Denmark introduces a carbon tax on agriculture

Source : Vegconomist

 From Vegconomist

Denmark looks set to introduce what is claimed to be the world’s first carbon tax on agriculture, following negotiations between the government, farmer organisations, trade unions, industry, and environmental NGOs.

The agreement is expected to be formally approved by the Danish parliament in August, and will see a tax of DKK 300 per tonne CO2e introduced on livestock emissions from 2030. This will rise to DKK 750 per tonne CO2e in 2035, but with a basic deduction of 60%; this means that the effective tax will be DKK 120 (€16) per tonne in 2030 and DKK 300 (€40) per tonne in 2035.

“We are investing in the future of our agricultural sector”

The proceeds raised by the tax in 2030-31 will be returned to the industry as a support fund to aid the green transition. The tax is expected to reduce emissions by 1.8 million tonnes of CO2e by 2030, enabling Denmark to achieve its legally binding target of cutting emissions by 70%.

Additionally, 250,000 new hectares of forest will be established in the coming years, and targets have been set to protect at least 20% of nature. Fees for slaughterhouses will be raised by DKK 45 million (€6 million) annually from 2029, and funding will be allocated to upskill labour.

The agreement has been reached despite Europe-wide backlash from farmers against proposed EU environmental policies, which led to some targets being dropped earlier this year. New Zealand has also recently scrapped plans for a tax aimed at tackling livestock emissions.

With the new tax, Denmark continues on its trajectory of progressive agricultural policies. In 2021, the country allocated 580 million DKK to farmers who produce plant-based foods; this was said to be the first time in history that plant foods had been given priority in an agricultural agreement.

In October 2023, Denmark became the first country worldwide to publish a national action plan for plant-based foods. The plan aims to strengthen and promote the country’s plant-based sector as part of the shift toward climate-friendly diets. Its publication came just a few months after a report found that Denmark’s financial sector currently lacks the objectives, knowledge, and ambition to invest in sustainable foods.

In March of last year, the Danish Climate Council recommended that two-thirds of the meat consumed by Danes should be replaced by plant-based foods, and suggested that high-emission foods such as beef should be taxed.

Beef and mutton produce the most methane in agriculture, and methane is 80 times as potent a greenhouse gas over 10 years as CO2 (it takes 12 years for methane to decay into CO2).  Also, expanding beef production means more land clearing, though obviously not in Denmark.  Globally, these two factors make agriculture a major source of greenhouse gases.  In 2024, 88% of Denmark's electricity came from renewables.   And 56% of Denmark's car sales are EVs/PHEVs.   Agriculture is the logical next step to cut emissions.  Heat pumps are another.  Compared to the rest of Scandinavia and Europe, Denmark has fewer heat pumps installed per 100,000 people, partly because its heat pump subsidies are smaller.  Heat pumps are far more efficient for heating in terms of energy use than old-fashioned gas or oil boilers.