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While the country may receive some relief from the EC, it seems likely that the final emissions base will be closer to actual 1990 emissions than to the modified emissions base of 5 MtCO2 higher. If so, the target for the years 2008-2012 will be around 55 MtCO2 and meeting this target will require a more than 30% reduction in emissions from the projected emissions level of around 80 MtCO2. Given Denmark’s challenging reduction target and the degree of emissions reduction measures already introduced, it was prudent to employ such a high degree of international mechanisms in the climate change strategy.
Another problematic area is the simultaneous use of both a CO2 tax borne by end-users and the EU-ETS system where producers/emitters pass through the (opportunity) cost of allowances. Thus, there is a double price signal for 45 reduction of CO2. Finally, the tax regulations discourage the use of electricity for district heating, which may be an attractive option when many of the mustrun renewable energy plants are generating, which results in electricity prices decreasing substantially or approaching zero.
Dk operations, including decisions on network additions, treat all competing suppliers equally. The third way in which the merger gives DONG market power is through crossfuel integration with strong operations in oil, gas and electricity. One of the primary competitive options for new entrant electricity, through greenfield plants or acquisitions, is via gas-fired generation. While supplier choice and equal access rules for all transport and distribution pipelines should theoretically place all competitors on a level playing field, even the suggestion of favouritism would deter new entrants and thus stifle competition.