World’s first carbon tax on livestock will cost farmers $145 per cow

Dairy farmers in Denmark face having to pay an annual tax of 672 krone ($145) per cow for the planet-heating emissions they generate.

The country’s coalition government agreed this week to introduce the world’s first carbon emissions tax on agriculture. It will mean new levies on livestock starting in 2030.

Denmark is a major dairy and pork exporter, and agriculture is the country’s biggest source of emissions. The coalition agreement – which also entails investing 40 billion krone ($8.6 billion) in measures such as reforestation and establishing wetlands – is aimed at helping the country meet its climate goals.

“With today’s agreement, we are investing billions in the biggest transformation of the Danish landscape in recent times,” Foreign Minister Lars Lokke Rasmussen said in a statement on Tuesday.

“At the same time, we will be the first country in the world with a (carbon) tax on agriculture.”

The Danish dairy industry broadly welcomed the agreement and its goals, but it has angered some farmers.

The move comes just months after farmers held protests across Europe, blocking roads with tractors and pelting the European Parliament with eggs over a long list of complaints, including gripes about environmental regulation and excessive red tape.

The global food system is a huge contributor to the climate crisis, producing around a third of greenhouse gas emissions.

Livestock farming has a particularly big impact, accounting for about 12 per cent of global emissions in 2015, according to the United Nations’ Food and Agriculture Organisation. A share of this pollution comes from methane, a potent planet-warming gas produced by cows and some other animals through their burps and manure.

Reducing livestock emissions

The tax, expected to be approved by Denmark’s parliament later this year, will amount to 300 krone per tonne of CO2-equivalent emissions from livestock from 2030, rising to 750 krone in 2035.

A 60 per cent tax break will apply, meaning that farmers will effectively be charged 120 krone per tonne of livestock emissions per year from 2030, rising to 300 krone in 2035.

On average, Danish dairy cows, which account for much of the cattle population, emit 5.6 tonnes of CO2-equivalent per year, according to Concito, a green think tank in Denmark. Using the lower tax rate of 120 krone results in a charge of 672 krone per cow.

With the tax break in place, that levy will rise to 1680 krone per cow in 2035.

In the first two years, the proceeds from the tax will be used to support the agricultural industry’s green transition and then reassessed.

“The whole purpose of the tax is to get the sector to look for solutions to reduce emissions,” Concito’s chief economist Torsten Hasforth told CNN.

For example, farmers could change the feed they use.

But Danish farmers’ group Bæredygtigt Landbrug said the measures amounted to a “scary experiment”.

“We believe that the agreement is pure bureaucracy,” chairman Peter Kiær said in a statement.

“We recognise that there is a climate problem … But we do not believe that this agreement will solve the problems, because it will put a spoke in the wheel of agriculture’s green investments.”

Peder Tuborgh, the CEO of Arla Foods, Europe’s largest dairy group, said the agreement was “positive” but that farmers who “genuinely do everything they can to reduce emissions” should not be subjected to a tax.

“It is essential that the tax base for a (carbon) tax is solely based on emissions for which there are means to eliminate (them),” he added in statement.

Kristian Hundeboll, the CEO of DLG Group, one of Europe’s biggest agricultural businesses and a cooperative owned by 25,000 Danish farmers, said it was “crucial for competitiveness” for the tax to be “anchored” in European Union legislation.

“Neither the climate, agriculture nor the ancillary industries benefit from Denmark acting unilaterally,” he said.

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