“Everybody has a plan until they get hit in the face…or something.”
Denmark's climate minister Dan Jørgensen seemed tuite tickled when before this weekend's historic climate negotiations, The Local asked him to recall the quote from the boxer Mike Tyson, he had used a few weeks earlier to explain why coronavirus made imposing a carbon tax a bad idea.
“Now is not the time, we think, to put big taxes on companies,” he added, explaining what he had meant. “And now is not the time to look at fundamental changes to our tax system.”
But on Sunday night the ruling Social Democrats agreed to do exactly that, committing to draw up plans for a green tax reform and then propose a new system in the autumn, ahead of another round of inter-party talks.
The reform was one of a raft of measures agreed between Denmark's political parties late on Sunday night in the first agreement over the country's climate plan, which together should reduce Denmark's greenhouse gas emissions by 3.4m tonnes a year by 2030.
The tax element was forced on the government by the Social Liberal Party, which teamed up with the centre-right Liberals on the proposal.
The fact that the parties have agreed a deal does not mean, however, that the coronavirus crisis, and its enormous impact on the economy, has not changed the way his government hopes to manage the green transition.
“What the situation is forced us to do is to revisit the possible policy instruments that we have,” Jørgensen explained.
“Without saying too much about what we had originally planned, it is fair to say that we have changed course, so it's more carrots than sticks in our present proposal.”
He pointed to the Scandinavian airline SAS, to which the Danish government recently agreed to lavish billions of kroner in emergency economic support.
“Obviously, we think that the aviation sector needs to go through a green transformation, and most people that agree with that say 'well then that means some some sort of taxation on plane tickets'. But is now the time to do that? We think not.
“They've already had to fire a lot of people. So instead of risking companies closing and people losing their jobs, we'd rather postpone decisions having to deal with taxation. Not for an eternity, but right now is definitely not the time to do it.
“I think that we're better off spending resources on subsidies and helping them in the green transformation than we are if we were to choose to put more economic pressure on them.”
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Jørgensen was adamant, however, that this changed approach did not mean it had become less ambitious.
The “energy islands”, two enormous clusters of offshore wind parks promised under the plan, were, he claimed, “the biggest infrastructure investments in the history of our country”.
“We will have a huge capacity in the sea of up to 10GW on one island, which is 1.5 times the entire electricity consumption of a country like Denmark. So this is really a huge step forwards,” he said. “Now, this is going to be financed primarily by private investments. But it takes political decisions, power and political will to get these projects started.”
The Social Democrats' worries about green tax reform are not limited to the risks of putting yet another burden on companies.
They are also worried that the reform is being used by the centre-right parties as a backhand way of reducing income and corporate taxes more generally, and as a result reducing funding available for the welfare state.
Jørgensen warned that the agreement between the Liberal and Social Liberal parties on green tax reform masked fundamental disagreements.
“What they've said in that proposal is that the tax on CO2 should be accompanied by tax reductions to our companies. And if you give our companies tax reductions, that comes from the funding for the welfare state,” he said.
“It's only at face value that there's an agreement. If you look at how it's actually going to be done, here's a huge disagreement.
“And that, of course, is going to be a challenge for the government. How will we find a broad majority on a model that actually works, a model that will both create the green transformation and the right incentives. How do we do that, knowing that we need to take care of our public sector funded by taxes, and without having a bigger inequality in our country?”
The deal reached on Sunday night pushes that discussion out until the autumn.
But, with Denmark's parliament on Thursday signing the country's 70% emissions reduction goal — perhaps the most ambitious in the world — into law, Jørgensen was insistent that Denmark remained on track.
After the coronavirus crisis hit, he pointed out, the populist Danish People's Party, had proposed reducing the 2030 goal to a 60% cut, a suggestion the Social Democrats had rejected.
“My counter-argument to that was 'no, because the climate crisis is so much bigger than than the pandemic we're in right now', in the sense that it will also be there on the other side of the pandemic,” he explained.
As well as the 2030 goal, he pointed out, Denmark had pledged to become carbon neutral by 2050.
“When you do that, then you know that crises are going to occur,” he said. “Nobody could have foreseen the Covid-19 crisis, obviously. But we could say with some certainty that we will reach crisis situations before 2050. That's the main reason why it's a good idea to have a climate act — so we are legally obliged to do these things even when they're difficult.”
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