332 L. BOSCÁN ET AL.
of the normal registration tax between 2016 and 2018, for the first 5
thousand units sold in the two-year period. This failed; in 2017, only 1.3
thousand of 221 thousand new vehicle sales were EVs, and at the end of
2018, only 3.5 thousand new BEVs had been sold in Denmark.
In response to the failure, and to complement the 2018 energy policy
agreement, the Danish government has put forward a comprehensive set
of proposals to counter climate change and air pollution (Danish Ministry
of Energy Utilities and Climate 2018b). One key proposal is to stop
selling new gasoline- and diesel-fueled vehicles by 2030, and to do the
same with respect to plug-in hybrid EVs by 2035. From 2025, all new
taxis and buses shall be emission-free, such that by 2030 the entire taxi
and bus fleet shall produce no emissions. Together, this creates an approximate target of 1 million EVs running in Denmark by 2030. As immediate
measures, in late 2018, the Danish Parliament decided to continue with
the 20% registration tax policy until the end of 2020 for most cars, effectively leaving the least expensive varieties of cars paying essentially no
tax (FDM 2018; Statistics Denmark 2019). These tax reductions will
be complemented by other measures, such as reduced parking fees, the
opportunity to drive in bus lanes, an improved charging infrastructure,
and an increased scrapping reward for old diesel-fueled vehicles.
While the impact of the measures on drivers’ choices can be uncertain, one well-known barrier for the implementation of tax exemptions or subsidies is the financial dependence of the government on
private transportation-related taxes. Presently, approximately 5% of all
its proceeds come from this source and the government recognizes the
tradeoff between increasing energy efficiency and the availability of tax
income (Danish Ministry of Energy Utilities and Climate 2018b). The
electrification of transportation requires careful consideration of the policy
costs involved.
Challenge 2: Reforming the District Heating Sector and Increasing
the Share of Renewables in the Production of Heat. In international
comparisons of district heating systems, Denmark appears to be a leader.
Euroheat & Power (2015)—an international district energy organization—highlights that Denmark ranks third in terms of the share of
citizens covered (63%), exceeded only by Iceland (92%) and Latvia
(65%). Denmark also ranks third in direct renewable usage, which
includes the use of renewable energy in heat-only boilers and installations other than CHP. According to this metric, only Iceland (92%),
which possesses unusually favorable conditions for geothermal energy, and
of the normal registration tax between 2016 and 2018, for the first 5
thousand units sold in the two-year period. This failed; in 2017, only 1.3
thousand of 221 thousand new vehicle sales were EVs, and at the end of
2018, only 3.5 thousand new BEVs had been sold in Denmark.
In response to the failure, and to complement the 2018 energy policy
agreement, the Danish government has put forward a comprehensive set
of proposals to counter climate change and air pollution (Danish Ministry
of Energy Utilities and Climate 2018b). One key proposal is to stop
selling new gasoline- and diesel-fueled vehicles by 2030, and to do the
same with respect to plug-in hybrid EVs by 2035. From 2025, all new
taxis and buses shall be emission-free, such that by 2030 the entire taxi
and bus fleet shall produce no emissions. Together, this creates an approximate target of 1 million EVs running in Denmark by 2030. As immediate
measures, in late 2018, the Danish Parliament decided to continue with
the 20% registration tax policy until the end of 2020 for most cars, effectively leaving the least expensive varieties of cars paying essentially no
tax (FDM 2018; Statistics Denmark 2019). These tax reductions will
be complemented by other measures, such as reduced parking fees, the
opportunity to drive in bus lanes, an improved charging infrastructure,
and an increased scrapping reward for old diesel-fueled vehicles.
While the impact of the measures on drivers’ choices can be uncertain, one well-known barrier for the implementation of tax exemptions or subsidies is the financial dependence of the government on
private transportation-related taxes. Presently, approximately 5% of all
its proceeds come from this source and the government recognizes the
tradeoff between increasing energy efficiency and the availability of tax
income (Danish Ministry of Energy Utilities and Climate 2018b). The
electrification of transportation requires careful consideration of the policy
costs involved.
Challenge 2: Reforming the District Heating Sector and Increasing
the Share of Renewables in the Production of Heat. In international
comparisons of district heating systems, Denmark appears to be a leader.
Euroheat & Power (2015)—an international district energy organization—highlights that Denmark ranks third in terms of the share of
citizens covered (63%), exceeded only by Iceland (92%) and Latvia
(65%). Denmark also ranks third in direct renewable usage, which
includes the use of renewable energy in heat-only boilers and installations other than CHP. According to this metric, only Iceland (92%),
which possesses unusually favorable conditions for geothermal energy, and