Denmark‘s government has announced that the country will be the first in the world to introduce a carbon tax on agriculture, following agreement by seven negotiating parties, including farmer organisations, trade unions, industry, and environmental NGOs.
Commenting in 2030, a tax of DKK 300 per tonne CO2e from emissions on livestock will be introduced in 2030, rising to DKK 750 per tonne CO2e in 2035 with a basic deduction of 60%. The effective tax will thus amount to DKK 120 (€16) per tonne in 2030, rising to DKK 300 (€40) per tonne in 2035.
The proceeds from this livestock tax in the initial years of implementation will be returned as a transition support fund to support the industry’s green transition.
Denmark is aiming to reduce emissions by 1.8 million tonnes CO2e by 2030, and sees the potential for a reduction of up to 2.6 million tonnes.
‘Historic’ decision
“Today is truly historic for Denmark. For the climate, for our nature and for Danish agriculture,” commented Nicolai Wammen, Denmark’s finance minister.
“We are investing in the future of our agricultural sector, initiating a transition with shared ambitions and goals – laying the tracks to what our country will look like in five, 10 and 20 years from now. We know that a CO2 tax model aligned across all sectors gives us the lowest societal costs in total. What we have now done from industry sectors to agriculture shows us that an ambitious green transition is possible.”
The tax is expected to be formally approved by the Danish parliament in August. The proposal was finalised following extensive negotiations between several key stakeholders. These included the Danish Society for Nature Preservation, the Council of Food & Agriculture (representing farmers), the Danish Metal Workers’ Union, the farm workers’ trade union NNF, Local Government Denmark, the Confederation of Danish Industry, and the government.
Earlier this month, New Zealand dropped plans for a similar tax aimed at tackling emissions from livestock.
A new direction
“This is a historic compromise that sets a completely new direction for land use,” said Maria Reumert Gjerding, president of the Danish Society for Nature Conservation.
“The agreement will ensure significantly more forest, large wetlands and much more protected nature in Denmark and integrate nature, nitrogen and climate efforts. Despite major disagreements, we have managed to reach a compromise on a carbon tax that paves the way for a transformed food industry – also beyond 2030.”
Elsewhere, Mark Howden, director of the Institute for Climate, Energy and Disaster Solutions, Australian National University and a member of the Expert Panel on Livestock Methane, advised governments across the globe to “take a close look” at Denmark’s agriculture emissions tax plans.
“The world can no longer afford to ignore the third of global emissions produced by the agri-food sector,” he said. “The solutions needed to make a significant cut in agriculture’s climate footprint already exist – but financial incentives like the Danish tax could assist them being implemented at scale. This policy package looks like it can push down on greenhouse gas emissions efficiently at the same time as generating benefits for farmers and for biodiversity.”
Food and agriculture account for one-third of global greenhouse gas emissions. At the UN Climate Summit last year, 159 countries committed to including food and agriculture in their national climate mitigation and adaptation plans.
