Carbon tax? Ask the Danes

The business of pollution and buying your way out of it with carbon credits is big news these days. From governments levying carbon taxes to air travellers buying into carbon offsetting schemes, few people can claim ignorance on the issue anymore.

But the idea of taxing carbon pollution isn’t a new concept. Sweden, Finland, Denmark and Norway have been using carbon taxes since the 1990s with each country reporting varying degrees of success.

In Norway emissions have actually increased by 43 percent while Denmark on the other hand, has successfully seen a reduction in emissions by 15 percent between 1990 and 2005, whilst still managing to grow at an impressive rate.

So how does Denmark do it? One analyst says that what Denmark did right was to use the carbon tax for environmental research. The tax it collects from manufacturers is then pumped back into the industry, either for innovations which will further reduce emissions, or to support research into alternative production methods.