Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Denmark and delivering a Council opinion on the 2022 Convergence Programme of Denmark
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Denmark, digital transformation, economic policy, economic recovery, economic reform, energy policy, fiscal policy, stability pact, stability programme, waste management

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   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 607 final  Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Denmark and delivering a Council opinion on the 2022 Convergence Programme of Denmark {SWD(2022) 607 final} - {SWD(2022) 640 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2022 National Reform Programme of Denmark and delivering a Council opinion 
on the 2022 Convergence Programme of Denmark 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 9(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021.  The  Recovery  and  Resilience  Facility  provides  financial  support  for  the 
implementation of reforms and investment, entailing a fiscal impulse financed by the 
Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps strengthen sustainable public finances and 
boost growth and job creation in the medium and long term. The maximum financial 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [XX] June 2022, in line with Article 11(2) of Regulation (EU) 2021/241.  

On  24  November  2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 
coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 
Social Summit of May 2021 to further implement the European Pillar of Social Rights 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on  17 
November  2017.  The  European  Council  endorsed  the  priorities  of  the  2022  Annual 
Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 

1 
2 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
stablishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

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(3) 

(4) 

(5) 

Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report, in which it did not identify Denmark as one of the Member States for which an 
in-depth  review3  would  be  needed.  On  the  same  date,  the  Commission  also  adopted 
the proposal  for the 2022 Joint Employment Report analysing the implementation  of 
the Employment Guidelines and the principles of the European Pillar of Social Rights, 
which was adopted by the Council on 14 March 2022. 

Russia’s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’  economies  has  been  felt  for  example  through  higher  energy  and  food  prices, 
the inflow of refugees from Ukraine and weaker growth prospects. The higher energy 
prices weigh particularly on the most vulnerable households  experiencing or at risk of 
energy  poverty.  The  EU  is  also  seeing  an  unprecedented  inflow  of  people  fleeing 
Ukraine.  In  this  context,  on  4  March  2022,  the  Temporary  Protection  Directive  was 
triggered4  for  the  first  time,  granting  displaced  persons  from  Ukraine  the  right  to 
legally  stay  in  the  EU,  as  well  as  access  to  education  and  training,  labour  market, 
healthcare, housing and social welfare. 

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility,  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated, or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20205. In its Communication 
of  3  March  20216,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 
in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 
criterion. Heightened uncertainty and strong downside risks to  the economic  outlook 
in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 
supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023.  

(6) 

Following  the  approach  in  the  Council  opinion  of  18  June  2021  on  the  2021 
Convergence Programme, the fiscal stance is currently best measured as the change in 
primary  expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19 

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Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on 
the prevention and correction of macroeconomic imbalances, OJ L 306, 23.11.2011, p. 25. 
Council  Implementing  Decision  (EU)  2022/382  of  4  March  2022  establishing  the  existence  of  a  mass 
influx of displaced persons from Ukraine  within the meaning of Article 5 of Directive 2001/55/EC, and 
having the effect of introducing temporary protection, OJ L 71, 4.3.2022, p. 1 
Communication  from  the  Commission  to  the  Council  on  the  activation  of  the  general  escape  clause  of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 
Communication from the Commission to the Council on one year since the outbreak of COVID-19: fiscal 
policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

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(7) 

crisis-related  temporary  emergency  measures  but  including  expenditure  financed  by 
non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other 
EU funds, relative to medium-term potential growth7. Going beyond the overall fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally-financed8  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment. 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination9.  The  Commission  noted  that,  based  on  the  macroeconomic  outlook  of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine. 

(9) 

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On 30 April 2021, Denmark submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 
2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery and resilience plan for Denmark10. The release of instalments is conditional 
on  a  decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of 
Regulation  (EU)  2021/241,  that  Denmark  has  satisfactorily  fulfilled  the  relevant 

The  estimates  on  the  fiscal  stance  and  its  components  in  this  recommendation  are  Commission 
estimates  based  on  the  assumptions  underlying  the  Commission  2022  spring  forecast.  The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  
Not financed by grants from the Recovery and Resilience Facility and other EU funds. 
Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2023,  Brussels, 
2.3.2022, COM(2022) 85 final. 
Council Implementing Decision of 6 July 2021 on the approval of the assessment of the recovery and 
resilience plan for Denmark (ST 10154/2021) 

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milestones  and  targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory 
fulfilment  presupposes  that  the  achievement  of  preceding  milestones  and  targets  has 
not been reversed. 

(10)  On 29 April 2022, Denmark submitted its 2022 National Reform Programme and, on 
12 May  2022, its 2022 Convergence Programme, beyond the deadline established in 
Article 4 of Regulation  (EC) No 1466/97. To take account of their interlinkages, the 
two  programmes  have  been  assessed  together.  In  accordance  with  Article  27  of 
Regulation  (EU)  2021/241,  the  2022  National  Reform  Programme  also  reflects 
Denmark’s  bi-annual  reporting  on  the  progress  made  in  achieving  its  recovery  and 
resilience plan.  

the 

(11)  The Commission published the 2022 country report for Denmark11 on 23 May 2022. It 
relevant  country-specific 
in  addressing 
assessed  Denmark’s  progress 
recommendations adopted by the Council in 2019, 2020 and 2021, and took stock of 
Denmark’s  implementation  of  the  recovery  and  resilience  plan,  building  on  the 
Recovery  and  Resilience.  Based  on  this  analysis,  the  country  report  identified  gaps 
with respect to those challenges that are not addressed or only partially addressed by 
the  recovery  and  resilience  plan,  as  well  as  new  and  emerging  challenges,  including 
those  emerging  from  Russia’s  invasion  of  Ukraine.  It  also  assessed  Denmark's 
progress  on implementing the European Pillar of Social Rights  and on achieving the 
EU headline targets on employment, skills and poverty reduction, as well as progress 
in achieving the UN’s Sustainable Development Goals. 

the  economy  and  support 

(12)  On  20  July  2020,  the  Council  recommended  Denmark  to  take  in  2020  and  2021  all 
necessary measures, in line with the general escape clause, to  effectively address the 
pandemic,  sustain 
the  ensuing  recovery.  It  also 
recommended  Denmark  to  pursue,  when  economic  conditions  allow,  fiscal  policies 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 
sustainability,  while  enhancing  investment.  In  2021,  based  on  data  validated  by 
Eurostat, Denmark’s general government balance improved from a deficit of 0.2% of 
GDP in 2020 to a surplus of 2.3% in 2021, helped by non-recurrent tax revenue. The 
fiscal  policy  response  by  Denmark  supported  the  economic  recovery  in  2021,  while 
temporary emergency support measures increased from 2.6% of GDP in 2020 to 4.0% 
in 2021. The measures taken by Denmark in 2021 have been in line with the Council 
Recommendation of 20 July 2020. The discretionary budgetary measures adopted by 
the  government  in  2020  and  2021  were  mostly  temporary  or  matched  by  offsetting 
measures.  Based  on  data  validated  by  Eurostat,  general  government  debt  stood  at 
36.7% of GDP in 2021. 

(13)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Convergence Programme is favourable in 2022 and realistic in 2023. The government 
projects  real  GDP  to  grow  by  3.4%  in  2022  and  1.9%  in  2023.  By  comparison,  the 
Commission’s 2022 spring forecast projects a lower real GDP growth of 2.6% in 2022 
and  1.8%  in  2023,  mainly  due  to  lower  private  consumption  growth.  In  its  2022 
Convergence  Programme,  the  Government  expects  that  the  headline  surplus  will 
decrease to 0.6% of GDP in 2022 and to 0.2% of GDP in 2023. The decrease in 2022 
mainly  reflects  a  slowdown  in  economic  activity  and  non-recurrence  of  certain  tax 
revenues. According to the Programme, the  general government debt-to-GDP ratio is 
expected  to  decrease  to  33.3%  in  2022,  and  to  decline  to  32.5%  of  GDP  in  2023. 
Based on policy measures known at the cut-off date of the forecast, the Commission 

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SWD(2021) 154 final. 

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(14) 

2022 spring forecast projects a government surplus for 2022 and 2023 of 0.9% of GDP 
and  0.6%  respectively.  This  is  slightly  higher  than  the  surplus  projected  in  the  2022 
Convergence  Programme.  The  Commission  2022  spring  forecast  projects  a  higher 
general  government  debt-to-GDP  ratio,  of  34.9%  in  2022  and  33.9%  in  2023.  The 
difference is due to a higher assumed stock-flow adjustment items, notably support for 
social housing.  

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 1.9%. However, this estimate does not include 
the  impact  of  the  reforms  that  are  part  of  the  Recovery  and  Resilience  Plan  and  can 
boost Denmark’s potential growth. 

In 2022, the government phased out the majority of measures taken in response to the 
COVID-19 crisis, such that the temporary emergency support measures are projected 
to  decline  from  4.0%  of  GDP  in  2021  to  0.0%  of  GDP  in  2022.  The  government 
deficit is impacted by the measures adopted to counter the economic and social impact 
of  the  increase  in  energy  prices,  which  in  the  Commission  spring  2022  forecast  are 
estimated  at  0.1%  of  GDP  in  2022  and  0.0%  of  GDP  in  2023.12  These  measures 
mainly  consist  of  social  transfers  to  lower-income  households.  These  measures  have 
been announced as temporary. However, in case energy prices remain elevated also in 
2023,  some  of  these  measures  could  be  continued.  The  government  deficit  is  also 
impacted by the costs to offer temporary protection to displaced persons from Ukraine, 
which in the Commission 2022 spring forecast are projected at 0.2% of GDP in 2022 
and 2023.13  

(15)  On  18  June  2021,  the  Council  recommended  that  in  2022  Denmark14  maintains  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience  Facility,  and  preserves  nationally-financed 
It  also 
recommended  Denmark  to  pursue,  when  economic  conditions  allow,  a  fiscal  policy 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  fiscal 
sustainability  in  the  medium  term,  and  at  the  same  time,  to  enhance  investment  to 
boost growth potential. 

investment. 

(16) 

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the 
information  incorporated  in  Denmark’s  2022  Convergence  Programme,  the  fiscal 
stance  is  projected  to  be  supportive  at  -1.6%  of  GDP,  as  recommended  by  the 
Council.15 Denmark plans to provide continued support to the recovery by making use 
of  the  Recovery  and  Resilience  Facility  to  finance  additional  investment  as 
recommended  by  the  Council.  The  positive  contribution  to  economic  activity  of 
expenditure financed by Recovery and Resilience Facility grants and other EU funds is 

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15 

The figures represent the level of annual budgetary costs of those measures taken since autumn 2021, 
including current revenue and expenditure as well as – where relevant – capital expenditure measures. 
The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 
account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 
Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Convergence 
Programme of Denmark, OJ C 304, 29.7.2021, p. 14. 
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 

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projected  to  remain  stable  compared  to  2021.  Nationally-financed  investment  is 
projected  to  provide  a  neutral  contribution  to  the  fiscal  stance  in  2022  of  0.0 
percentage points of GDP.16 Therefore, Denmark plans to preserve nationally financed 
investment,  as  recommended  by  the  Council.  At  the  same  time,  the  growth  in 
nationally-financed  primary  current  expenditure  (net  of  new  revenue  measures)  in 
2022 is projected to provide an expansionary contribution of 1.6 percentage points to 
the  overall  fiscal  stance.  This  significant  expansionary  contribution  includes  the 
additional  impact  of  the  measures  to  address  the  economic  and  social  impact  of  the 
increase  in  energy  prices  (0.1%  of  GDP)  as  well  as  the  costs  to  offer  temporary 
protection  to  displaced  persons  from  Ukraine  (0.2%  of  GDP).  Other  increased 
expenditures  include  notably  defence  and  security  policy  related  government 
consumption  as  well  as  additional  expenditure  aiming  at  accelerating  the  green 
transition and ending dependence on imported fossil fuels. 

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2022  spring  forecast  at 
+1.6% of GDP on a no-policy change assumption.17 Denmark is projected to continue 
using  the  grants  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance 
additional  investment  in  support  of  the  recovery.  The  positive  contribution  to 
economic activity of expenditure financed by Recovery and Resilience Facility grants 
and other EU funds is projected to decrease by 0.1 percentage point of GDP compared 
to 2022, reflecting the frontloaded financial support from the Recovery and Resilience 
Facility in 2021 and 2022. Nationally-financed investment is projected to  provide an 
expansionary  contribution  to  the  fiscal  stance  of  0.4  percentage  points  compared  to 
2022.18  At  the  same  time,  the  growth  in  nationally-financed  primary  current 
expenditure  (net  of  new  revenue  measures)  in  2023  is  projected  to  provide  a 
contractionary contribution  of 1.4 percentage points  to the overall fiscal  stance. This 
includes  the  impact  from  the  phasing  out  of  the  measures  addressing  the  increased 
energy  prices  (0.1%  of  GDP)  and  additional  costs  to  offer  temporary  protection  to 
displaced  persons  from  Ukraine  (0.1%  of  GDP).  Other  drivers  include  decreased 
government expenditures on energy consumption. 

In the 2022 Convergence Programme, the general  government surplus is expected to 
gradually  stabilise  at  0.6%  of  GDP  in  2024  and  to  fall  to  0.4%  of  GDP  by  2025. 
According to the Programme, the general government debt-to-GDP ratio is expected to 
increase to  34.0% of GDP in  2024, and 33.9% in  2025. Based on the Commission’s 
analysis, debt sustainability risks appear low over the medium term. 

In Denmark recurrent property taxes are currently capped, hence they do not increase 
with market prices. They are thereby not able to dampen house price cycles and entail 
adverse distributional effects. A new property tax system was already approved by the 
Parliament in 2017 but is still not in place. A surge in house prices and long waiting 
times for social housing has resulted in a shortage of affordable housing in the main 
urban  areas.  Additionally,  the  share  of  mortgage  loans  with  a  debt-to-income  ratio 
above  4  and  loan-to-value  ratio  above  60%  have  increased  substantially  in  the 
Copenhagen area making such borrowers potentially vulnerable to increases in interest 

(17) 

(18) 

(19) 

16 

17 

18 

Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  neutral  contribution  of  0.0 
percentage points of GDP. 
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  contractionary  contribution  of 
0.4 percentage points of GDP. 

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rates  or  any  marked  decline  in  house  prices.  The  Danish  Systemic  Risk  Council  has 
the 
issued  recommendations 
recommendations have not been implemented.  

to  reduce  risks  for  such  mortgage 

loans,  but 

(20) 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2, to Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These address all or 
a  significant  subset  of  the  economic  and  social  challenges  outlined  in  the  country-
specific  recommendations  addressed  to  Denmark  by  the  Council  in  the  European 
Semester in 2019 and 2020, in addition any country-specific recommendations issued 
up to the date of adoption of a plan. In particular, the plan focuses on investments in 
the green and digital transitions, notably the clean and efficient production and use of 
energy,  sustainable  transport,  and  research  and  innovation.  Research  measures  have 
the potential to broaden the innovation base and involve more companies in research 
and innovation activities. Some country-specific recommendations, namely “focusing 
investment-related economic policy on education and skills”, and measures to address 
the shortage of health workers and ensure the effective supervision and enforcement of 
the anti-money laundering framework, have been addressed outside the plan. Measures 
relating to these areas were not incorporated in the recovery and resilience plan.  

(21)  The  implementation  of  the  recovery  and  resilience  plan  of  Denmark  is  expected  to 
contribute  to  making  further  progress  on  the  green  and  digital  transitions.  Measures 
supporting  the  climate  objectives  in  Denmark  account  for  59%  of  the  plan’s  total 
allocation, while measures supporting digital objectives account for 25% of the plan’s 
total allocation. The fully-fledged implementation of the recovery and resilience plan, 
in  line  with  the  relevant  milestones  and  targets,  will  help  Denmark  swiftly  recover 
from the fallout of the COVID-19 crisis, and will continue to strengthen its resilience. 
The systematic involvement of social partners and other relevant stakeholders remains 
important  for  the  successful  implementation  of  the  recovery  and  resilience  plan,  as 
well  as  other  economic  and  employment  policies  going  beyond  the  plan,  to  ensure 
broad ownership of the overall policy agenda. 

(22)  Denmark submitted the Partnership Agreement on 4 April 2022 and the first cohesion 
policy  programming  document19  on  11  April  2022.  In  line  with  Regulation  (EU) 
2021/1060 of the European Parliament and of the Council of 24 June 2021, Denmark 
shall  take  into  account  the  relevant  country-specific  recommendations  in  the 
programming  of  the  2021-2027  cohesion  policy  funds.  This  is  a  prerequisite  for 
improving the effectiveness and maximising the added value of the financial support 
to  be  received  from  cohesion  policy  funds,  while  promoting  the  coordination, 
complementarity and coherence between these funds and other Union instruments and 
funds.  The  successful  implementation  of  the  Recovery  and  Resilience  Facility  and 
cohesion  policy  programmes  also  depends  on  the  removal  of  bottlenecks  to 
investment,  to  support  the  green  and  digital  transition  and  balanced  territorial 
development. 

(23)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan, Denmark faces a number of additional challenges related to reducing dependence 

19 

Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down 
common provisions on the European Regional Development Fund, the European Social Fund Plus, the 
Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and 
financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund 
and the Instrument for Financial Support for Border Management and Visa Policy. OJ L 231, 30.6.2021, 
p. 159. 

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on fossil fuels, strengthening the circular economy to support the green transition and 
making the housing market and indebted households more resilient.  

(24)  While  the  Danish  recovery  and  resilience  plan  earmarks  59%  of  the  funds  for  green 
initiatives,  Denmark  is  underperforming  in  some  areas  of  circular  economy.  Danish 
rates  of  circular  material  use  are  well  below  the  EU  average.  The  country  currently 
produces  the  highest  amount  of  municipal  waste  per  capita  in  the  EU  with  845 
kg/capita/year. While Denmark stands just above the EU average for municipal waste 
collected  for  recycling  (53.9%  in  2020  comapred  to  EU  average  47.8%),    it 
incincerates 45.2% of  its municipal waste, close to double the EU average. Much of 
the  waste  in  Denmark  is  incinerated  for  energy  generation,  thereby  missing  out  on 
opportunities  to  improve  resource  efficiency.  A  new  strategy  on  waste  management 
and  circular  economy  and  related  national  programmes  and  plans  for  waste  and 
circular  economy  need  to  be  timely  implemented.  Losses  in  terms  of  lower  energy 
generation  due  to  reduced  waste  incineration  could  be  compensated  by  more 
environmentally friendly methods, including energy efficiency improvements and the 
use of electric heat pumps. 

(25) 

In  response  to  the  mandate  by  the  EU  Heads  of  State  or  Government  set  out  in  the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union’s 
dependence on fossil fuel imports from Russia as soon as possible. For this purpose, 
the most suitable projects, investments and reforms at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels and shift fossil fuel imports away from Russia. 

(26)  Denmark is committed to achieve a greenhouse gas emissions reduction target of 70% 
compared  to  1990  levels  by  2030  and  a  coal  phase-out  by  2028.  To  achieve  these 
ambitious  targets,  the  Danish  National  Energy  and  Climate  Plan  foresees  substantial 
investment  in  additional  renewable  energy  capacity  and  investments  in  energy 
efficiency. Accelerating the deployment of renewables and renewable hydrogen could 
be fostered by streamlining and accelerating permitting procedures. While Denmark is 
committed  to  increasing  renewable  energy  capacity  from  offshore  wind,  further 
investments in energy transmission networks are needed to ensure that the increasing 
share of renewable energy can be used efficiently. Investment in energy and electricity 
interconnection, including offshore hybrid assets, with  neighbouring  countries  would 
considerably increase security of energy supply and adaptability to regional variances, 
also  in  the  context  of  the  Russia’s  invasion  of  Ukraine.    Denmark’s  overall  energy 
dependency on Russian fossil fuel imports is at 21.1% (24.4% for EU average), taking 
into  account  secondary  dependencies  tracing  back  all  re-imports  using  respective 
assumptions.  In  2020,  dependency  on  fossil  fuels  from  Russia  in  Denmark’s  overall 
energy mix was  lower than the EU  average for  oil (12% compared to  36.5% for the 
EU average). While it was higher for coal (97% compared to 19.3% for EU average), 
the share of coal in Denmark’s energy mix is low (4.3%). Natural gas makes up 12.8% 
of  its  energy  mix,  and  while  Denmark  does  not  import  Russian  gas  directly  for 
domestic  use,  its  dependency  through  German  gas  imports  implies  a  significant 
secondary dependency, higher than the EU average: 65% of domestic gas consumption 
is imported from Russia, compared to 41.1% in the EU average. While, according to 
2020 data, Denmark’s reliance on Russian oil and gas imports is still significant20, but 

20 

Eurostat (2020), share of Russian imports over total imports of natural gas, crude oil and hard coal. For 
the  EU27  average,  the  total  imports  are  based  on  extra-EU27  imports.  For  Denmark,  total  imports 
include  intra-EU  trade.  Crude  oil  does  not  include  refined  oil  products.  Denmark  has  an  indirect 
dependency on Russian imports through intra-EU trade. Accounting for the secondary dependence on 

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this dependence is projected to be eliminated as of 2023 when the refurbishment of an 
existing  North  Sea  field  will  be  finalised,  and  Denmark  is  expected  to  be  a  net  gas 
exporter  again.  Speeding  up  ongoing  interconnection  projects  can  also  foster 
diversification of energy supply. New infrastructure and network investments  related 
to gas are recommended to be future-proof where possible, in order to facilitate their 
long-term  sustainability  through  future  repurposing  for  sustainable  fuels.  Denmark’s 
ambitions for energy efficiency could be further boosting by corresponding additional 
investment  in  decarbonising  industry,  services,  private  dwellings  and  transport. 
Further  increase  in  ambition  for  reducing  greenhouse  gas  emissions  and  increasing 
renewables  and  energy  efficiency  will  be  needed  for  Denmark  to  be  in  line  with  the 
‘Fit for 55’ objectives. 

(27)  While the accelerating the transition towards climate neutrality and  away from fossil 
fuels will create significant  restructuring costs in several sectors, Denmark can make 
use of the Just Transition Mechanism in the context of cohesion policy to alleviate the 
socio-economic  impact  of  the  transition  in  the  most  affected  regions.  In  addition, 
Denmark  can  make  use  of  the  European  Social  Fund  Plus  to  improve  employment 
opportunities and strengthen social cohesion.  

(28) 

In  the  light  of  the  Commission’s  assessment,  the  Council  has  examined  the  2022 
Convergence Programme and its opinion21 is reflected in recommendation (1) below. 

HEREBY RECOMMENDS that Denmark take action in 2022 and 2023 to:  

1. 

2. 

3. 

In 2023, ensure that the growth of nationally-financed current expenditure is in line 
with  an  overall  neutral  policy  stance,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  Stand  ready  to  adjust  current  spending  to  the  evolving 
situation.  Expand  public  investment  for  the  green  and  digital  transition  and  for 
energy  security,  including  by  making  use  of  the  RRF,  RePowerEU  and  other  EU 
funds. For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent 
medium-term  fiscal  positions.  Implement  the  new  property  tax  system  in  order  to 
restore the link between market prices and taxes and ensure fairer taxation. Stimulate 
investment in construction of affordable housing to alleviate the most pressing needs. 
Increase the financial resilience of highly indebted borrowers. 

Proceed with the implementation of its recovery and resilience plan, in line with the 
milestones  and  targets  included  in  the  Council  Implementing  Decision  of  13  July 
2021.    Swiftly  finalise  the  negotiations  with  the  Commission  of  the  2021-2027 
cohesion policy programmes and proceed with their implementation. 

Strengthen circular economy and waste management policies including by promoting 
waste prevention  and reuse, increasing  recycling, and gradually shifting  away from 
incineration of municipal waste to greener sources of heat generation. 

Russian  gas through intra-EU imports  would lead to the estimation that  Denmark has a  65% Russian 
import dependency on gas. 
Under Article 9(2) of Council Regulation (EC) No 1466/97. 

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4. 

Reduce  overall  reliance  on  fossil  fuels.  Further  diversify  energy  supply  and  help 
decarbonise  the  economy  by  accelerating  the  deployment  of  renewables,  including 
by  introducing  reforms  to  simplify  and  expedite  administrative  and  permitting 
procedures,  upgrading  energy  transmission  networks,  increasing  interconnections 
with neighbouring countries and improving energy efficiency. 

Done at Brussels, 

For the Council 
The President 

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