RRF funded projects in Denmark

What’s in the plan?

The reforms and investments in Denmark’s plan, approved by Council on 13 July 2021, are helping it become more sustainable, resilient and better prepared for the challenges and opportunities offered by the green and digital transitions.

^{*This value includes also the part of the plan which is financed with national resources}

• 33 investment streams and 6 reforms
• 59% of the plan will support climate objectives 
• 25% of the plan will foster the digital transition.

The transformative impact of Denmark’s plan is the result of a balanced combination of reforms and investments which address the specific challenges of Denmark. The reforms will support the green transition of the economy, while most investments are targeted to increase energy efficiency, reduce CO2 emissions and foster the digital transformation.

All measures have to be implemented within a tight time frame, as the Regulation establishing the Recovery and Resilience Facility requires all milestones and targets within the national plans to be completed by August 2026.

In the area of climate and environmental policies, Denmark faces several challenges.

First, Denmark has set an ambitious GHG emissions reduction target of 70% by 2030 relative to the 1990 levels, and climate neutrality by 2050 at the latest, which will require significant investments and reforms across the economy, notably through the installation of new renewable energy capacity. Second, energy consumption increased in the years up until 2020, which highlights the need for additional policy and measures to foster energy efficiency. Lastly, challenges remain to develop sustainable transport, through easing road transport bottlenecks, ensuring the electrification of railways and building infrastructure encouraging electricity-based transport.

Key measures for the green transition

• The two largest single green measures in the plan are:
  • The investment window (€163million) of the green tax reform and the reprioritisation of the registration tax of vehicles; and
  • The low electricity tax on charging vehicles (€141million), in the sustainable transport component.
• Together with the research program in green solutions (€94 million) and measure related to carbon rich soils (€89 million), these measures are expected to boost the green transition and make up more than half of all the green investments in the plan.
• Lastly, energy efficiency measures will account for € 235 million. The Danish plan is expected to provide support to private buildings and public buildings, but also to energy efficiency of small and medium enterprises (SMEs).

Digital challenges for Denmark include the lack of sufficient progress in raising the low share of ICT specialists in the workforce, the inclusion of women in digital jobs, careers and entrepreneurship and a growing shortage of talent with advanced digital skills, for instance in areas such as artificial intelligence, high-performance computing, cybersecurity and machine learning.

Key measures for the digital transition

• Denmark’s recovery and resilience plan supports the digital transition with investments in the digitalisation of small and medium enterprises (SMEs) and the public administration. 
• Tax schemes will support frontloading digital investments of Danish companies, extending rural broadband coverage and pursuing digitalisation of the healthcare sector.
• An SME digitalisation scheme will support the digitisation efforts of smaller-size companies. 
• A new digital strategy will further digitalise the public administration and prepare the country for the future challenges in areas such as cybersecurity and artificial intelligence.
• Additionally, the plan will support the development of solutions to store and reuse personal information by public administrations and increase the share of public innovation fostered by public and private partnerships.

Key macro-economic challenges for the Denmark’s economy include sluggish productivity growth as well as start-ups and small and innovative companies struggling to scale up and grow. Furthermore, R&D activity remains concentrated in a small number of large firms in a few sectors. 

Key measures in reinforcing economic and social resilience

Key measures in reinforcing economic and social resilience include:

• Measures for the health sector, where the plan is expected underpin inter alia management system for stocks of critical supplies, further rollout of telemedicine, healthcare services also for persons on the margins of society and the study of effects and side effects of COVID-19 vaccines.
• Measures fostering green and digital investments mainly of SMEs, through tax incentives thereby frontloading private investments to achieve the twin transition.
• Measures to reinforce Denmark’s resilience and its ability to absorb economic shocks (including measures in the healthcare system and the digital projects).
• Several of the initiatives can be expected to have a positive effect on the long-term growth potential of the Danish economy. Public investment in energy efficiency, green heating and carbon capture storage, and sustainable road transport are expected to increase long-term productivity and potential GDP.

More information on the event can be found here.

The plan is consistent with the challenges and priorities identified in the European Semester, the annual cycle of coordination and monitoring of each EU country’s economic policies. For a detailed explanation of the European Semester see the following link: The European Semester explained | European Commission (europa.eu)

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