Denmark to Be First Country to Impose CO2 Tax on Farms, Government Reports

By Isabelle Yr Carlsson

COPENHAGEN – Denmark, a prominent exporter of pork and dairy products, plans to implement a tax on livestock carbon dioxide emissions starting in 2030. This move makes Denmark the first country to enact such a tax, with hopes of setting an example for others to follow, as announced by the government on Tuesday.

The tax was initially proposed in February by experts commissioned by the government, aimed at helping the country achieve its legally binding goal of reducing greenhouse gas emissions by 70% by 2030 compared to 1990 levels.

On Monday, the centrist government reached a broad consensus with farmers, industry representatives, labor unions, and environmental groups on policies concerning agriculture, which is the largest source of CO2 emissions in Denmark.

"We will be the first country in the world to introduce a real CO2 tax on agriculture. Other countries will be inspired by this," stated Jeppe Bruus, the Taxation Minister from the centre-left Social Democrats.

While the proposed tax is subject to parliamentary approval, political analysts expect it to pass given the extensive agreement among stakeholders.

The agreement suggests levying a tax of 300 Danish crowns per tonne of CO2 in 2030, which will increase to 750 crowns by 2035. Farmers will be eligible for a 60% income tax deduction, meaning that the effective tax burden will start at 120 crowns per tonne and rise to 300 crowns by 2035. Additionally, subsidies will be offered to help farmers adjust their operations accordingly.

According to the Minister for Economic Affairs, the tax may lead to an increase of 2 crowns per kilo of minced beef by 2030. Currently, minced beef is priced around 70 crowns per kilo in Danish discount stores.

In contrast, New Zealand recently withdrew plans to introduce a similar tax following backlash from farmers.

Despite initial concerns among Danish farmers about the potential impact on production and jobs, many believe the compromise reached allows them to sustain their businesses.

"The agreement brings clarity regarding significant aspects of the farmers’ conditions," noted the L&F agriculture industry group.