In light of the upcoming EU legislation on fuel efficiency standards, we argue that Denmark will not benefit in terms of lower CO2 emissions compared to the rest of the EU countries. The reason is the system of high Danish registration taxes making the development of new, more fuel efficient technology too expensive in Denmark.
The figure shows how more fuel efficient technologies quickly become twice as expensive in Denmark compared to Germany.
Figure: It is expensive to introduce more fuel efficent technologies in Denmark
Note: Germany. The figure shows the accumulated costs of introducing fuel efficient technologies – ranked from the cheapest to the most expensive. The full red line is the current system in Denmark with registration taxes; the dotted red line is Denmark without registration taxes; the full golden line is Germany.Source: IEA (2000) Fuel economy improvement. Policies and measures to save oil and reduce CO2 emissions.