The Copenhagen Climate Conference

Heavy taxes fuel Danes’ clean economy

Sam Eaton Dec 16, 2009
The Copenhagen Climate Conference

Heavy taxes fuel Danes’ clean economy

Sam Eaton Dec 16, 2009


Kai Ryssdal: At this point in the UN climate conferece, you might fairly be asking yourself this question: Why Copenhagen? I mean, it’s nice enough. But mid-December’s not the most visitor-friendly month to be in the Danish capital, after all. There is this to consider, though. With the pressure on to move to a clean or at least a cleaner economy, the Danes are miles ahead of almost everybody else in that regard. Marketplace’s Sam Eaton reports now from Copenhagen.

SAM EATON: One of the first things I noticed about Denmark is how easy it is to get around without ever using a car. Trains and subways go everywhere. Bike lanes are jammed with well-dressed professionals. And if you look closely at the horizon you can see the spinning blades of offshore wind turbines.

FINN MORTENSEN: I think we have a very good story to tell the world from a Danish perspective.

That’s Finn Mortensen. He heads Climate Consortium Denmark, the country’s clean tech trade group. He says today Denmark is one of the most energy efficient nations in the world and a leader in clean technology exports. But the motivation to get there wasn’t always about saving the planet.

MORTENSEN: If you turn back the time to late 1973 when we had the first oil crisis, Denmark was very severely affected. Prices went up. Unemployment went up. The economy came to a standstill.

In a panic, the government slapped punishing taxes on anything that had to do with petroleum. Other countries did the same but when oil prices dropped, Denmark kept its taxes in place. And it used the revenue to fund clean and efficient energy. Today Denmark is one of the most heavily taxed countries in the world, but it also leads the world in wind power.

MORTENSEN: I don’t know whether we are masochists in Denmark, but if you want to change attitudes then it’s not enough with a miniscule tax. You have to do a rather hefty tax. I mean the price of gasoline in Denmark is three times as high to the consumer as it is in the U.S., for instance.

That’s if you can even afford a car. The registration taxes on a new one actually cost more than the car’s sticker price.

Kaspar Olesen, his wife Susanne, and their 3 year old are your typical suburban family here.

KASPAR OLESEN: All people, not only Danes, complain about taxes. When you look at it all we got a lot of pluses in our tax system.

Like the bike trail Olesen uses to commute 10 miles to work every day. That’s not to say the taxes are painless. Olesen’s house, big by Danish standards, is about 1,600 square feet. When they moved in last August, the annual energy bill was more than $11,000 a year — an amount they couldn’t possibly afford. But thanks to generous tax-funded rebates and a mortgage that rolls energy improvements into the total cost, they started making changes.

OLESEN: This right here. This is our old oil furnace. And we have changed it and today we use a state-of-the-art furnace for natural gases.

They’ve also added insulation, swapped out the windows, not only because they’re concerned about their environmental impact, but because it makes financial sense.

Most of their neighbors all up and down the street have done the same. And this points to one of the reasons the high taxes here haven’t become a political liability.

STEEN GADE: Tax is not the answer as such. Tax has to be followed by the possibility to choose in other ways.

That’s Steen Gade, chairman of the environment committee in the Danish parliament. He says without major public investments in things like bike lanes, mass transit, and energy efficiency, the Danes probably would have revolted against high taxes. And businesses would have joined them if it weren’t for the generous government help they get for becoming energy efficient and selling the products and services to do so.

GADE: Now business are asking us, the greens, to fight for stronger regulation because then they see the economic benefits in the business.

But taxes and regulation do have limits. Danish farmers are often the fiercest critics of the country’s punitive tax system.

Villads Sorensen is a tenth generation farmer here. He raises 7,500 pigs a year for export.

VILLADS SORENSEN: I use energy to transport my barley and my wheat and water. And I use energy to make the feed to the pigs and the ventilation.

EATON: So big energy bill?

SORENSEN: Yes. I use a lot of energy.

Sorensen’s wife, Tine, says paying those bills has been a struggle, but they’ve managed to survive. She even sees the good in it. Their farm is now about as energy efficient as it can get, which makes it more competitive, at least in theory. And this is why she’s following the Copenhagen climate talks so closely.

TINE: As it is now, we believe that it is possible in the future if there is the same rules for everybody. If we are the only country or the only farm who has to deal with it then the competition would be too strong. But if the rules and the ideas are widespread we believe it’s possible, yes.

She says Denmark’s story is just the beginning. Now it’s what the rest of the world does that really matters.

In Copenhagen, I’m Sam Eaton for Marketplace.

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