Denmark’s latest offshore wind auction introduces a two-sided CfD model and a 20-year support period, designed to provide the stable returns needed to attract investment in green infrastructure. This is a significant step forward for the energy transition.

However, as shown in a chronicle by Karl Berlin, Jakob Bundgaard, and Katja Dyppel Weber published in Berlingske today, a recent binding ruling from the Danish Tax Council may expose companies receiving the CfDs to ongoing taxation of unrealised market value changes, creating volatility and liquidity challenges that directly counteract the stability CfDs are meant to deliver.

We believe tax policy should support, not hinder, the green transition. Extending rules intended for financial derivatives to green energy contracts risks deterring investment and repeating past auction failures. Policymakers must clarify the tax treatment of CfDs to ensure Denmark’s climate ambitions remain credible and attractive to investors.