In response to the COVID-19 crisis, several Nordic countries are continuing their trend of investing in a green economy. Finland’s recovery plan includes approximately EUR 500 million for green investments, including public transportation, recapitalizing its climate fund, and phasing out oil heating. Denmark has adopted 13 climate partnerships with the business sector to build a green economy. The energy and industry agreement includes 4 gigawatts (GW) of offshore wind, subsidies for energy efficiency, tax reform for heating (higher taxes on fossil fuels, lower on green electricity), and consideration of green tax reforms that will make it easier to choose solutions that reduce negative impacts on the environment.
Experience from the Nordic countries demonstrates that increasing taxes on fossil fuels provides an effective way to raise cash for social welfare and economic stimulus. At a time when governments around the world are facing unprecedented costs, reduced revenue, and climate change, taxing fossil fuels simply makes sense.