Denmark Implements World-First Emissions Tax on Livestock

Targeting Greenhouse Gases from Cows, Pigs, and Sheep

Denmark is set to become the first country in the world to impose an emissions tax on livestock. Starting in 2030, the tax will target greenhouse gases emitted by the country’s cows, pigs, and sheep. This groundbreaking move comes amid global efforts to reduce climate-changing emissions.

Details of the Emissions Tax

According to the plan, farmers will be required to pay approximately $43 per metric ton of carbon dioxide equivalent produced by their livestock, with the rate increasing to about $108 in 2035. However, the levies will be partially offset by a 60 percent tax deduction, effectively reducing the cost to around $17 per metric ton in 2030 and $43 in 2035.

Danish officials project that this tax will reduce the country’s emissions by about 1.8 million metric tons (approximately 2 million tons) of carbon dioxide equivalent by 2030. To put this into perspective, humans emitted over 40 billion tons of carbon dioxide in 2022, according to the MIT Climate Portal.

With a focus on reducing methane emissions and supporting the agricultural sector’s transition to greener practices, this initiative marks a significant step in global efforts to combat climate change.

Government and Industry Reactions

Danish Tax Minister Jeppe Bruus highlighted the pioneering nature of the tax, stating, “We will be the first country in the world to introduce a real [carbon dioxide equivalent tax] on agriculture. Other countries will be inspired by it.” He emphasized the collaborative effort across political and interest groups to address one of the greatest challenges of our time.

The deal, reached between the center-right government and representatives from various groups including farmers, industry, and unions, is expected to be approved by the Danish parliament. Farmers across Europe have been protesting cuts to subsidies and new regulations aimed at reducing emissions, making this consensus even more significant.

Utilization of Tax Proceeds

Proceeds from the proposed tax for 2030-2031 will be returned to the agricultural industry to support its green transition. The handling of these funds will be revisited in 2032. Additionally, the bill includes the establishment of more than 600,000 acres of new forest areas and other environmental initiatives.

Methane Emission Reduction Goals

The tax aims to significantly cut emissions of methane, a potent greenhouse gas. The U.N. Intergovernmental Panel on Climate Change (IPCC) states that methane emissions must be reduced by 40 to 45 percent by 2030 to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) this century.

Denmark’s initiative is seen as a crucial step toward meeting its domestic climate target of reducing greenhouse gas emissions by 70 percent from 1990 levels by 2030. Livestock is responsible for about 32 percent of human-caused methane emissions, with 1.5 billion cattle worldwide being the primary contributors.

Comparisons to New Zealand’s Approach

A similar bill was considered by New Zealand’s previous center-left government, where the agricultural sector accounts for half of the country’s emissions, primarily from livestock methane. However, this plan was recently scrapped by New Zealand’s new center-right government due to opposition from cattle farmers.

Instead, New Zealand is exploring alternative methods to reduce livestock methane, such as funding research for a “methane vaccine” and breeding lower-emission cattle. However, such research is not yet cost-effective for farmers, according to Richard Eckard, a professor of carbon farming at the University of Melbourne.

Industry-Led Emission Reduction

Major multinational agricultural companies are setting targets for reduced emissions, which could drive change more effectively at the farm level than a direct carbon tax. This approach could alleviate the need for governments to impose carbon taxes that might face resistance from the farming community.

Key Facts

(India CSR)