First-Ever Carbon Tax on Livestock: Farmers to Pay $100 per Cow

With a looming $100 carbon tax on livestock, farmers in Denmark are facing a financial burden to curb their emissions.¹

But are they prepared for this shift in agriculture?

New Levies on Livestock to Begin in 2030

Denmark’s coalition government has agreed to introduce a carbon emissions tax on agriculture, marking the first of its kind globally. 

The new levies on livestock are set to begin in 2030, aiming to curb the country’s agricultural emissions, which are the largest source in Denmark.^(ref)

Investing in the Green Transition

The coalition agreement also includes a substantial investment of 40 billion Danish krone ($3.7 billion) in initiatives such as reforestation and wetland establishment.^(ref)

These measures are intended to support Denmark’s efforts to achieve its climate goals.

A Transformation of the Danish Landscape

Foreign Minister Lars Lokke Rasmussen heralded the agreement as a watershed moment for Denmark, stating, ““With today’s agreement, we are investing billions in the biggest transformation of the Danish landscape in recent times.” 

He underscored the nation’s pioneering spirit, declaring, “At the same time, we will be the first country in the world with a (carbon) tax on agriculture.”^(ref)

Mixed Reactions from the Dairy Industry

While the Danish dairy industry generally welcomed the agreement and its environmental objectives, it has sparked discontent among some farmers.

This follows previous protests by farmers across Europe over environmental regulations and bureaucratic burdens.^(ref)

Addressing the Climate Impact of the Global Food System

The global food system contributes significantly to the climate crisis, generating approximately one-third of greenhouse gas emissions. 

Livestock farming, in particular, accounts for about 12% of global emissions, with a portion stemming from methane produced by cows and other animals.^(ref)

Reducing Livestock Emissions through Taxation

The carbon tax, pending parliamentary approval, will amount to 300 krone ($43) per ton of CO₂-equivalent emissions from livestock from 2030, increasing to 750 krone ($107) in 2035.^(ref)

A 60% tax break will be applied, resulting in an effective charge of 120 krone ($17) per ton of livestock emissions per year from 2030, rising to 300 krone ($43) in 2035.^(ref)

Estimated Cost for Dairy Cows

On average, Danish dairy cows emit 5.6 ton of CO₂-equivalent annually. According to Concito, a green think tank, considering the lower tax rate of 120 krone, the charge per cow would be 672 krone ($96), increasing to 1,680 krone ($241) in 2035 with the tax break.^(ref)

In the initial two years, the revenue generated from the tax will be allocated to support the agricultural industry’s transition towards greener practices, followed by a reassessment.

Concerns & Criticisms from Farmers

Danish farmers’ group Bæredygtigt Landbrug expressed concerns, calling the measures a “scary experiment” and criticizing them as purely bureaucratic. 

They acknowledged the climate problem but questioned the effectiveness of the agreement in addressing it, fearing potential hindrances to green investments in agriculture.

Dairy Industry Leaders’ Perspectives

Peder Tuborgh, CEO of Arla Foods, viewed the agreement positively but emphasized that farmers actively working to reduce emissions should be exempt from the tax. He stressed the importance of the tax base being solely based on emissions for which elimination methods exist.^(ref)

Torsten Hasforth, chief economist at Concito, explained that the tax aims to incentivize the agricultural sector to seek solutions for emission reduction, such as modifying feed for livestock.^(ref)

Interestingly, the Danish tax coincides with New Zealand’s decision to postpone its own livestock levy until at least 2030 after facing opposition from farmers.^(ref) In contrast to New Zealand, the response from Danish farmers has been largely positive, according to Hasforth.

Source:

1. https://www.accuweather.com/en/weather-news/worlds-first-carbon-tax-on-livestock-will-cost-farmers-100-per-cow/1663287