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Denmark Becomes First-Ever to Impose CO2 Emissions Tax on Agriculture

Denmark Becomes First-Ever to Impose CO2 Emissions Tax on Agriculture

CO2 Tax
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  • Historic First: Denmark introduces the world’s first CO2 tax on agriculture.
  • Broad Agreement: The deal involves farmers, industry, and environmental groups.
  • Green Transition: Revenues to support sustainable farming practices.

Denmark is set to become the first country to impose a CO2 tax on agricultural emissions, targeting livestock. This groundbreaking policy, achieved through extensive negotiations among various stakeholders, aims to significantly reduce greenhouse gas emissions. The tax will start in 2030 and incrementally increase by 2035, with revenues earmarked to support the farming sector’s green transition. This initiative underscores Denmark’s commitment to climate goals and sets a precedent for other nations.

Denmark, renowned for its pork and dairy exports, will introduce a tax on livestock CO2 emissions from 2030. This bold move aims to inspire other nations to adopt similar measures. The government reached a consensus with farmers, industry, labor unions, and environmental groups on policies linked to agriculture, Denmark’s largest CO2 emitter.

Taxation Minister Jeppe Bruus stated, “We will be the first country in the world to introduce a real CO2 tax on agriculture. Other countries will be inspired by this.

The tax, pending parliamentary approval, proposes an initial rate of 300 Danish crowns ($43.16) per tonne of CO2 in 2030, rising to 750 crowns by 2035. Farmers will receive a 60% income tax deduction, reducing their actual cost per tonne to 120 crowns initially and 300 crowns by 2035. Subsidies will also support farm operation adjustments.

Minister for Economic Affairs Stephanie Lose mentioned, “The tax could add an extra cost of 2 crowns per kilo (2.2 pounds) of minced beef in 2030.” This modest increase is expected to be manageable within the broader climate strategy.

Despite initial concerns, Danish farmers view the compromise as viable for maintaining their businesses. The L&F agriculture industry group acknowledged, “The agreement brings clarity when it comes to significant parts of the farmers’ conditions.

The agreement also includes a 40bn-kroner fund aimed at protecting nature, restoring degraded ecosystems, and creating forests and wetlands. Maria Reumert Gjerding, president of the Danish Society for Nature Conservation, highlighted, “This is a historic compromise that sets a completely new direction for land use.

This tax aligns with Denmark’s goal of cutting greenhouse gas emissions by 70% from 1990 levels by 2030. Finance Minister Nicolai Wammen emphasized, “We know that a CO2 tax model aligned across all sectors gives us the lowest societal costs in total.”

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The policy, which must still be ratified by lawmakers, is expected to reduce CO2 emissions by 1.8 million tons in 2030. Prof Mark Howden from the Australian National University commented, “The world can no longer afford to ignore emissions from the agri-food sector. Financial incentives like the Danish tax could assist them being implemented at scale.

Denmark’s initiative not only addresses domestic environmental goals but also positions the country as a leader in global agricultural policy.

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