The final agreement

On 1 March 2009 final agreement on the tax reform was reached between the Government and the DPP.

The green initiatives within the reform were an increase in green taxes and the introduction of a green cheque.

65 The proposal stated: “Green taxes are an effective means of achieving climate and energy policy targets. It reduces gross energy consumption, strengthens RE, and the emission of GHGs from non-quota sectors is reduced” (The Danish Government, 2009b: 6). By introducing the use of

intelligent solutions it was argued that it could be “cheaper for the families and businesses to consume energy without harming our climate and environment” (The Danish Government, 2009b:

15). These articulations created a logic of equivalence associated with the nodal point ‘green taxes’ that included cheaper energy and climate protection and was thus placed within the

ecological modernisation discourse because it was articulated as a solution that was beneficial for the climate while it did not hamper economic growth.

The agreement included a number of increased energy charges. It was however recognised that this could lead to a relocation of industries, which was sought to be overcome by exempting a number of industries from the agreement. The logic behind this exemption was that the global climate would not be improved if companies chose to relocate abroad (The Danish Government, 2009b), repeating the articulation of the Confederation of Danish industry mentioned in section 5.3.1.4. It therefore seems that, as in the transport agreement, green policies that could be questioned on the extent to which they were economical were excluded; and thereby that economic concerns were more important than the concern for the environment.

An income dependent green cheque was also part of the agreement, and it was articulated as follows:

The parties agree to compensate the families for the increase in taxes on consumption of energy… The energy consumption by the households and hence the impact of the

increased energy charges are expected to constitute a gradually declining share of income. This is among other due to the increased use of RE, which is taxed to a lesser extent, and on-going energy savings. (The Danish Government, 2009b: 14).

This articulation of the nodal point ‘green cheque’ made it equivalent with a fair distribution of the cost of the increased green taxes, while it argued that these costs would be reduced in the future due to technological developments.

The green cheque in this way responded to the concerns over the distributional consequences of increased green taxes – a concern that as mentioned had been voiced by almost all parties of parliament and by the Ecological Council. It could also be seen as a recognition of the position by

66 the general public that an increase in green taxes should not be associated with an increase in economic costs.

There had been a widespread critique of the Tax Commission’s proposal to introduce a tax on methane both by businesses and NGOs, although they used very different argumentations. The fact that the final agreement did not include any tax on agriculture suggests that the arguments by Landbrugsraadet and the Danish Agriculture about loss of competitiveness and no positive effect on CO2-emissions outweighed the NGO arguments for a tax on manure not used for

biogasification. This could be because the NGO argument did not include any referral to possible economic gains from this tax and therefore did not reflect the ecological modernisation

discourse’s requirement that solutions should be both green and economical.

The agreement relied on technological developments to create solutions that were at the same time climate-friendly and economical and thus again seemed to suggest the hegemonic position of the ecological modernisation discourse.

Beside the apparent agreement between the different political parties that green taxes should be increased and the tax on labour should be decreased, the final settlement nevertheless ended up being quite narrow. This suggests that it was not the climate political issues that were the main cause of disagreement; rather the tax freeze seems to be what separated the parties. The tax freeze to a large extent formed the antagonistic relationship between the Government and its supporters on one side and the Opposition on the other. The SL voiced its resistance against the tax freeze on several occasions arguing that it prevented the Government to make a truly green tax reform. When the Government made it an ultimate condition that the tax freeze had to be upheld in the tax reform it thus excluded the Opposition from the negotiations and was free to disregard the proposals made by the Opposition parties such as lower public transport fares and differentiated electricity charges in the final agreement.

It seems that the other nodal point that the Opposition articulated as the basis of the antagonistic relationship between itself and the Government was the potential skewed economic effect of increased green taxes, which again suggested that the economic effects of the proposed political instruments were more important than the beneficial effects these instruments could have on the climate.

67 It therefore seems that the green tax reform was as not as much proactive climate policy rather than a tool to decrease the tax on labour.