the initial years (where all small investments are depreciated at 100 per

cent) but naturally declines over time as future depreciations are reduced (already

depreciated in year 1). After 2025, the increased limit will result in fiscal losses for

Denmark. These losses will be covered by reducing the overall budget for fiscal

expenditures.

An increase in the threshold will in particular strengthen the incentive to invest in

information and communications technology, and can help strengthen liquidity

among companies that earn profits. The increased threshold to 30.000 DKK is es-

timated, with some uncertainty, to increase the scope of investments that can be

depreciated immediately by approx. 3 bn. DKK.

Thus, the initiative delivers on the recommendations for Denmark in the National

Energy and Climate Plan and the Country Specific Recommendations to frontload

investments in a green and digital transition, and by ensuring a just transition for

the most affected companies with the implementation of a green tax reform.

Implementation:

The Danish Ministry of Taxation will be managing the initia-

tive.

State aid:

An assessment has been made of whether the initiative conforms with

state aid rules. The initiative applies to all undertakings on equal terms and there-

fore does not constitute state aid.

Link to reforms:

The investment window will provide companies with liquidity

and incentives to invest in fixed assets – In particular information and communi-

cations technology – that can bring Denmark closer to the new industrial age and

ease carbon leakage problems when introducing higher taxes on greenhouse gases.

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Target group:

The initiative entails all companies and self-employed. It is noted

that it is only enterprises with a taxable profit, which will be able to take advantage

of the increase in the short term. Companies without taxable profits will however

in general be able to utilize the increased deductions to offset profits in recent

years.

Timeline:

A politically binding agreement has been concluded on 8 December

2020. New bills have been submitted to parliament on February 24, 2021. The bill

has passed the Parliament on 13. April 2021. The increase in the threshold for ac-

celerated depreciation has entered into force on 23 November 2020.

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Do No Significant Harm:

Table 2.4.4

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to

significant greenhouse gas emissions?

Yes

No Significant negative impact?

X No. Investments which could violate the

“Do No Significant

Harm”-principle

such as internal combustion engines or

other fossil-fuel driven machinery etc., would have a much

higher costs than the threshold, and thus will not qualify for

the accelerated depreciation.

Further, the raised threshold for accelerated depreciation

must be viewed in the context of the Green Tax Reform, in

which companies are being incentivized to frontload green in-

vestments in preparation for a higher CO

e-tax. All Danish

companies thus have very clear incentives to use the accel-

erated depreciation to reduce their carbon emissions as a

preparation for the upcoming CO

e-tax.

The investment window, increased R&D incentive and accel-

erated depreciation will moreover help ease leakage prob-

lems since the initiatives will make a transition through green

investments possible and thus reduce the risk of production

moving abroad.

X No – the raised threshold for accelerated depreciation will

incentivize companies to frontload green investments in

preparation for a higher CO

e-tax.

The investment window, increased R&D incentive and ac-

celerated depreciation will moreover help ease leakage

problems since the initiatives will make a transition through

green investments possible and thus reduce the risk of pro-

duction moving abroad.

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of

water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of

ecosystems; or

(ii) detrimental to the conservation status of habitats and species,

including those of Union interest?

No part of the Green Tax Reform has negative implications

for the use and protection of water services. The overall re-

duction in fossil fuel usage as a result of the Green Tax Re-

form can on the contrary help protect pollutants from enter-

ing marine resources.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

No – the first phase of the Green Tax Reform, of which the

raised threshold for accelerated depreciation is a part, has

no implications for the waste handling or the circular econ-

omy. The second phase aims to lower all carbon emissions,

which includes better waste management and promoting

more free nature (to capture CO

No – pollutants are strictly regulated in Danish environmen-

tal laws and this does not change with the Green Tax Re-

form.

No – the measure has no implication for the protection and

restauration of biodiversity and ecosystems.

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Green and digital dimensions of the component

Green transition

The Danish government has an ambitious target of reducing greenhouse gas emis-

sions by 70 per cent by 2030 compared to 1990. The business sector is an essen-

tial partner in achieving that ambition. The green transition of businesses in Den-

mark is the focus of the Green Tax Reform. The tax reform promotes the green

transition by increasing taxes on greenhouse gas emissions in industry in the first

phase and sending a strong signal of higher carbon taxation in the second phase.

At the same time, the reform provides tax cuts on green and digital investments to

insure that companies have the incentive and the opportunity to prepare for in-

creased carbon taxation. This will incentivize companies to reduce greenhouse gas

emissions, and by moving in the direction of a uniform tax on greenhouse gas

emissions, the tax reform will make the reductions happen in areas where the cost

is the lowest. Thus, the Green Tax Reform makes the regulation of greenhouse

gas emissions more efficient.

The introducing an investment window will contribute significantly to create the

right incentives for the green transition and promote new growth potentials. The

investment window is a temporary measure that will instantly increase employ-

ment. However, at the same time, the initiative will create a lasting impact on the

companies’ production by letting companies invest in new and greener technology

and inventory, which will make the production greener and cleaner in the years to

come. The investment window will exclude fossil-fuel driven machinery to ensure

the investments made by firms are in fact green. Furthermore, the investments

will make a basis for green growth in the future with a potentially large job crea-

tion effect.

With the first phase of the green tax reform greenhouse gas emissions are lowered

by 0.5 Mt by 2030. For the second phase of the Green Tax Reform, an expert

group has been established, which will draw the road map for the next phase of

e taxation in a manner consistent with protecting Danish competitiveness, so-

cial balance and minimizing leakage. It is the ambition in the long term to make a

comprehensive tax reform with a high and uniform CO

e tax on all emissions.

This will require significant development work, especially with regard to emissions

that are not currently subject to taxation.

Digital transition

Danish firms have historically proven to aim their investments in fixed assets to-

wards digitalization. This is true both for the large share of Danish private invest-

ments in ICT and in smart machinery (3D printers, robotics, AI etc.). That is why

Denmark consistently ranks in the very top of the EU-commissions digitalization

index

: Danish firms are ranked 4th in the EU business digitalization index, 3rd in

https://ec.europa.eu/digital-single-market/en/digital-economy-and-society-index-desi

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the e-commerce index and 1st on the share of business with “very high digitaliza-

tion”. These achievements are the result of Danish businesses’ commitment to in-

vesting in the future.

The initiatives under the green tax reform will contribute to furthering the digital

agenda. Specifically, a sizeable share of the investments supported through the in-

vestment window and the raised threshold for accelerated depreciation will drive

digitalisation. In 2017, the last year in which there is an effect from a similar in-

vestment window with additional depreciation allowance introduced in 2012-

2013, ICT and other digitalized equipment constituted an estimated 40 per cent of

Danish companies’ investments in fixed assets (excl. vehicles),

cf. table 2.4.5.

Table 2.4.5

Gross fixed capital formation in 2017

2017

M. DKK

ICT equipment

Other digital equipment

Other non-digital eq./machinery

Total

- hereof total digital investments

19.444

10.779

46.078

76.301

30.223

25 %

14 %

60 %

100 %

40 %

Share (per cent)

Source: Statistics Denmark and own calculations based on the definiton on digital tagging in annex VII under the

regulation establishing the Recovery and Resilience Facility.

Moving forward, Danish firms’ investments in smart machinery are expected to

be the key investment focus throughout 2020-2023, guided by the Danish digitali-

zation investment effort through a suite of public-private-partnerships,

see Box

2.4.2.

The key focus area going forward, will be to lift small enterprises to the

level of digitalization of larger enterprises.

The Danish digitalization investment effort, combined with the large fiscal incen-

tives to expand investments in ICT and machinery in the Green Tax Reform, will

expectantly drive a surge in digitalization. It is therefore the Danish government’s

expectation, that at least 40 per cent of the investments made through the invest-

ment window and the raised threshold for accelerated depreciation will be in digi-

talization efforts, i.e. ICT or intelligent production assets. The 40 per cent should

be seen as a conservative estimate, as it is based on data from 2017, and the digi-

talisation share is expected to continue from 2017-2022, as has been the case in

2015-2017. Further, many of the investments in categories, in which the digital

equipment part is estimated to be small, is counted as completely non-digital in-

vestments. Therefore the share of digital investments is under-estimated.

https://erhvervsfremmebestyrelsen.dk/sites/default/files/2020-03/Erhvervsfremme-i-Danmark-2020-

2023_Strategi.pdf

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Box 2.4.2

The Danish Business Promotion will support a coherent business promotion effort by coordinating

with other actors in the area, including:



Small and medium sized enterprises:

Digital,

which is a comprehensive program with several initiatives targeted

at the digitalization of small and medium sized enterprises. Among other things, support is provided for private

advice on digitalization including e-commerce, and digital sprints as well as competence development.

The Fund of Innovation,

which supports digital innovation, among other things, through the InnoBooster pro-

gram, just as companies are supported in finding solutions to major societal challenges through, among other

things, digital solutions.

The Growth Fund,

which invests in companies with digital business models and companies that use advanced

digital technologies.

Digital Hub Denmark,

which aims to make Denmark a European frontrunner in digital development and market

Danish digital strengths

The Approved Technological Service Institutes (GTS’er),

which support technological development in Danish

companies through research and development collaborations and provide access to test, demonstration and re-

search facilities.

The Technology Pact,

which has been established across the public sector, companies, educational institutions

and organizations with the aim of getting more people to work with, take an interest in and educate themselves

within STEM (science, technology, engineering and math).

The Council of Data Ethics,

which among other things, is to create a data ethics debate, continuously support

responsible data use in business and the public sector, as well as work to ensure that responsible data use can

become a competitive parameter.

The Danish innovation centers,

which help Danish companies to acquire knowledge about the latest technolo-

gies and business models in, among other things, the digital area. The municipalities and the local business ser-

vice are often the first entrance to the business promotion system. The inter-municipal business hubs provide spe-

cialized business services and function partly as entrances and partly as hubs in business promotion system,

which refers to relevant business promotion schemes and actors as well as private advisers, investors, etc.



Source:

https://erhvervsfremmebestyrelsen.dk/sites/default/files/2020-03/Erhvervsfremme-i-Danmark-2020-

2023_Strategi.pdf

Cross-border and multi-country projects

All investment incentives in the Green Tax Reform will be available for foreign

firms doing business in Denmark. The Green Tax Reform is therefore expected

to attract foreign investment, expertise and labour by promoting investment

through the investment window, accelerated depreciation and R&D incentives

(R&D incentives are described under component 7). This will spur growth and in-

vestment in Denmark, but at the same time increase cohesion and cross-border

activity throughout the EU.

Do No Significant Harm

It is the expectation that no aspects of the Green Tax Reform will harm the cli-

mate, environment or sustainable development. To the contrary, the reform will

reduce CO

-emmissions by 0.5 Mt by raising the price on carbon emissions and

fostering green investments.

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To ensure no negative impacts the investment window will not include machinery

running on fossil fuels to ensure a green transition of industry. This will boost the

companies’ growth potential and job creation, while encouraging companies to in-

vest in new hardware and technology that can reduce emissions in the longer run.

The investment, window, increased R&D incentive and accelerated depreciation

will moreover help ease leakage problems since the investment window will make

a transition through green investments possible and thus not lead to moving pro-

duction out of the country.

It is estimated that 6.5 per cent of the investments through the investment win-

dow will be in non-passenger vehicles. In order to ensure full compliance with the

DNSH-principle, the estimated costs for investments in fossil driven trucks and

vans are exempted from the funding from the RRF. Therefore, the RRF-funding

for the investment window is lowered and readjusted with 6.5 per cent from 3.2

bn. DKK to 3.0 bn. DKK.

Financing and costs

The costs of the Green Tax Reform (after accounting for dynamic behaviour) are

listed in

Table 2.4.2.

The methodology for estimating the tax consequences follows

the standard methodology of the Danish Ministry of Taxation. Concretely:

The mechanical effect of increased taxes of fossil energy usage is computed

using the forecast of Danish Energy Authority. The behavioural effect is es-

timated based on the elasticities described in the official Danish excise, tariff

and subsidy analysis

The establishment of the expert group will have a total budget of 6 m. to be

spent from 2021-2022

The mechanical effect of extended deductions for the Investment window

is based on data from Denmark Statistics on firm investments. The behav-

ioural effect is based on the empirical observed response from the Danish

investment window in 2012/2013.

II.

III.

https://www.skm.dk/media/6046/afgifts-og-tilskudsanalysen-delanalyse-3.pdf

https://fm.dk/nyheder/nyhedsarkiv/2012/juni/investeringsvindue-skaffer-job-og-ny-vaekst/

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IV.

The mechanical effect of extended deductions for raising the threshold for

accelerated depreciation is based on data from Denmark Statistics on firm

investments. The behavioural effect on investment, profits, employment

and wages is based on the standard calculation of corporate tax changes by

the Ministry of Finance/Taxation documented

here.

Table 2.4.6

Cost of Initiatives in Component 3: Green Tax Reform

M. DKK, 2021-prices

I. Emission taxes on industries

II. Expert group to prepare proposals for a

e-tax

III. Investment window

IV. Accelerated depreciation

Total

Investment/

reform

Reform

Investment

Total

-410

3,029

1,280

3,905

2021

626

410

1,039

2022

1,038

310

1,351

2023

-90

608

240

758

2024

-80

439

180

539

2025

-240

318

140

218

210

Funding from

other sources

Table 2.4.7

Measurable effects of the Green Tax Reform

-reduction

in 2030

2021

I. Emission taxes on industries

III. Investment window

IV. Accelerated depreciation

Total

0.5 Mt

0.0

2.3

0.1

2.4

Employment effects

(1.000)

2022

0.0

4.5

0.2

4.7

2023

0.0

0.7

0.2

1.0

2024

-0.1

-1.0

0.3

-0.7

2025

-0.1

-0.7

0.3

-0.5

2021

0.00

0.15

0.00

0.15

2022

0.00

0.25

0.00

0.25

GDP effects

(%)

2023

0.00

2024

0.00

-0.10

0.00

-0.05

2025

0.00

-0.05

0.00

-0.05

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Component 2.5

Sustainable road transport

The transport sector is one of the largest emitters of greenhouse

gasses in Denmark. In order to reach the ambitious target of re-

ducing greenhouse gas emissions by 70 per cent by 2030, reduc-

tions in the transport sector is essential.

Increasing the sustainability of the road transport sector, which ac-

counts for about 90 per cent of the greenhouse gas emissions in

the transport sector in Denmark, is especially crucial.

The initiatives in this component on the green transition of road

transport sets out strong measures and contributes to lower

greenhouse gas emissions in the road transport sector by 2.1 Mt

in 2030 and set forth the ambition of having 1 m. zero- or low-

emission cars on the roads by 2030.

Re-prioritisation of the registration tax, reducing GHG intensity of

fuels, significant investments, subsidies for green infrastructure

and new technologies further incentivises green mobility.

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Description of the component

Box 2.5.1

Sustainable road transport

Climate policy, sustainable consumer behaviour, pollution mitigation, protection of health and well-being of cit-

izens, just and inclusive transition, competitiveness between conventional and low emission cars.

Objective:



Better environment and health:

Reducing the greenhouse gas intensity of fuels on a well-to-wheel basis will

reduce GHG-emissions from conventional cars in the transition towards zero-emission cars. The subsidy pool

targeted the scrapping of old diesel cars will further support clean air in the cities and the general health of citi-

zens by reducing emissions of particles and NOx. Furthermore, owners of old diesel cars are incentivised to sub-

stitute to greener alternatives, due to the re-prioritisation of the registration tax and low electricity tax on charging

electric vehicles that are also introduced.

Smart and sustainable mobility:

Re-prioritising registration taxes of vehicles and low electricity tax on charging

electric vehicles support the consumers and incentivises users to choose transportation options to mitigate

greenhouse gas emissions and air pollution, while limiting the effects of congestion and promoting public health.

The re-prioritisation of registration taxes will ensure it is more robust to technological development and solely

dependent on the car’s value and CO

emissions.

Green transition:

Re-prioritisation of the registration tax, increasing the obligation to reduce GHG will improve

the use of sustainable energy sources and reduce greenhouse gas emissions. By incentivising electric and plug-

in hybrid cars, decreasing the stock of conventional cars and reflecting the impact emissions and pollution have

on the environment, the initiatives support the ambition of reducing greenhouse gas emissions by 70 % by 2030

compared to 1990, and achieve climate neutrality by 2050 at the latest.



Reforms/investments to underpin the objectives



I. Incentives to choose green cars (870 mill. DKK)

a. Re-prioritisation of the registration tax of vehicles and low electricity tax on charging electric vehicles

b. Temporary increase in the scrapping premium for old diesel cars



II. Analyses, tests and campaigns for greener transport (25 mill. DKK)

c. Development test of road-pricing

d. Car sharing and carpooling (awareness)

e. Analysis of test scheme with double trailers

Analysis of the regulation on weight and dimensions to optimise heavy haulage



III. Green transportation and infrastructure (730 mill. DKK)

g. Scheme to infrastructure for electric bicycles

h. Investments in bike paths in state roads and bicycle subsidy scheme for municipalities

Subsidy scheme to green ferries

Estimated Cost:

Approximately 1.6 bn. DKK in total from 2021-2025 covered by the RFF. The total cost of the reforms and invest-

ments on green road transportation is 1.2 bn. DKK in 2021 increasing to 2.9 bn. DKK in 2030. The residual costs

are covered by increasing taxes on conventional cars, existing reserves and a new road-pricing toll for heavy vehi-

cles based on CO

-emissions from 2025.

Main challenges and objectives

2.5.1 Main challenges

The green transition requires better solutions, new technologies and behavioural

change across sectors and industries. The challenges mentioned below relate to a

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segment of these e.g. shifting from the use of conventional to low- and zero-emis-

sion cars:



Lack of sufficient market competition between conventional vs. low- and zero-emission cars:

Low- and zero-emission cars are relatively new technologies and thus not

competitively priced compared to conventional cars. The conversion of the

car fleet to zero- and low-emission cars is a long process, as the average life-

time of a new car is approximately 15 years, so it is important to take the nec-

essary steps early. Therefore, a re-prioritisation of the registration tax and low

electricity tax on charging will support Danish efforts to reach our climate tar-

gets and increase the stock of zero- and low-emission cars in the short- and

long-term.

Requirements to reduce CO2 emissions from fossil fuel cars:

Conventional cars will

constitute a majority of the general car stock over the coming decades, neces-

sitating initiatives to reduce the CO

-emissions stemming from conventional

cars. This could e.g. include campaigns about car-sharing and carpooling, anal-

ysis of heavy haulage and investments in infrastructure for bicycles.



2.5.2 Objective

The Danish Government along with several parties of parliament have agreed on

a number of reforms and investments that sets out strong measures to lower

greenhouse gas emissions in the road transport sector. It is estimated that this will

lead to a substantial reduction in greenhouse gas emissions of 1.0 m. tonnes in

2025 increasing to 2.1 m. tonnes in 2030. The parties have an ambition of having

1 m. zero- and low-emissions cars on Danish roads by 2030. Moreover, this will

ensure long-term regulation of green fuels to fossil-driven cars, and from 2025,

the heavy haulage industry will be covered by a new, CO

-differentiated road-pric-

ing toll. This is an important step towards reaching the 2030 climate target of re-

ducing greenhouse gas emissions by 70 per cent. The initiatives in the agreement

will support the objectives below and is possible due to the funds from the recov-

ery and resilience fund.



Better environment and health:

Enhancing and increasing the obligation to reduce

the greenhouse gas intensity of fuels on a well-to-wheel basis will reduce

greenhouse gas emissions from conventional cars in the transition towards

zero-emission cars. The subsidy pool targeted at the scrapping of old diesel

cars will, combined with the other initiatives, support clean air in the cities and

the general health of citizens by reducing emissions of particles and NOx.

Smart and sustainable mobility:

Re-prioritising the registration tax of vehicles sup-

ports the consumers and incentivises users to choose transportation options

to mitigate greenhouse gas emissions and air pollution, while simultaneously

promoting public health. The re-prioritisation entails that the registration tax



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for low- and zero-emissions cars is reduced significantly until 2035. Further,

the re-prioritisation of the registration tax simplifies the tax, making it solely

dependent on the car’s value and CO

emissions.



Green transition:

Re-prioritisation of the registration tax, obligation to reduce

greenhouse gas emissions from fuel will improve the use of sustainable energy

sources and reduce greenhouse gas emissions. By enhancing the incentive to

buy low- and zero-emission cars, decreasing the stock of conventional cars

and reflecting the impact emissions have on environment, the initiatives sup-

port the ambition of reducing greenhouse gas emissions by 70 per cent by

2030 compared to 1990 and achieve climate neutrality by 2050 at the latest.

The measures and initiatives are coherent and compliant with the European

Green Deal. The measures presented below focus on accelerating the shift to sus-

tainable and smart mobility, sustainable consumer behaviour, just and inclusive

transition. In general, the initiatives will ensure that the price of transport more

accurately reflects the impact it has on the environment and on public health. At

the same time, the initiatives comply with the National Energy and Climate Plan

(NECP). In general, the initiatives are supporting measures aimed at ensuring

more efficient transport and vehicles. In addition, they put forward trajectories in

the transport sector to meet the emission targets. Moreover, the initiatives are in

line with the CSR, where Denmark will invest in sustainable fuels industry in or-

der to take action and address initiatives in one of the country’s largest sources of

greenhouse gas emission.

Summary description of the reforms and investments of the

component

Overall, the Danish government is proposing a package of initiatives regarding

green road transport of approximately 1.2 bn. DKK in 2021 increasing to 2.9 bn.

DKK in 2030.

The package contains reforms and investments in supporting the transition to-

wards the use of sustainable energy sources in the road transport sector. Among

these are measures that increases the incentive to choose green cars. These include

a re-prioritisation of the registration tax and a low electricity tax to electric charg-

ing of zero- and low-emission cars. In addition, the component contains analyses,

tests and campaigns that can support a further reduction in greenhouse gas emis-

sions from road transport in the long term. Finally, the component contains initia-

tives that promote and support green transportation and infrastructure, including

for example investments in bike paths. Thus, there is devoted means targeted at

road transport, supporting green infrastructure, including milestones of low- and

zero-emission vehicles.

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Reforms

2.5.3 Incentives to choose green cars

A) Re-prioritisation of the registration tax and low electricity tax on charging electric vehicles

Addressing challenges:

Currently, the purchase of low- and zero-emission cars

is less favourable compared to conventional cars, as the purchasing prices of these

low- and zero-emission cars are higher. In order to enable an affordable transition

from conventional cars to low- and zero-emission cars it is important to support

sustainable cars and provide better terms for these.

Achieving sustainable transport means putting users first and providing them with

more affordable, accessible, and cleaner alternatives to their current mobility hab-

its. Consequently, the initiative is in line with the European Green Deal, as it ac-

celerates the shift towards sustainable and smart mobility.

Objectives:

The Danish government and several parties of the parliament are de-

termined to implement a re-prioritisation of the registration tax of vehicles in or-

der to enhance and strengthen the market competition of low- and zero-emission

cars. The re-prioritisation entails that the registration tax for low- and zero-emis-

sion cars is reduced significantly until 2035. Furthermore, the re-prioritisation of

the registration tax simplifies the tax, making it solely dependent on the car’s value

and CO

emissions. In addition, the special scheme with low electricity tax to

charging of zero- and low-emission cars will be extended to 2030. The scheme

was already in place through 2021. By extending the scheme, reduced costs for

charging an electrical vehicle are ensured until 2030, further incentivising the up-

take of low- and zero-emission cars.

The registration tax will be based on CO

emissions and is thus independent of

used technology, promoting zero- and low-emission cars, as they will be subject to

lower registration taxes. Zero-emission cars (typically electric cars) are defined as

emitting 0 gram of CO

per kilometre, while low-emission cars are defined as

emitting less than 50 grams of CO

per kilometre. Cars that emit at least 50 grams

of CO

per kilometre are in the taxation scheme defined as conventional.

The model proposed is estimated to result in 1) a stock of approx. 775,000 green

cars in 2030, of which 715,000 are passenger cars and 60,000 are vans, 2) a CO

reduction of approx. 0.5 m. tonnes in 2030, and 3) a shadow price of CO

-reduc-

tions of approx. 2,600 DKK per tonnes of CO

The re-prioritisation of the registration tax is estimated to include a substantial fi-

nancial allocation,

cf. table 2.5.1.

The green transportation deal is fully financed

from 2026-2030. Hence, the re-prioritisation of the registration taxes requires

complementary RRF funding in 2021-2025 in order to be achieved and rein-

forced. This use of RRF funding reinforces the recommendations of the NECP

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and the CSR, as they focus on the clean and efficient use of energy and sustaina-

ble transport.

Table 2.5.1

Total costs of the re-prioritisation of the registration tax 2021-2030

2021

M. DKK

Costs

500

600

800

1,000

1,100

1,000

900

800

700

500

2022

2023

2024

2025

2026

2027

2028

2029

2030

In addition, a financing element through an increase in the existing ownership tax

is included by an increase of 3 % in 2022, 6.5 % annually in 2023-2025 and 10 %

in 2026. The model also entails a re-prioritisation of registration tax for vans,

which is estimated to result in additional revenue after reflux and behaviour of

100 m. DKK annually from 2021 to 2030, a CO

reduction of approx. 0.05 m.

tonnes in 2030 and a stock of 60.000 green vans in 2030.

The special scheme with low electricity tax to charging of electric cars has been in

place since 2012 and was set to expire at the end of 2021. The scheme has previ-

ously been discussed with the Commission, who recognised that it did not consti-

tute a State aid problem.

Estimates of the financial allocation for the extension of the special scheme are il-

lustrated in

table 2.5.2.

Table 2.5.2

Total costs of the extension of the special scheme with low electricity tax for charging 2022-2030

2022

M. DKK

Costs

100

200

300

400

500

700

800

900

2023

2024

2025

2026

2027

2028

2029

2030

Implementation:

The re-prioritisation of the registration tax has been in place

since December 18th 2020. The extension of the scheme from 2022 through 2030

was formally adopted by the Danish parliament on February 9

2021.

Target group:

Households and companies.

Timeline:

The initiatives are implemented.

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Do no significant harm:

Table 2.5.3

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to

significant greenhouse gas emissions?

Yes No

Significant negative impact?

No - on the contrary, the measure is expected to lead to

significant reductions in the greenhouse gas emissions

as a consequence of incentivising the transition from

polluting cars to low- or zero-emission vehicles. The

government and the parties behind the agreement has

an ambition of having 1 million low- and zero emission

vehicles on danish roads by 2030.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

The measure is interlinked with the objective to transform

the car-stock from gas and diesel to sustainable and

electrical cars. The re-prioritisation of the registration tax

and lowering the electricity tax for charging are expected

to significantly raise the incentive for consumers to buy

zero- or low emission cars.

The measure encourages the usage of sustainable road

transport, and limits the consumption of polluting and

emitting vehicles. The measure is not expected to have

an implication for the use and protection of water ser-

vices.

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of wa-

ter, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy3?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

The measure has no implication for the waste handling

or the circular economy.

The measure is directly and indirectly expected to reduce

emissions of pollutants into air, water and land. This

especially concerns GHG emissions and the support of

clean air in the cities by reducing emissions of particles

and NOx.

No – the measure will not conflict with the protection and

restoration of biodiversity and ecosystems.

Pollutants are strictly regulated in Danish environmental

laws and this does not change with the re-prioritisation

of the registration tax and low electricity tax on charging

electric vehicles.

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition5 and resilience of eco-

systems; or

(ii) detrimental to the conservation status of habitats and species, in-

cluding those of Union interest?

B) Temporary increase in the scrapping premium for old diesel cars

Addressing challenges:

Older diesel cars are a source of harmful particulate

matter and NOx gases, especially in the larger cities, and generally emit more CO2

than newer (diesel) cars. There are incentives to discard older and polluting diesel

cars, but the process of scrapping is currently too slow in order to reinforce the

green transition of the car-stock.

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Objectives:

In order to support the transition from old conventional cars to

zero- or low-emission cars (particulate matter, NOx and CO2) the scrapping pre-

mium for old diesel cars is increased, increasing the incentive for households to

scrap their old diesel cars in favour of newer, less emitting cars, including zero-

and low-emission cars. The re-prioritisation of the registration tax in initiative I.a.

incentivises consumers to choose cars with lower emissions by making greener

cars relatively cheaper. Combined with the temporary increase in the scrapping

premium for old diesel cars, consumers are provided with incentives to scrap their

older, polluting car and replace it with a zero- or low-emission car. Thus, the initi-

atives are intertwined and will reform the incentive structure in order to reinforce

the green transition of the car-stock.

Implementation:

A subsidy scheme will be initiated to increase the scrapping

premium in 2021, so owners of diesel cars from before 2006 will receive a scrap-

ping premium of 5.000 DKK, if they scrap their old diesel car, and their applica-

tion is approved. The administration set up will be digital. The digital set up will

be developed as a part of the costs of the administration scheme.

There will be allocated 100 m. DKK to the initiative in 2021. Moreover, there is

allocated 5 m. DKK in 2021, 10 m. DKK in 2022 and 5 m. DKK in 2023 to fi-

nance the derivative consequences of the initiative.

In total, the initiative is expected to reduce the emission of PM2.5 by 17 tonnes

and the emission of CO2 by approximately 7.000 tonnes.

Target group:

Households.

Timeline:

The Ministry of Environment will manage the initiative, which is to be

carried out from early 2021.

State aid:

The scrapping premium does not constitute state aid within the mean-

ing of TEUF art. 107(1), as the premium is not selective, and as any effect on

trade or distortion of competition is merely hypothetical.

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Do no significant harm:

Table 2.5.4

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to sig-

nificant greenhouse gas emissions?

Yes

No Significant negative impact?

Conventional cars will constitute a majority of the general

car stock over the coming decades, necessitating

initiatives to reduce the CO2-emissions stemming from

conventional cars. The scrapping scheme for old diesel

cars is expected to lead to reductions in the GHG

emissions. The premium is not tied up in the purchase of

new cars or anything else, but merely the scrapping of old

diesel cars to discard them from the existing car stock.

The re-prioritisation of registration taxes and lowering the

electricity tax for charging significantly raises the incentive

for consumers to buy zero- or low emission cars. The

scrapping scheme is thereby mutual supportive to the

other measures in the component. As a whole, these aim

at speeding up the green transition in transport, either by

incentivizing the up-take of low- and zero emission

vehicles, accelaterating the transition away from polluting

cars or into alternative green means of transport.

The scrapping scheme for old diesel cars is expected to

lead to reductions in the GHG emissions.

The measures are associated and interlinked with the

objective to transform the car-stock from gas and diesel to

sustainable and electrical cars. Thus, the initiatives work

together by increasing the incentive to discard emitting

and polluting cars and replace them with sustainable

ones. Moreover, the investments in infrastructure for

bicycles also raises the incentive to use types of

sustainable transportation.

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of wa-

ter, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

The measure encourages the usage of less polluting road

transport, and reduces the stock of the most polluting and

emitting vehicles.The measure is not expected to have an

implication for the use and protection of water services.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

Since the scrapping premium provides incentive to hand

in old diesel cars to authorized car wreckers, it is

expected to increase the amount of cars handed in for

scrapping, and therefore increase the amount of waste for

a temporary period. However, the cars will be scrapped

sustainably and the recyclable materials will be part of the

ordinary recycling streams as for other scrapped cars due

to the efficiency of the Danish waste management

system. Therefore it is not expected that this initiative will

have harmful implications for the circular economy.

The scrapping scheme for old diesel cars are expected to

lead to reductions in pollutants especially particular matter

(PM) into air, water and land. This support clean air in the

cities by reducing emissions of particles and NOx.

The initiative will not conflict with the protection and

restoration of biodiversity and ecosystems.

Pollutants are strictly regulated in Danish environmental

laws and this does not change with the initiative.

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of eco-

systems; or

(ii) detrimental to the conservation status of habitats and species, in-

cluding those of Union interest?

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Investments

2.5.4 Analyses, tests and campaigns for greener transport

A) Development test of road-pricing

Addressing challenges:

A road-pricing scheme can, among other things, con-

tribute to decrease congestion, mitigate CO

emissions and reduce air pollutions.

However, the technical solutions need further development and a development

test can contribute to valuable knowledge about e.g. the associated costs and ben-

efits related to a road-pricing scheme.

Objectives:

There is a clear theoretical potential of creating socio-economic ben-

efits from road pricing in Denmark, with key benefits stemming from decreased

congestion. Other expected benefits will be a mitigation of CO

emissions from

road transport, lower levels of air pollution, noise and accidents. A number of the-

oretical studies have been carried out on road-pricing in the last two decades – the

most recent was published by a government expert commission (Bilkommissio-

nen) in September 2020 (national scheme), and February 2021 (scheme for Co-

penhagen). However, the technical solutions that can implement road pricing

schemes needs further development and the associated costs are key to under-

standing the expected return of a project that holds many risks and uncertainties.

Therefore, the parties of the transportation agreement are committed to initiate

development tests of road pricing in order to explore efficient ways of taxing con-

gestion and the damage and health costs associated with driving.

Implementation:

The parties agreed to allocate 20 m. DKK in 2022 to a public-

private development partnership that can investigate the technological and admin-

istrative challenges related to road-pricing of cars. The project management and

dissemination of results is expected to be assigned to a University with scientific

knowledge in the area of transport economics.

Target group:

Households and companies.

Timeline:

The public-private development partnership will be initiated in 2022.

EU state aid rules:

It will not be regarded as state aid as long as it is ensured that

there will not be an economic advantage given when awarding the funds to a

Danish university. It has to be ensured that it is a purchase of a service at a market

price.

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Do no significant harm:

Table 2.5.5

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to sig-

nificant greenhouse gas emissions?

Yes No

Significant negative impact?

No. A road-pricing scheme can among other things con-

tribute to decrease congestion, mitigate CO

emissions

and reduce air pollutions. However, the technical solu-

tions need further development and a development test

can contribute to valuable knowledge about e.g. the as-

sociated costs and benefits related to a road-pricing

scheme.

No. As mentioned before, a road-pricing scheme can

among other things contribute to decrease congestion,

mitigate CO

emissions and reduce air pollutions. How-

ever, the technical solutions need further development

and a development test can contribute to valuable

knowledge about e.g. the associated costs and benefits

related to a road-pricing scheme.

No. A road-pricing scheme will contribute to knowledge

about how to implement a large-scale roadpricing

scheme that among other things contribute to decrease

congestion, mitigate CO2 emissions and reduce air

pollutions.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of wa-

ter, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

No. A test scheme could help quantifying potential re-

ductions in emissions.

No. A test scheme could help quantifying potential re-

ductions in emissions and the measure is expected to

indirectly reduce emissions of pollutants into air, water

and land, if there is results that shows that there will be

benefits in implementing a large scale roadopricing

scheme that among other things contribute to decrease

congestion, mitigate CO

emissions and reduce air pol-

lutions.

No – the analysis will not conflict with the protection and

restoration of biodiversity and ecosystems. Pollutants

are strictly regulated in Danish environmental laws and

this does not change with the initiatives of the sustaina-

ble road transport.

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of eco-

systems; or

(ii) detrimental to the conservation status of habitats and species, in-

cluding those of Union interest?

B) Car sharing and carpooling (awareness)

Addressing challenges:

The initiative aims at addressing challenges related to

the use of cars, where the capacity is not fully used and time is wasted due to con-

gestion. These challenges are termed ‘transport waste’.

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Objectives:

With 1.05 persons per car and commuters spending up to 30 percent

of the travel time in queues, there are challenges with ‘transport waste’. Addition-

ally, there is an increasing pressure on parking in the bigger cities.

On this basis, there is potential for making the transport sector more efficient and

limit the number of cars in the cities by increasing car sharing and carpooling.

However, most citizens are unaware of the benefits, carpooling and sharing vehi-

cles offers for the individual and for society as a whole. Carpooling can help re-

duce transportation time, congestion, the emission of particles and CO

-emissions

while simultaneously offering economic and social benefits for companies and cit-

izens alike e.g. lower fuel costs. Additionally, car sharing can help reduce the in-

creasing pressure on parking spots in the bigger cities. The campaigns can also be

an inspiration for Danish cities to integrate shared mobility forms in their urban

mobility planning such as the sustainable urban mobility plans (SUMPs).

Implementation:

The parties of the green transportation deal have allocated 3 m.

DKK in 2021 to initiate information- and behavioural campaigns aimed at in-

forming about the challenges related to ‘transport waste’ as well as highlighting

the benefits for citizens, companies and society at large associated with car sharing

and carpooling.

Target group:

The target groups of the campaigns will be based on an initial

analysis conducted in 2021 by the Danish Ministry of Transport and the Danish

Road Directorate. The current expectation is that the target group will be com-

muters and companies.

Timeline:

The campaigns will be initiated during 2021-2022.

EU state aid rules:

As the aid will be provided by the EU to the Danish Ministry

of Transport, the aid will not be considered as state aid in the sense of Article

107(1) TFEU.

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Do no significant harm:

Table 2.5.6

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to sig-

nificant greenhouse gas emissions?

Yes

No Significant negative impact?

No – on the contrary, the measure is expected to lead to

reductions in the greenhouse gas emissions by informing

about the potentials by car sharing and carpooling.

No – the measure has the objective to create awareness

about the positive and aspects of sustainable ways of us-

ing cars.

The measure encourages the usage of sustainable road

transport, and limits the consumption of polluting and

emitting vehicles. The measure is not expected to have

an implication for the use and protection of water ser-

vices.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected

future climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of

water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of

ecosystems; or

(ii) detrimental to the conservation status of habitats and species,

including those of Union interest?

No – on the contrary, the measure aims at preventing

‘transport waste’ by sharing cars and car seats.

No – the measure is expected to lead to minor indirect

reductions in emissions of pollutants into air, water and

land.

No – the measure will not conflict with the protection and

restoration of biodiversity and ecosystems. Pollutants are

strictly regulated in Danish environmental laws and this

does not change with the initiatives of the sustainable

road transport.

C) Analysis of test scheme with double trailers

Addressing challenges:

In achieving the government's goal of reducing CO

emissions across all sectors by 70 percent by 2030, solutions that support the

green transition must be found. This also applies to the transport sector, which in

2030 is expected to emit almost 14 m. tonnes of CO

, corresponding to approx.

32 percent of Denmark's total greenhouse gas emissions. The analysis will disclose

whether the permit of double trailers will contribute to reducing road transport's

emissions.

Objectives:

Double trailers can potentially contribute to make freight transport

more efficient and correspondingly reducing CO

-emission while offering eco-

nomic benefits as more freight can be carried by fewer lorries. However, there is

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uncertainty surrounding whether the Danish infrastructure network can accom-

modate longer lorries, potentially leading to accidents, economic externalities and

congestion, if the use of double trailers is allowed haphazardly.

Optimal capacity utilisation of trucks requires efficient logistics, route optimisa-

tion, etc. Experiences with the ongoing adjustment of the weight and dimension

regulations, including increased total weights for ordinary lorries and experiments

with modular lorries, are positive - also in relation to fuel consumption relative to

the amount of transported goods.

If double trailers are to be able and allowed to drive on the Danish road network,

it is necessary that the road network is modified to support this. As the overall

road network is state-owned, it is a state task to examine the existing road condi-

tions in relation to a number of traffic safety conditions, such as driving curves.

Implementation:

An analysis will be carried out by the Danish Road Directorate

and the Danish Road Traffic Authority covering the efficiency of the road design,

planning and test rides etc. Based on the analysis it will be possible to decide

which reconstructions can and should be carried out in order to ensure both traf-

fic safety and traffic flow on the certain road network. There is allocated 1 m.

DKK in 2021 to the analysis.

Target group:

Heavy haulage.

Timeline:

The analysis will be carried out in 2021.

EU state aid rules:

Infrastructure investments are tasks for the public authori-

ties, as roads are owned by either the state or municipalities. The initiative does

not involve user-financing. Thus, it is not economic activity. Accordingly, the cost

for the analysis are not covered by EU state aid rules.

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Do no significant harm:

Table 2.5.7

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to sig-

nificant greenhouse gas emissions?

Yes

No Significant negative impact?

No. A report on the findings of the analysis of test scheme

with double trailers could help quantifying potential reduc-

tions in emissions.

No. A report on the findings of the analysis of test

scheme with double trailers could help quantifying poten-

tial reductions in emissions.

No. The measure encourages the usage of sustainable

road transport, and limits the consumption of polluting

and emitting vehicles. The measure is not expected to

have an implication for the use and protection of water

services.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine re-

sources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of wa-

ter, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

No. A report on the findings of the analysis of test

scheme with double trailers could help quantifying poten-

tial reductions in emissions.

No. A report on the findings of the analysis of test

scheme with double trailers could help quantifying poten-

tial reductions in emissions and the measure is expected

to indirectly reduce emissions of pollutants into air, water

and land, if the analysis showes positive results on

reducing reductions in emmissions from lorries.

No – the analysis will not conflict with the protection and

restoration of biodiversity and ecosystems.

Pollutants are strictly regulated in Danish environmental

laws and this does not change with the initiatives of the

sustainable road transport.

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of eco-

systems; or

(ii) detrimental to the conservation status of habitats and species, in-

cluding those of Union interest?

D) Analysis of the regulation on weight and dimensions to optimise heavy

haulage

Addressing challenges:

There is an unused potential of optimising the national

regulation on weight and dimensions, which, if used, can improve the efficiency

and reduce emissions related to the transportation of goods.

Objectives:

The Danish Road Traffic Authority has assessed that there is a po-

tential in improving the efficiency and reduce emissions from heavy haulage by

optimising the regulation on weight and dimensions. A thorough analysis of fur-

ther reduction potentials in the regulation is assumed to lead to a further reduc-

tion of emissions and optimisation of the transportation of goods.

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Implementation:

An analysis concerning the potential of lower emissions

through further adjustments of the current regulation on weight and dimensions

will be carried out. Besides estimating the potential reduction in emissions, the

analysis will also estimate financial consequences for the transport sector and the

society - such as increased wear and tear on roads. The Danish Ministry of

Transport will perform the analysis.

1 m. DKK in 2021 is allocated to carry out the analysis.

Target group:

Companies in the transport sector and derived sectors.

Timeline:

The analysis will be carried out in 2021.

EU state aid rules:

The EU funding provided to the Danish Ministry of

Transport in respect of performing the analysis of the regulation on weight and

dimensions to optimise heavy haulage does not fall within the concept of state aid

in Article 107 TFEU since the EU funding does not involve state resources and

since the funding will not be passed on to undertakings.

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Do no significant harm:

Table 2.5.8

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to

significant greenhouse gas emissions?

Yes

No Significant negative impact?

No. A report on the findings of the regulation on weight and

dimensions to optimise heave haulage could help quantify-

ing potential reductions in emissions.

No. A report on the findings of the regulation on weight

and dimensions to optimise heave haulage could help

quantifying potential reductions in emissions.

No. The measure encourages the usage of sustainable

road transport, and limits the consumption and usage of

polluting and emitting vehicles. The measure is not

expected to have an implication for the use and protec-

tion of water services.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected

future climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of

water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

No. A report on the findings of the regulation on weight

and dimensions to optimise heave haulage could help

quantifying potential reductions in emissions.

No. A report on the findings of the regulation on weight

and dimensions to optimise heave haulage could help

quantifying potential reductions in emissions. The

measure is expected to indirectly reduce emissions of

pollutants into air, water and land if the analysis showes

positive results on how to reduce reductions in

emmissions from lorries by optimising the national

regulation on weight and dimensions.

No – the analysis will not conflict with the protection and

restoration of biodiversity and ecosystems.

Pollutants are strictly regulated in Danish environmental

laws and this does not change with the initiatives of

optimising the national regulation on weight and

dimensions.

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of

ecosystems; or

(ii) detrimental to the conservation status of habitats and species,

including those of Union interest?

2.5.5 Green transportation and infrastructure

A) Scheme to infrastructure for electric bicycles

Addressing challenges:

With electric bicycles, longer distances can be covered

by bike. This new mode of transportation requires the possibility to charge the

bike along the way, so that the battery's range does not limit the length of the bike

ride. Therefore, it is necessary to invest in publicly available charging to electric bi-

cycles to make it more attractive to choose the bike for longer distances.

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Objectives:

Cycling combines mobility with exercise and contributes to improv-

ing public health, while at the same time being a very environmentally and cli-

mate-friendly form of transport. Denmark is among the world's best cycling na-

tions. However, continued focus on cycling and investments in bicycle infrastruc-

ture is necessary, if this leading position is to be maintained and more people are

to choose the bicycle.

The bicycle can be used as an alternative to other modes of transport both in the

cities and in the rural areas to a much greater extent than today. Especially electric

bicycles can expand the bikeable distances while also improving public health.

Whether the funds will be targeted at cycling commuters or for recreational cy-

cling, has not yet been decided, as the funds will not be allocated until 2024. In

that light, the decision of which area to invest in will depend on the speed and di-

rection of the development of battery technology.

As it is not decided whether the funds will be targeted cycling commuters or rec-

reational cycling, it is not possible to estimate exactly how many e.g. bike charging

stations the investment will be able to finance. If the funds are targeted cycling

commuters it will be easier to install the bike charging station compared to in-

stalling a station where there are no existing power outlets.

The Danish Road Directorate estimates that a pool of 10 million DKK is able to

finance approx. 200 locations, assuming that dedicated electric bike chargers are

installed where there are no existing power outlets. On the other hand, the Danish

Road Directorate points out that an additional socket in addition to an already ex-

isting electrical installation has very limited installation costs compared to bike

charging stations where there are no existing power outlets.

Implementation:

The parties of the transportation agreement have allocated 10

m. DKK in 2024 to public accessible charging stations of electric bicycles.

The investment in infrastructure for bicycles will integrate the EU Commissions

Sustainable and Smart Mobility Strategy by contributing to urban planning, and on

connectivity with rural and suburban areas, so that commuters are given sustaina-

ble mobility options by public accessible charging stations of electric bicycles. The

electric bicycles enables the commuter to choose the bike for longer distances. At

the same time, the investment will contribute to clean and climate friendly tourism

as the public charging stations will make it possible and more attractive for tour-

ists to choose cycling tourism.

Target group:

Households and companies.

Timeline:

The scheme is supposed to be initiated in 2024.

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EU state aid rules:

The investments are tasks for the public authorities, as the

state and the municipalities respectively own the roads. The initiative does not in-

volve user-financing. Thus, it is not economic activity. Accordingly, the invest-

ments are not covered by EU state aid rules.

Do no significant harm:

Table 2.5.9

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to

significant greenhouse gas emissions?

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected

future climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of

water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

No. the investments in infrastructure for bicycles raises

the incentive to use types of sustainable transportation.

The measure is not expected to lead to an increase in

disposal of waste, lead to significant inefficiencies in the

direct or indirect use of any natural resource at any

stage or cause significant and long-term harm to the en-

vironment.

Yes No

Significant negative impact?

No – the measure promotes green transporation and

infrastructure.

No – the investments in infrastructure for bicycles raises

the incentive to use types of sustainable transportation.

The initiative encourages the usage of sustainable road

transport. The initiative is not expected to have an impli-

cation for the use and protection of water services.

The measure is expected to reduce emissions of

pollutants into air. This especially concerns the support

of clean air in the cities by promoting green transporta-

tion and infrastructure through the subsidy schemes to

infrastructure for electric bicycles and investments in bike

paths in state roads and municipalities.

No – the initiatives in this component will not conflict with

the protection and restoration of biodiversity and ecosys-

tems.

Pollutants are strictly regulated in Danish environmental

laws and this does not change with the initiatives of the

sustainable road transport.

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of

ecosystems; or

(ii) detrimental to the conservation status of habitats and species,

including those of Union interest?

B) Investments in bike paths in state roads and bicycle subsidy scheme for mu-

nicipalities

Addressing challenges:

In Denmark, the bicycle traffic has been stagnant or

even declining for a number of years. Only in the larger cities, where cycling is a

faster and easier choice than other modes of transport, bicycle traffic has been in-

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creasing. Outside the urban areas, the bicycle is not a natural first choice in every-

day life. Therefore, it is necessary to make it more attractive to choose the healthy

and CO

neutral bike instead of the car.

Objectives:

To incentivize citizens to choose bicycles rather than cars it is im-

portant to prioritize and support the development of green mobility. This is ad-

vantageous for public health, and it can limit congestion and reduce CO

emis-

sions. The investments are tasks for the public authorities, as the state and the

municipalities respectively own the roads.

Implementation:

The parties of the transportation agreement have allocated 30

m. DKK in 2021 and 170 m. DKK annually in 2022-2023 to the construction of

bicycle infrastructure. This will support access to a more coherent bicycle road

network for citizens and thereby better opportunities to choose the bicycle rather

than other modes of transport.

In addition, 150 m. DKK will be allocated to a scheme targeting municipal bicycle

construction projects. This presupposes municipal co-financing of 50 % of the

costs, meaning that in total 300 m. DKK worth of municipal bicycle paths will be

constructed. The municipal contribution will have to be prioritised within the mu-

nicipalities’ construction budget. In total this means an allocation of 180 m. DKK

in 2021 and 170 m. DKK annually in 2022-2023.

The investments in cycling infrastructure will integrate the EU Commissions Sus-

tainable and Smart Mobility Strategy by contributing to urban planning, and on

connectivity with rural and suburban areas, so that commuters are given sustaina-

ble mobility options. Studies show that urban planning has an impact on the use

of the bicycle, which is why municipal urban planning, transformation of existing

urban spaces and urban policy are also tools that can contribute to bicycle promo-

tion locally and nationally. Pools targeted at municipalities can therefore help to

promote cycling locally.

The Bicycle subsidy scheme to the state roads will integrate the EU Commissions

Sustainable and Smart Mobility Strategy by investing in safer cycling infrastructure

on state roads. The investment consists primarily of the construction of new cycle

paths, especially for the benefit of commuting to work and school, as well as im-

proved crossing options on sections where the state road is a barrier.

Target group:

Households and companies.

Timeline:

The subsidy scheme will be initiated at the beginning of 2021 and the

investments in bike paths on state roads will be carried out in the period 2021-

2023. The construction of the bike paths on state roads is expected to be com-

pleted in Q4 2025.

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EU state aid rules:

The investments are tasks for the public authorities, as the

state and the municipalities respectively own the roads. The initiative does not in-

volve user-financing. Thus, it is not economic activity. Accordingly, the invest-

ments are not covered by EU state aid rules.

Do no significant harm:

Table 2.5.10

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to sig-

nificant greenhouse gas emissions?

Yes No

Significant negative impact?

No – the measure promote green transporation and

infrastructure.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine re-

sources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of wa-

ter, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

Pollution prevention and control:

Is the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

No – the investments in infrastructure for bicycles

raises the incentive to use types of sustainable trans-

portation.

The initiative encourages the usage of sustainable road

transport. The initiative is not expected to have an im-

plication for the use and protection of water services.

No. the investments in infrastructure for bicycles raises

the incentive to use types of sustainable transportation.

The measure is not expected to lead to an increase in

disposal of waste, lead to significant inefficiencies in

the direct or indirect use of any natural resource at any

stage or cause significant and long-term harm to the

environment.

The measure is expected to reduce emissions of

pollutants into air. This especially concerns the support

of clean air in the cities by promoting green transportation

and infrastructure through the subsidy schemes to infra-

structure for electric bicycles and investments in bike

paths in state roads and municipalities.

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of eco-

systems; or

(ii) detrimental to the conservation status of habitats and species, in-

cluding those of Union interest?

No – the initiatives in this component will not conflict

with the protection and restoration of biodiversity and

ecosystems.

Pollutants are strictly regulated in Danish environmental

laws and this does not change with the initiatives of the

sustainable road transport.

C) Subsidy scheme to green ferries

Addressing challenges:

The transport sector constitutes a substantial share of

the emission of greenhouse gasses. The transition to green transportation requires

significant public investments as private agents might not take the benefits from

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reduced greenhouse gas emissions properly into account in their own investment

decisions.

Objectives:

To promote the green transition of the transportation sector it is im-

portant to strengthen schemes that support initiatives contributing to this. The

support scheme covers co-financing of a green transition of municipal ferries.

The initiative follows up on the recommendations from relevant business organi-

sations across the transport sector and contributes to a green boost of the econ-

omy. The support scheme is part of a larger agreement with additional funds to

those covered by RRF. At present, there are ongoing political negotiations about

the scale of the additional funds.

Co-financing of a green transition of municipal ferries:

In December 2020,

an analysis documenting the total societal benefits and the potential of a green

transition of Danish ferries, most of them run by municipalities, was completed.

Denmark has many islands, and most ferry routes are the primary connection be-

tween the islands and the rest of Denmark, so the ferries are an important mode

of transport in Denmark. Most of the current ferries are conventional ferries,

which sail on diesel fuel. Alternatives to conventional propulsion can thus reduce

the greenhouse gas emissions significantly.

The magnitude of the investments re-

quired to make the transition is too costly for the municipals to conduct on their

own. In addition, as the monetary payoff of the investment is negative when

greenhouse gas reductions are not included, central government support is neces-

sary for the green transition of municipal ferries. In total, DKK 200 million from

RRF are allocated to the green transition of municipal ferries (DKK 150 million in

2021 and DKK 50 million in 2022). With a subsidy percentage of 15-25, the DKK

200 million DKK will enable a green transition of approximately 23 ferries.

The following overall criteria will be used for the subsidy for green transition of

ferries: The CO

effect and environmental effect per invested DKK. The funds

will only be used for investments in e.g. new green ferries, retrofit or other neces-

sary infrastructure such as charging stations for the ferries. In total, RFF’s contri-

bution to the scheme consists of 150 m. DKK in 2021 and 50 m. DKK in 2022.

Target group:

Municipals.

Timeline:

The allocated funds will go to a support scheme together with poten-

tial additional funds, where municipalities can apply for co-financing. It is ex-

pected, that the application deadline will be sometime in the autumn of 2021, so

that an announcement of commitment to support/not support can be given to

applicants in 2021 and 2022.

”Grøn omstilling af danske indenrigsfærger”, COWI (2020).

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EU state aid rules:

The investments are tasks for the public authorities, as the

municipalities respectively operates the ferries included. The ferries in question

can generally be considered as services of general economic interest to the public,

because they are important to the citizens and would not be supplied without

public intervention. The municipalities will take the RRF support into account in

the compensation mechanism to the operator, and if the co-financed ferry is not

owned by the municipality, the operator will have to pay back its residual value at

the end of the contract.

Do no significant harm:

Table 2.5.11

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected to lead to

significant greenhouse gas emissions?

Yes No

Significant negative impact?

No – on the contrary, the measure is expected to lead to

reductions in the greenhouse gas emissions by

exchanging ferries from dieselferries to ferries with

reduced emissions such as electric ferries or ferries that

sail on biofuels.

No – the measure has the objective to reduce emissions

from ferries and thereby improving the climate.

Climate change adaptation:

Is the measure expected to lead to an

increased adverse impact of the current climate and the expected fu-

ture climate, on the measure itself or on people, nature or assets?

The sustainable use and protection of water and marine

resources.

Is the measure expected to be detrimental:

(i) to the good status or the good ecological potential of bodies of

water, including surface water and groundwater; or

(ii) to the good environmental status of marine waters?

The transition to a circular economy, including waste prevention

and recycling.

Is the measure expected to:

(i) lead to a significant increase in the generation, incineration or dis-

posal of waste, with the exception of the incineration of non-recyclable

hazardous waste; or

(ii) lead to significant inefficiencies in the direct or indirect use of any

natural resource at any stage of its life cycle which are not minimised

by adequate measures; or

(iii) cause significant and long-term harm to the environment in respect

to the circular economy?

No - the measure encourages the usage of sustainable

ferries and limits the number of polluting and emitting

ferries. The measure is expected to have positive impli-

cations for the use and protection of water and marine

resources because it limits the emission of CO2 and

particles.

No – the measure aims at preventing ‘transport waste’

by getting more sustainable ferries, and it will therefore

not cause significant and longtime harm to the environ-

ment. The exchanging of ferries can lead to an earlier

replacement of some ferries and thereby create some

waste at an earlier state than without the subsidy. How-

ever, because the subsidy will apply to both retrofit of

existing ferries, when this is possible, as well as re-

newal of ferries, when this is optimal, it will not lead to

a significant increase in the disposal of waste. In addi-

tion, the co-financing will not go to propellants, and will

therefore not lead to significant ineffeciencies in the di-

rect or indirect use of any natural resources.

No – the measure is expected to lead to reductions in

emissions of pollutants into air, water and land.

Pollution prevention and control: Is

the measure expected to lead

to a significant increase in the emissions of pollutants into air, water or

land?

The protection and restoration of biodiversity and ecosystems.

Is the measure expected to be:

(i) significantly detrimental to the good condition and resilience of

ecosystems; or

(ii) detrimental to the conservation status of habitats and species,

including those of Union interest?

No – the measure is not expected to conflict with the

protection and restoration of biodiversity and ecosys-

tems. Pollutants are regulated in Danish environmental

laws and this does not change with the initiatives of ex-

changing ferries to sustainable ferries.

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Green and digital dimensions of the component

Green transition

Ensuring a green and sustainable future is one of the Danish Government's main

priorities. The Danish government has set an ambitious reduction target for

greenhouse gas emissions of 70 per cent in 2030 compared to 1990. The transport

sector will play an important role in reaching this target as it will require a compre-

hensive green transformation of the transport sector. As such, it is necessary to

explore the potential of all transport modes to ensure that the transport sector

also contributes to reaching the 70 per cent target.

However, given that road transport’s share of the transport emissions are 90 per

cent, initiatives must focus especially on delivering emissions reductions from this

sub-sector. Therefore, the Danish government and its supporting parties have

agreed on a deal of green transition of the road transport sector initiating

measures that will reduce emissions from passenger cars and heavy road freight

transport by a total of 2,1 m. tonnes CO

e. Some of these measures are presented

in this component and will contribute to ensure a green transition of the road

transport sector in Denmark.

The green transition requires better solutions, new technologies and behavioural

change across sectors and industries and the measures presented in this compo-

nent contribute to this development.

Do no significant harm

The initiatives presented in this component will contribute to ensure a green tran-

sition of the road transport sector. The aim of the initiatives is to ensure a transi-

tion to green cars and reduce the use of fossil fuel cars.

At the same time it acknowledges that conventional cars will constitute a majority

of the general car stock over the coming decades, necessitating initiatives to re-

duce the CO

-emissions stemming from conventional cars, which is why this

component also include measures to ensure this, e.g. the campaign about car-shar-

ing and carpooling, analysis of heavy haulage and investments in infrastructure for

bicycles.

The initiatives in this component will not conflict with the protection and restora-

tion of biodiversity and ecosystems.

Financing and costs

The recovery funds will partly finance the initiatives below with 1.6 bn. DKK in

total in 2021-25. The remaining costs are covered by increasing the ownership tax

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on cars, existing reserves and a new road-pricing toll for heavy vehicles based on

-emissions from 2025.

The effects on the sale of green cars and the financial cost of the initiative regard-

ing a re-prioritisation of the registration tax and the low electricity charge are esti-

mated by the Ministry of Taxations CES-model for car selection and ministry’s car

choice model. Using this model, it is estimated that the costs of the initiative in

2021-2025 amounts to 4.9 bn. DKK, cf.

Table 2.5.4,

of which 750 m. DKK is

funded from the RRF.

The CES-model was developed during the work with

Commission for the green conver-

sion of passenger cars

in 2019-2020 and is thus documented in their first report on

taxation on cars from September 20

. The model evaluates the effects on chances

in the car taxation on the choice of purchasing a new car based on its total cost of

ownership.

The loss (or gain) of revenue due to the changes on the sale of cars is then calcu-

lated in the ministry’s car choice model. The model is based on a large dataset of

the total car sales in one year and thus includes both mechanical effects and ef-

fects from changes in behaviour.

Regarding the investments in bike paths along state roads, it is expected that 370

m. DKK for investments in bicycle projects along state roads will be able to fi-

nance approx. 50 km bicycle path in total and ensure improvement of five safe

road crossings for bicycles. This is based on the specific projects calculations from

the Danish Road Directorate, which estimates the cost of 1 km of bicycle path to

be in the range of 3-12 m. DKK depending on local conditions expropriation

costs etc. The average cost is approximately 7.4 m. DKK per km bicycle path.

It is expected that a subsidy scheme of 150 m. DKK for co-financing (50 %) mu-

nicipal bicycle projects will encourage the municipalities to prioritise the construc-

tion of bicycle paths and thereby green mobility. Studies show that urban planning

has an impact on the use of the bicycle, which is why municipal urban planning,

transformation of existing urban spaces and urban policy are tools that can con-

tribute to bicycle promotion locally and nationally. Pools targeted municipalities

can therefore help to promote cycling locally in the municipalities through e.g. in-

vestments in new bicycle infrastructure, such as super cycle trail. Furthermore,

Denmark has good experience with pools for co-financing of municipal bicycle

projects in Denmark, with high application levels. In the period 2009-2020, ap-

prox. 1.1 bn. DKK was given as a subsidy for bicycle projects in the municipalities

from the Danish state.

Regarding the analyses and campaign in this component, the costs are estimated

from experiences with earlier work from similar projects. The Danish Road Direc-

torate has estimated the cost of the analyses on double trailers to 1 m. DKK,

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which corresponds to the expected use of one full-time employee including over-

head to carry out, e.g. analyses of road safety, vehicle technical, road technical and

environmental conditions etc.

The road-pricing test can be considered a complex research project, and the fund-

ing thus covers investments in equipment, IT support and external assistance in-

cluding project management and dissemination of results. There has not been

made a political decision yet on how the test will be conducted. This is expected

in the fall of 2021. However, computationally it can likely be assumed that the test

will be a smaller version of a project description from the so-called “Trængs-

elskommission” which in 2013 suggested a large road-pricing-test-scheme of 100

m. DKK. Since there is allocated 20 m. DKK for this project, it will not be possi-

ble to do the same test-scheme, but it is expected that a lot of inspiration can be

found in the material from 2013

A national campaign to the promotion of carpooling and car sharing needs to tar-

get the culture, habits and prejudices regarding carpooling and car sharing among

the Danish road users. These aspects are difficult to change, therefore, the cam-

paign will need a substantial amount of advertising funds during a long period of

time and a well working concept to have a real effect. The expenses for the cam-

paign are estimated to 3 m. DKK. In January 2021, the anti-litter campaign

'Thank you for nothing … on the road' (Tak for ingenting … i vejkanten.) was

launched with a budget on 1.2 m. DKK. The campaign was primary centred on

the capital of Denmark, Copenhagen. While the expenses to developing campaign

material in the two campaigns are similar, it will require extra funding to run a na-

tional campaign on social media compared to a campaign centred on Copenhagen.

Regarding the green transition on ferries, the Danish Ministry of Transport esti-

mates that the 200 m. DKK will enable a green transition of approximately 23 fer-

ries with a support percentage of 15-25. This is based on an analysis by COWI

all Danish inland ferries assessing the societal economy in transforming the routes

into a greener profile e.g. electrified ferries or other alternative zero-emission

fuels. The 23 ferries are identified by calculating the routes, which have the most

potential in terms of societal economy. This is done by including parameters like

age of the current, length of route, current emissions (CO2, SO2, NOx and parti-

cles).

https://www.trm.dk/publikationer/2013/traengselskommissionens-betaenkning-og-sammenfatning/

COWI (2020): Grøn omstilling af danske indenrigsfærger.

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Tabel 2.5.12

Overview of RRF-funding for the initiatives in component of sutainable road transport

M. DKK, 2021-prices

I) Incentives to choose green cars

a. Re-prioritisation of the registration tax and the low electricity

charge

b. Temporary increase in the scrapping premium for old diesel

cars

Total

870

750

120

2021

254

149

105

2022

182

172

2023

163

158

2024

141

2025

132

II) Analysis, tests and campaigns for greener transport

a. Development test of road-pricing

b. Sharing cars and car-pooling (awareness)

c. Analysis of test scheme with double trailers

d. Analysis of the regulation on weight and dimensions to

optimise heavy haulage

III) Green transportation and infrastructure

a. Scheme to infrastructure for electric bicycles

b. Bicycle subsidy scheme to the state and municipalities

c. Subsidy scheme for green ferries

730

520

200

330

180

150

220

170

In total

1,625

589

422

333

151

132

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Table 2.5.13

Financial consequences in total of the full reform on green road transportation

Bn. DKK (2021-level)

Initiatives

Re-prioritisation of the registration

tax and the low electricity charge

Obligation to reduce GHG intensity

of fuels on a well-to-wheel basis:

Kilometre-based toll for heavy duty

vehicles based on CO

-differentia-

tion

Financing the lack of missing index-

ing of the registration tax

Analysis of test scheme with double

trailers

Analysis of the regulation on weight

and dimensions to optimise heavy

haulage

Temporary increase in the scrap-

ping premium for old diesel cars

Development test of road-pricing

Sharing cars and carpooling

Scheme to infrastructure for electric

bicycles

Subsidy scheme for green ferries

Bicycle subsidy scheme to the state

and municipalities

Adjustment of the taxation of com-

pany cars

Increased economic deduction for

shared green cars

Increase of the countervailing

charge

Increase of the ownership tax

Financing from previous political

agreement from 2017

0,0

-0,15

-0,18

0,00

-0,001

0,5

-0,05

-0,17

0,00

-0,001

0,5

0,1

0,0

-0,17

0,00

-0,001

0,4

0,0

0,01

-0,001

0,4

0,7

0,0

0,00

-0,001

0,4

1,0

0,0

0,01

-0,002

0,4

1,4

0,1

0,00

-0,002

0,3

1,3

0,1

0,00

-0,003

0,3

1,2

0,2

-0,01

-0,004

0,3

1,2

0,2

-0,02

-0,005

0,3

1,1

0,3

-0,003

-0,01

2021

-0,8

-0,5

2022

-0,8

0,0

2023

-0,7

-1,0

0,0

2024

-0,6

-1,2

0,0

2025

-0,5

-1,4

-0,3

0,5

-0,3

-0,001

-0,11

-0,01

-0,02

-0,01

-0,4

-0,5

-0,6

2026

0,0

-1,4

-0,3

0,5

-0,6

2027

0,0

-1,4

-0,3

0,5

-0,6

2028

0,1

-1,4

-0,7

1,0

-0,5

2029

0,1

-1,5

-0,7

1,0

-0,5

2030

-0,2

-1,4

-1,0

1,0

-0,4

The revenue includes a change in the registration and ownership tax for new registrations and the decrese profit from a low

electricity charge to electrical charging until 2030. 2) The obligation to reduce GHG intensity of fuels is phased in from 3,4 %

in 2022-2024 increasing currently to 5,2 % in 2025, 6 % in 2028 and 7 % in 2030 and beyond.

Resources: Own calculations.

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Tabel 2.5.14

Measureable effects of the full reform of green road transportation

e-reduction

2025

Transportation

Re-prioritisation of the registration tax and the low electricity charge

Obligation to reduce GHG intensity of fuels on a well-to-wheel basis:

Increasing and improving requirements of sustainability criteria

Kilometer-based toll for heavy duty vehicles based on CO

-differentiation

Analysis of test scheme with double trailers

Analysis of the regulation on weight and dimensions to optimise heavy haulage

Temporary increase in the scrapping premium for old diesel cars

Development test of road-pricing

Sharing cars and car-pooling

Scheme to infrastructure for bicycles

Subsidy scheme for green ferries

Bicycle subsidy scheme to the state and municipalities

Mt CO

0,2

0,7

0,1

not relevant

0,018

0,5

1,4

0,2

not relevant

0,018

2030

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Component 2.6

Digitalisation

As a part of the Danish government’s reform agenda, digitalisation

will be a flagship in leading Denmark stronger through the COVID-

19 crisis and accelerate the transition to a more modern and

digital welfare society.

Through a reform push consisting of a new digital strategy, the

aim is to promote a digital transformation across all sectors of

society advancing welfare and equality, growth and employment,

the green transition and the restart of the Danish economy after

the COVID-19 crisis.

Denmark is one of the leading digital countries in the world and

therefore further reformation requires well-thought solutions. As

part of the process, the government has established a digitalisa-

tion partnership that will qualify and contribute with recommenda-

tions for the new strategy. By doing so, Denmark will build its very

strong digital foundation in cooperation with a broad variety of

stakeholders.

In addition, Denmark is proposing investments supporting the

digital transition through strengthened broadband connectivity

enabling more citizens to connect to and utilise digital solutions.

Furthermore, investments in increasing digital export opportunities

for SME’s are included.

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Description of the component

Box 2.6.1

Digitalisation

Digitalisation, New digital strategy, Digitalisation partnership, Digital Business Transformation, Digital Transition,

Public Sector Efficiency, Adoption of new technologies

Objective:

Overall, the aim is to promote a just and inclusive digital transition that will support the development of better wel-

fare services, job creation and growth, as well as the green transition. To promote this digital reform agenda, Den-

mark will formulate and implement a new digital strategy covering all sectors of society. The digital strategy will con-

sist of five sub-reforms.

The objectives of the new digital strategy are:



Sub-reform 1 – Strategy for the digital public sector and services of the future:

Creating the digital public sec-

tor of the future. This is done by a continuous modernisation of the digital infrastructure meeting the needs of all

citizens and businesses and strengthening connectivity.



Sub-reform 2 – Strategy for the digital professions and jobs of the future:

Securing the digital professions and

jobs of the future and supporting growth and export of goods and services by strengthening digitalisation within

business and industry.

Sub-reform 3 – Framework for innovation, public-private partnerships and use of new technology:

Creating

better opportunities for co-creation and innovation. This is done by using new technologies and public-private part-

nerships to streamline and improve public digital services, accelerate digital transition of businesses, and support

climate change mitigation.

Sub-reform 4 – Framework for a data-driven society:

Creating a data-driven society and improving the digitalisa-

tion of SMEs, health systems and digital services by promoting better access to data, secure and interoperable data

infrastructures, and a digital-ready regulatory framework.

Sub-reform 5 – Framework for Denmark fit for a digital future:

Creating a framework for Denmark fit for a digital

future whilst preserving the best of our society by e.g. enhancing the cyber- and information security, digital skills

and competencies benefitting all citizens, businesses and employees.



The Danish government has established a digitalisation partnership consisting of top managers and experts who

will qualify and contribute with recommendations for each of the sub-reforms, cf. the terms of reference for the digi-

talisation partnership. This approach ensures that the digital reform will include the most demanded and effective

solutions in the further digital transformation of the Danish society. Building upon the recommendations of the part-

nership, the underlying initiatives of the digital strategy will be subject to political negotiations before the govern-

ment initiates the specific actions in public authorities within the five sub-reforms. The Danish government has an-

nounced the publication of the new digital strategy by the end of 2021, cf. the terms of reference for the digitalisa-

tion partnership.

In addition to the digital strategy, the component also consists of measures concerning the strengthening of the

SME-digitalisation programme and continuation of the broadband pool. The objectives of these measures are to

support especially SME’s in overcoming barriers to invest in and use new and advanced technology and e-com-

merce solutions as well as to promote connectivity by means of high-speed internet access in rural areas across

the country.

Reforms and investments:

The digital strategy will consist of five sub-reforms building on the partnership’s recommendations:

I. Digital strategy: 500 m. DKK.

a) Strategy for the digital public sector and services of the future

b) Strategy for the digital professions and jobs of the future

c) Framework for innovation, public-private partnerships and use of new technology

d) Framework for a data-driven society

e) Framework for Denmark fit for a digital future

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In addition, the promotion of digital transition in Denmark will consist of two investments that are reinforcements of

existing initiatives:

II. SME’s digital transition and export: 65 m. DKK.

III. Broadband pool: 100 m. DKK.

Estimated cost:

665 m. DKK of which 100 per cent is covered by Recovery and Resilience Facility. Additional national funds may

be granted to support and reinforce the realisation and implementation of the digital strategy.

Main challenges and objectives

2.6.1 Main challenges

Continuous digital transition of the public and private sector is a prerequisite for a

modernised economy and public sector reaping the benefits of digitalisation and

new technology. In promoting the digital transformation, the Danish govern-

ment’s digital strategy will seek to address key challenges within the following ar-

eas:



Modern digital infrastructure and closing the digital divide.

In Denmark, a common

digital infrastructure and national digital solutions are well known, used and

trusted by almost all citizens and businesses across the public and private sec-

tor. Although the general user satisfaction is high, some users still experience

that the digital world can be too complex and difficult to navigate. As an ex-

ample, 23 per cent of citizens indicate that they needed help when they most

recently used a digital self-service solution. This highlights the importance of

promoting digital inclusion and online digital services accessible to all as well

as continued investments in and modernisation of our national digital infra-

structure and solutions. Therefore, it is crucial to ensure a modern digital in-

frastructure and strong digital connectivity across the country in order to ad-

dress the needs of all citizens and businesses.

Digitising businesses.

Digitisation is a driving force for increased productivity.

Denmark is digitally well established and suited for seizing the digital opportu-

nities. Danish companies continue to be among the most digital in the EU.

The progress in the digital transition in Denmark is slightly below the EU av-

erage. These include companies' use of new and advanced digital technologies

for data analysis and artificial intelligence. Especially the small and medium-

sized enterprises’ use of newer technologies lags behind comparable countries,

e.g. in relation to Big Data. Furthermore, the Danish financial sector uses

enormous amounts of resources to counteract financial crime. While signifi-

cant resources are invested in the fight against financial crime, the system has

weaknesses that are not solvable in the current setup.



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

Innovation and new technologies.

Even though Denmark is among the digital front-

runners in the world, the upscale and dissemination of successful new tech-

nologies and digital solutions across the public sector – typically in close col-

laboration with businesses – are often slow and fragmented. This is despite

the fact that emerging technologies and digital welfare solutions, such as artifi-

cial intelligence (AI), cloud services and robotics, offer opportunities to link

the various parts of the public sector closer together and create better and

more secure services. Therefore, the utilisation and dissemination of emerging

technologies and innovative solutions from the private sector remain an im-

portant area of development. As an example, while 33 per cent of Danish

public authorities apply AI or machine learning today, 91 per cent expect to

apply the technologies in 2023.

Better utilisation of data.

The global climate crisis requires that we find new ways

to reduce the climate footprint of citizens, businesses and the public sector. At

the same time, the COVID-19 crisis has highlighted the importance of im-

proving the effectiveness of our health and care systems. The utilisation of

data holds great potentials in these respects, but today the accessibility, quality,

and interoperability of data are often a challenge. Coupled with complex regu-

lation that often are difficult to administer digitally, these barriers inhibit bet-

ter exchange and access to different types of data in order to support

healthcare delivery, research and the green transition of society, e.g. by reduc-

ing the energy consumption of buildings, which accounts for almost 40 per

cent of the total energy consumption in Denmark.

Strong digital skills and competences.

Due to the continuous digital development of

society and our need to be able to support e.g. the green transition by devel-

oping and using new technology, Denmark faces a need for reskilling and up-

skilling the Danish workforce across the private and public sector. It remains

crucial for the digital transformation of the Danish economy to address the

shortage of digital technology experts and specialists, especially women. Fur-

thermore, the technological and digital development puts great demands on

citizens’, businesses’ and public employees’ general digital knowledge and

competencies. This includes abilities to use digital technologies in a meaning-

ful way for working, studying and for everyday life in general as well as in-

creased awareness among citizens, businesses and public employees on how to

critically evaluate digital technologies and navigate in the digital culture of so-

ciety.

Enhanced cyber security.

Denmark is one of the leading digital countries in the

world, and our digital solutions are crucial to a functioning society. As such,

we are also constantly at risk of cyber-attacks, and it is considered one of the

main threats to our society, critical infrastructure, businesses and public au-

thorities. Technological development and digitisation provides a number of

positive gains, but it also provides new areas of attack and potential vulnera-

bilities. According to the Danish Centre for Cyber Security, a very high cyber



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threat has become a basic condition. The development necessitates that the

level of ambition and focus in the national efforts are continuously adjusted.

2.6.2 Objectives

E-government, digital business transformation, digital public services, and com-

mon digital ecosystems have been a Danish political priority the last 20 years.

Therefore, Denmark has a strong digital foundation to stand and build upon. For

example, Denmark was in 2020 ranked as the most digital country in the world by

the UN E-Government Survey and was furthermore ranked 3

by the European

Commission in their 2020 Digital Economy and Society Index (DESI).

However, we need to use this favourable position to support that Denmark also

in the future remains fit for the digital age. Lately, the COVID-19 pandemic has

also underlined how digital capabilities are paramount in supporting sustainable

economic recovery and the everyday work of employees – both in Danish busi-

nesses and within the public sector.

Collectively, the reforms and investments of the component will aim to address

administrative and bureaucratic barriers, increase efficiency and growth, stimulate

the competitiveness and digital transition of businesses, and, at the same time,

strengthen green transition as well as the quality of the public digital services that

citizens and businesses meet.

Furthermore, the ambition is to ensure resilient, secure and user-friendly digital

services, including e-health services, by supporting the modernisation of the na-

tional digital infrastructure and the utilisation of new technology across the public

and private sector. This will also enhance national resilience, crisis preparedness

and Denmark’s capacity to initiate effective government measures in the future

and to address challenges like those witnessed during the COVID-19 crisis.

The ambitions of these reforms and investments are also in line with the country

specific recommendations from the European Semester, emphasizing that Den-

mark would need to invest in digital infrastructure as well in education, training

and upskilling in order to maintain our strong position in the long term and to en-

sure our competitiveness and benefit from the digital transformation. The

measures will also improve Denmark’s digital performance as measured in the

Digital Economy and Society Index, e.g. by continuing the digitisation of public

services; raising awareness and improving knowledge of citizens, businesses and

authorities; and helping non-digital citizens to use digital public services.

In particular, measures of this component are expected to contribute to the Euro-

pean Flagship initiatives “Modernise” and “Reskill and upskill” by promoting ac-

cessible and interoperable digital public services, ensuring cross-border electronic

identification and authentication, as well as supporting digital skills, education and

training. Moreover, the component will contribute to the flagship “Connect” by

enhancing connectivity in rural areas across the country.

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However, the Danish ambitions in the digital requires a thorough process where it

is carefully considered how to spend the funds wisely. Therefore, the Danish gov-

ernment has established a digitalisation partnership. The broad anchoring and in-

volvement of stakeholders across society can qualify digital aspects and will con-

tribute with recommendations for the digital strategy and which efforts need to be

prioritsed. Such a process involving all relevant actors is needed to ensure a con-

sistent and cross-sectoral digitalisation strategy for Denmark.

Summary description of the reforms and investments of the

component

As a part of the Danish government’s reform agenda, the Danish government will

promote a digital transformation through a new digital strategy that consists of

five sub-reforms covering all sectors of society. The strategy will aim to address

administrative and bureaucratic barriers, increase efficiency and growth, stimulate

the competitiveness and digital transition of businesses, and, at the same time,

strengthen the green transition as well as the quality of the public digital services

that citizens and businesses meet.

In addition to the new digital strategy, the component will consist of measures

concerning the strengthening of the SME-digitalisation programme and continua-

tion of the broadband pool. The objectives of these measures are to support

SMEs in overcoming barriers to invest in and use new and advanced technology

and e-commerce solutions as well as to promote connectivity by means of high-

speed internet access in rural areas across the country.

Together, these reforms and investments in digitalisation will be a flagship in lead-

ing Denmark and Danish companies stronger through the COVID-19 crisis by

advancing welfare and equality, growth and employment, the green transition and

the restart of the Danish economy.

Denmark will provide more detailed descriptions on concrete initiatives, benefi-

ciaries, target groups, financing and costs etc. before the end of 2021 once the dig-

ital partnership has submitted its recommendations and the government has

launched the new digital strategy. Denmark will receive no RRF-funding for the

digital strategy before these detailed descriptions has been submitted to the Com-

mission. This approach will ensure that Denmark will not receive RRF-funding

for initiatives that could be in conflict with the criteria within the regulation for

the Recovery and Resilience Facility.

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Reforms

2.6.3 Digital strategy

To promote this digital reform agenda in Denmark, the Danish government will

establish a new digital strategy covering all sectors of society. The strategy will

consist of five new sub-reforms:



Sub-reform 1:

Creating the digital public sector of the future by continuous

modernisation of our digital infrastructure meeting the needs of all citizens

and businesses and strengthening connectivity.

Sub-reform 2:

Securing the digital professions and jobs of the future by

strengthening digitisation within business and industry supporting growth and

export of goods and services.

Sub-reform 3:

Creating better opportunities for co-creation and innovation by

using new technologies and public-private partnerships to streamline and im-

prove public digital services, accelerate digital transition of businesses, and

support climate change mitigation.

Sub-reform 4:

Creating a data-driven society by promoting better access to data,

secure and interoperable data infrastructures, and digital-ready regulatory

framework to improve the digitalisation of SMEs, health systems and digital

services.

Sub-reform 5:

Creating a framework for Denmark fit for a digital future whilst

preserving the best of our society by e.g. enhancing our cyber- and infor-

mation security, digital skills and competencies benefitting all citizens, busi-

nesses and employees.



As part of the process to formulate and elaborate the five sub-reforms, the Dan-

ish government has established a digitalisation partnership that will deliver recom-

mendations for the five sub-reforms. The partnership consists of top managers

and experts from the Danish business community, including SMEs, representa-

tives of municipalities and regions, academia, civil society and labour market par-

ties. The broad anchoring and involvement of stakeholders across society, govern-

ment levels and the public and private sector will qualify the digital aspects and

needs in relation to citizens, businesses, the green transition and the welfare soci-

ety and thereby creating a better foundation for the five new sub-reforms.

Considering the recommendations of the partnership, the specific initiatives of the

new digital strategy and its five sub-reforms will then be subject to political nego-

tiations and approval. The elaboration of the digital strategy’s five sub-reforms

will therefore rely on the partnership’s recommendations, which are delivered

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through 2021. Following political negotiations, the government will initiate spe-

cific initiatives and actions in public authorities as part of the five sub-reforms.

Thus, the Danish government has announced the publication of a new digital

strategy by the end of 2021.

In connection with the partnership, a digitalisation unit will be established with

the responsibility of providing secretarial assistance for the partnership, including

the preparation of the partnership's discussions and the integration of its recom-

mendations in the new digital strategy for Denmark. The unit consists of the Min-

istry of Finance (chair); the Ministry of Industry, Business and Financial Affairs;

the Ministry of Climate, Energy and Utilities; the Ministry of Health; the Ministry

of Foreign Affairs as well as Local Government Denmark (representing munici-

palities), Danish Regions (representing regions) and representatives of the social

partners (trade unions).

1a. Sub-reform: Creating the digital public sector and services of the future

Addressing challenges:

The measure will address the bridging of the digital di-

vide by modernising digital infrastructure, digital public services and public ad-

ministrations. Moreover, the measure will address the interoperability between

central, regional and local administrations, the acceleration of administrative pro-

cesses, and the improvement of the digital interaction between administrations,

citizens, and businesses.

Objectives:

Since 2001, local, regional and central governments have collaborated

on joint-public digital strategies setting the course for public sector digitisation in

Denmark, including the public interaction with businesses and industry. The cur-

rent joint-public digital

strategy

expires in 2021. The objective of this sub-reform

will be on improving the digital infrastructure and solutions that citizens, busi-

nesses and authorities use across the public administration on the central, regional

and municipal government level.

The modernisation of the national digital infrastructure in Denmark will also sup-

port the development and implementation of cross-border and interoperable digi-

tal services, e.g. eID gateway and Single Digital Gateway.

The terms of reference for the digitalisation partnership states that it must prepare

recommendations and initiatives for the work on a new joint public digitalisation

strategy and for the ongoing development and adaptation of the strategy through-

out the strategy period.

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Example of possible measure creating the digital public sector and services of the

future:



A new joint-public digital strategy could set the framework for how digitisa-

tion, data and new technologies can be used actively to promote welfare,

strengthen coherence across the public sector, strengthen digital inclusion ef-

forts, contribute to the growth conditions of companies, and support the

green transition.

Implementation:

The digitalisation partnership is expected to deliver its recom-

mendations for sub-reform 1 by the end of September 2021 with a launch of the

governments new digital strategy by the end October 2021. The Ministry of Fi-

nance (Agency for Digitisation) will be responsible for the general implementation

and follow-up on the digital strategy. The Agency for Digitisation will be responsi-

ble for the implementation and follow-up on initiatives within this sub-reform.

Target group:

Citizens, public authorities (including digital solutions and infra-

structure used by central government as well as local and regional administrations)

and the private sector (businesses).

Compliance with State Aid Rules:

Prior to the agreement, it will be ensured

that all initiatives in the sub-reform for creating the digital public sector and ser-

vices of the future will comply with State Aid rules. Possible private providers of

goods or services will be selected on the basis of competitive, transparent, non-

discriminatory and unconditional tenders in line with the principles of the TFEU

in public procurement.

Timeline:

2022-2025.

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Do no significant harm:

Table 2.6.1

Substantive DNSH assessment

DNSH objective

Climate change mitigation:

Is the measure expected

to lead to significant greenhouse gas emissions?

Yes

No Significant negative impact?

X The activity that is supported by this sub-reform has an insignificant

foreseeable impact on this climate related objective, taking into account

both the direct and primary indirect effects across the life cycle of the

measure. By improving the digital infrastructure and solutions that citi-

zens, businesses and authorities use across the public administration

on the central, regional and municipal government level, the sub-reform

supports the objective of improved climate change mitigation and adap-

tation through more energy efficient solutions and reduced emissions.

The digitalisation partnership has not yet delivered its final recommen-

dations, but the reoccurring and including dialogue between different

stakeholders ensures that any risk of climate change mitigation will be

addressed in the analysis.

Climate change adaptation:

Is the measure expected

to lead to an increased adverse impact of the current

climate and the expected future climate, on the meas-

ure itself or on people, nature or assets?

The activity that is supported by this sub-reform has an insignificant