What Tom Friedman Forgets to Mention About Danish "Green Taxes"

In the wake of the post-Copenhagen climate change conference fiasco, New York Times columnist Thomas Friedman waxes eloquent over this Danish energy frugality in a recent column and even mentions why they might engage in energy sparing behavior: taxes.

As I listened to Denmark's minister of economic and business affairs describe how her country used higher energy taxes to stimulate innovation in green power and then recycled the tax revenues back to Danish industry and consumers to make it easier for them to make and buy the new clean technologies, it all sounded so, well, intelligent. It sounded as if the Danes looked at themselves after the 1973 Arab oil embargo, found that they were totally dependent on Middle East oil and put in place a long-term strategy to make Denmark energy-secure and start a new industry at the same time.

The more I listened to the Danish minister, Lene Espersen, the more I thought of my own country, where I've been told time and again by U.S. politicians that proposing even a 10-cent-a-gallon increase in gasoline taxes to make America more energy independent and to stimulate fuel efficiency is "off the table," an act of sure political suicide.

Not in Denmark. So I asked the Danish minister: "Tell me, what planet are you people from?"

Espersen laughed. But I didn't. How long are we Americans going to go on thinking that we can thrive in the 21st century when doing the optimal things — whether for energy, health care, education or the deficit — are "off the table."

It is true that the Danes are very energy conscious. Hmmm. Why would that be? First, let's clear up a few things. Denmark is now "energy-secure" largely because of its share of North Sea oil and gas. It even exports gas to the rest of Europe. The country reduced its carbon dioxide emissions not only because of windmills, but because the government started levying high taxes on high-carbon coal and lower taxes on lower-carbon natural gas used to produce electricity. Friedman is right that the taxes get recycled back to industry (not so much to consumers) and such recycling paid for much of the capital costs for the industrial switch from coal to natural gas and tax recycling works as a subsidy which helps Danish industry remain globally competitive.

However, Friedman fails to mention that another result of "green taxes" is that Danish consumers pay some of the highest electric rates in the world: 42 cents per kilowatt hour compared to 9 cents per kilowatt hour in the U.S. This may explain why the very hospitable Danish lady from whom I rented a room while covering the climate conference was always following behind me to make sure that the lights were off. Friedman's mention of "a 10-cent-a-gallon increase in gasoline taxes" is a bit disingeuous as well. A gallon of gasoline costs $7.76 in Denmark compared to $2.63 in the U.S.

Whole Friedman column can be found here.