DENMARK LEADING THE WORLD WITH ECO REGS.

Denmark is developing a macroeconomic model, GreenREFORM, to enable the fiscal and economic planning to support the green transition. The model is designed by the Danish Research Institute for Economic Analysis and Modelling, with the support of the Danish Ministry of Finance and other partners. The analytical tool draws from Danish experience with green budgeting, and aims to provide an integrated assessment of the environmental and climate effects of economic policies, as well as the socio-economic effects of energy and climate policies. Beyond climate budgeting, it can also simulate the possible effect on emissions of environmental taxes, subsidies and other regulations. In this way, it aims to strengthen the consistency of public finances with climate and environmental targets. GreenREFORM is based on a main dynamic computable general equilibrium model and several sub‑models that describe key sectors with important climate and environmental impacts (e.g. agriculture, electricity and heat, transport, waste management). It is designed as a fully integrated model system in which sub-models and the main model are linked and solved simultaneously. The data describes 142 different sectors in the economy and includes 27 different energy products (e.g. oil, gas and biomass). Denmark aims to illustrate the interactions between different sectors by bringing them together in a “one‑stop-shop” offering an integrated perspective of the potential climate and environmental impact of a given policy measure. This would enable ex-ante assessments of new measures to weigh possible effects, and enable more rigorous evaluations of different climate policy options. The model can produce yearly forecasts for each year 2015-2100, thereby enabling medium-to-long-term fiscal and economic analysis. This will allow Denmark to position climate and environmental policy centrally in the preparation of its medium-term fiscal framework (OECD, 2022). Instead of talking the talk as we see in the UK with u turns on eco matters, Denmark is walking the walk.

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