Press Release: State aid: Commission investigates proposed new Danish CO2 tax reductions

The European Commission has opened a formal investigation to examine whether Danish plans to grant CO2 tax exemptions to companies covered by the EU’s Emissions Trading Scheme (EU ETS) are compatible with EC Treaty state aid rules. The Commission is concerned that the measure might distort competition by increasing tax differentiation in an area where the EU has harmonised taxes in order to create a level playing field between companies. Furthermore, the Danish measure might run against the “polluter-pays” principle, a leading principle of the EU’s environmental policy, as companies participating in the EU ETS have received most of the emission allowances for free. The opening of a formal investigation gives interested parties the opportunity to comment on the intended measures. It does not prejudge the outcome of the procedure.