Denmark Sets New Livestock CO2 Tax

Denmark is set to pioneer a tax on livestock carbon dioxide emissions starting in 2030, becoming the world's first country to enact such legislation. The move aims to achieve a 70% reduction in greenhouse gas emissions by 2030, aligned with its commitment to climate neutrality by 2045.

"We will be the first country in the world to introduce a real CO2 tax on agriculture. We hope other countries will be inspired by this," said Jeppe Bruus, Taxation Minister. Under the new scheme, Danish livestock farmers will face a tax starting at 300 Danish crowns/ton CO2e (US$43.1/ ton CO2e) in 2030, escalating to 750 crowns (US$107.8) by 2035. However, due to a 60% income tax deduction, the effective cost per ton will be significantly lower, starting at 120 crowns (US$17.1) and rising to 300 crowns (US$43.1) by 2035.

The agreement, reached after extensive negotiations between the government, farmers, industry representatives, and environmental groups, aims to transform Denmark's food industry toward sustainability over the next decade and beyond. "This commitment lays the groundwork for restructuring our food industry beyond 2030," commented Maria Reumert, Head of the Danish Society for Nature Conservation.

Denmark, known for its substantial dairy and pork sectors, faces a significant challenge in reducing emissions from its 1.4 million cows, which individually produce about 6t of CO2e annually, according to Statistic Denmark. While pigs will also be taxed, cows contribute disproportionately higher emissions due to methane, a potent greenhouse gas.

The forthcoming legislation in Denmark awaits approval by the 179-seat parliament. However, following the consensus reached, broad support is expected among stakeholders. The tax is expected to influence global policy discussions on agricultural emissions, potentially paving the way for similar measures in other countries striving to meet ambitious climate targets.

For Danish farmers, concerns over production cuts and job losses under stringent climate goals have been assuaged by this commitment, which includes subsidies to facilitate adjustments in farming practices. Stephanie Lose, Economic Affairs Minister noted that the tax could increase consumer prices minimally, illustrating the government's careful approach to balancing environmental and economic priorities.