Denmark, known for its economic resilience to the COVID-19 crisis, embarked on an ambitious path toward a green transition to address challenges including labor shortages and an aging population. Despite the economic slowdown caused by rising energy prices, the Nordic country seeks to consolidate its high standard of living through reforms aimed at addressing long-term challenges, including the ecological transition.

According to the latest OECD report, Denmark projects GDP growth of 1.2% in 2024, with a subsequent recovery to 1.5% in 2025. In this context, the Danish government recognizes the importance of incentivizing emissions reductions in all sectors as a crucial component of advancing the ecological transition. Although employment has experienced solid growth, recruitment difficulties persist, highlighting the need for comprehensive reforms.

OECD Deputy Secretary-General Ulrik Vestergaard Knudsen emphasized that key future policy priorities should focus on encouraging longer working lives and addressing persistent labor shortages, especially in key sectors. Population aging, despite successful pension reforms, poses risks, and the annual net costs of aging are expected to increase by about 1.1% of GDP by 2050.

Denmark has set ambitious targets for reducing greenhouse gas emissions, and while it has made significant progress, the need for further policy reforms is recognized. Full implementation of green tax reform is presented as a vital tool to accelerate emission reductions and avoid distortions between sectors and technologies. The introduction of an agricultural emissions tax is currently being discussed as a cost-effective measure to incentivize more sustainable practices and support the green transition in the sector.

According to the OECD, moving to a carbon neutral economy entails accelerating electrification of the energy mix in further expand the green power production capacity. This requires finding agreements at the local level and reducing administrative barriers to invest in infrastructure deployment. Legislation to simplify planning an approval procedures and prioritse energy infrastructure over local concerns could significantly speed up the deployment of renewable energy sources.