Denmark will charge farmers €100 per cow as the first carbon tax in agriculture

Denmark has announced the first carbon tax in agriculture. Cattle farmers will be charged nearly €100 per year for each cow’s greenhouse gas emissions.

After months of difficult negotiations with trade groups and environmental groups, Denmark’s ruling coalition agreed on Monday night to a tax rate of DKr120 (€16) per tonne equivalent carbon dioxide emissions from livestock including cows, pigs, and sheep.

The world is struggling to reduce emissions from the food production, which account for nearly a quarter () of global emissions when land use changes are included.

Through their digestive systems, ruminant animals like cows and lambs produce methane. Synthetic nitrogen fertilisers found in the grass that they eat produce greenhouse gases as well. Livestock is responsible for 11% of global emissions. Nearly two-thirds are caused by cows.

The Danish agreement, which sets the foundation for the levy that will be implemented in 2030, came just months after farmers across Europe protested against EU environmental measures. Mette Frederiksen said that she hoped this tax would pave the way for similar initiatives in Denmark and around the world.

The deal was immediately criticized by the farmers’ organisation Baeredygtigt Landbrug. This group, which wasn’t involved in the negotiations, was not part of the discussions. Some green groups privately claimed that there were far too many deductions to make the tax effective.

Peter Kiaer of Baeredygtigt Landbrug said, “I find it crazy.” He added that the move would prevent much-needed investment in technology for a country which was already amongst the greenest producers of agricultural products on earth. “[The government] don’t listen to the farmers.”

The Danish parliament will vote on the tax in late this year. It has a headline of DKr300 for each tonne equivalent CO2 in 2030. This rate is set to rise to DKr750 in 2035. Farmers are encouraged to reduce their emissions. The tax is phased-in with a 60 percent basic tax deduction for the first two year.

According to Concito, the average Danish cow emits six tonnes of CO2 per year. The lower tax rate, DKr120, would result in a charge of DKr720 or €96.50. The emissions produced by cows are much higher than those of pork. However, the tax will be applied to pig farmers as well. The country exports a lot of dairy products and pork.

Lars Aagaard is the climate minister of Denmark. He said that agriculture was Denmark’s biggest emitter of greenhouse gases. He said, “This can’t continue.” “Agriculture has to contribute and be a part of a green future.”

Soren Sondergaard is the chair of the Danish Agriculture & Food Council. He said: “We succeeded — against all odds– in getting a model tax where the farmer using approved and economically sustainable solutions to climate change can avoid the tax completely.”

Peder Tuborgh is the chief executive officer of Arla Foods in Denmark. He said that taxation could unfairly impact some farmers. This includes organic producers who are doing their best to reduce emissions.

New Zealand scrapped this month an attempt to introduce a similar tax for sheep and cow producers in an effort reduce methane emission.

The European Commission is examining options for a system of trading agricultural emissions across the EU. This includes requiring landowners and farmers to pay directly.

Kristian Hundeboll is the chief executive officer of DLG Group. One of Europe’s largest agribusinesses and a cooperative owned by over 25,000 Danish farmers. He said that it was “crucial”, for this tax to “be anchored in Europe”, rather than Denmark acting unilaterally.

Alexandre Paquot said that at an event in Brussels held last week, the deputy director-general for the climate division of the European Commission, Alexandre Paquot stated that bringing agriculture under the EU’s emissions trading scheme would present “a new business case and create new opportunities” for farmers.