Denmark counts costs of electric mobility

08 September 2020

8 September 2020 The cost of a swift change to electric cars in Denmark has been calculated by a government commission. The country has set some ambitious climate-change targets, which promote the use of electric vehicles (EVs), but this could lead to an unbalanced budget. Come 2030, Denmark plans to cut its emissions by 70%, and become carbon neutral by 2050. Switching from cars powered by internal combustion engines (ICE) to EVs looks to be central to these aims. Crucial or costly? In March, the Danish Council on Climate Change, an independent advisory group to the government, stated that at least 1 million electric cars would be needed by 2030 to meet emissions targets. This would be a significant rise from the current figure, which is less than 20,000. ′If emissions from the transport sector are to be significantly reduced, it is crucial that Danes start buying electric cars instead of the traditional petrol and diesel-powered cars,’ the Council said in its March report. ′Sales of electric cars in Denmark are still sluggish compared to neighbouring countries, despite significant tax cuts.’ However, the country also has a heavy dependence on car and road taxes, which add up to roughly 50 billion Kroner (€6.7 billion) per annum. This totals 2.3% of Denmark’s gross domestic product (GPD). The recent Car Commission announcement revealed that meeting the 1 million electric car target, through raised subsidies and higher taxes on ICE-powered vehicles, would mean a total net loss to society of 5.7 billion Kroner in 2030, Reuters reported. ′No easy solutions’ The Danish government asked the commission for recommendations on how to successfully make the switch from ICE to EV, without sending the state budget into a downwards spiral. In its report, the group had to weigh up green goals against key economic structures in a series of scenarios. This included various important factors, from the socio-economic, to distributional, as well as climate considerations. ′The Car Commission has conducted a thorough analysis of the opportunities for increasing the number of green cars, which I look forward to studying closely,’ said Minister of Taxation Morten Bødskov. ′The government wants a green transition. And since the transport sector accounts for just over a quarter of total CO2 emissions, cars are a step on the way to achieving the government’s 70% target by 2030. But as the Car Commission’s report clearly states, there are no easy solutions.’ He went on to say that there are many considerations to not only think about but balance in further work. For many, a car is the only possible mode of transport when it comes to commuting, transporting children and making social calls. ′Therefore, a green transformation of the car fleet must go hand in hand with the needs of Danes for transport,’ Bødskov added.