Denmark, a major exporter of dairy products, will introduce a tax on livestock carbon dioxide emissions starting in 2030. This will make Denmark the first country in the world to implement such a tax, in the hopes of inspiring other nations to follow suit.
Meeting climate goals
The plan for this tax was initially proposed in February by government-appointed experts, as a way to help Denmark reach its legally binding target of cutting greenhouse gas emissions by 70 percent from 1990 levels by 2030.
Broad agreement reached with stakeholders
Additionally, on Monday, the Danish government reached a compromise agreement on farming policies with a wide range of stakeholders, including farmers, industry groups, labor unions, and environmental organizations. Farming is Denmark’s largest source of CO2 emissions.
First country to implement real CO2 tax on agriculture
“We will be the first country in the world to introduce a real CO2 tax on agriculture. Other countries will be inspired by this,” said Jeppe Bruus, Danish minister of Taxation, from the Social Democratic party.
While the proposal still requires parliamentary approval, political analysts expect the bill to pass given the broad consensus that was reached.
Tax structure and subsidies for farmers
The deal calls for taxing farmers 300 Danish crowns ($43.16) per ton of CO2 in 2030, increasing to 750 crowns by 2035. However, farmers will receive a 60 percent income tax deduction, meaning the actual cost will start at 120 crowns per ton and rise to 300 crowns by 2035. Additional subsidies will be provided to help farmers adapt their operations.
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Impact on retail beef prices
Furthermore, the tax is estimated to add about 2 crowns per kilo (2.2 pounds) to the retail price of minced beef by 2030. Minced beef currently sells for around 70 crowns per kilo at Danish discount stores.
In contrast, New Zealand recently scrapped plans for a similar agricultural emissions tax after facing backlash from farmers.
While Danish farmers had expressed concerns that the climate goals could force them to reduce production and cut jobs, they stated that this compromise agreement makes it possible for them to maintain their businesses.
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