The Danish government’s new incentive structure for green energy is facing sharp criticism from the Association of Danish Municipalities (Kommunernes Landsforening, KL). According to KL’s chairman, Martin Damm, who is also the mayor of Kalundborg for the Liberal Party (Venstre), the government’s bonus model could ultimately hinder the expansion of renewable energy sources such as wind turbines and solar panels.
On Thursday, the government unveiled its new rural district initiative, which includes an annual bonus of 200 million Danish kroner (approximately 28.4 million USD) for municipalities that install the most renewable energy infrastructure. This subsidy is set to take effect in 2026. However, KL warns that municipalities may decide to delay projects in order to qualify for the bonus. “Everything will come to a standstill,” said Martin Damm, adding that this sends the wrong signal to those municipalities that have already taken responsibility to establish renewable energy installations first.
Additionally, municipalities are dissatisfied with the financing model. The 200 million kroner will be funded through the municipal block grant, which means that some municipalities risk cuts to welfare services in order to finance the bonuses for others. “This is an unacceptable principle,” asserts Martin Damm, noting that this could set a precedent for funding practices from other government ministries.
Despite the criticism, Climate Minister Lars Aagaard maintains that the competitive element of the incentive structure is intentional. “We are creating an incentive for municipalities to participate,” he stated at the press conference, emphasizing that this is about a “green competition.”
Despite the good intentions, KL believes that this model risks causing more harm than good in the fight for a green transition.