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The first carbon tax on farms has been set, and it’s in Europe

June 26, 2024
in Entertainment
The first carbon tax on farms has been set, and it’s in Europe
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In a ‘world first’, Denmark is set to become the first to introduce a carbon tax on livestock emissions from 2030 onwards.

This week, the Danish government agreed that to help meet the country’s 2030 climate goals, as well as improve its natural landscape and drinking water quality, a tax on carbon emissions from livestock should be implemented.

The tax is expected to be formally approved by the Danish parliament in August.

Danish farmers taxed according to CO2e output​

According to the tax, in 2030 a fee of 300 Danish crowns (€40.13) will be charged to farmers per ton of CO2e. The fee is set to increase to 750 Danish crowns per ton of CO2e in 2035.

An income tax deduction of 60% will be available to farmers, which means that in real terms they would be charged 120 Danish crowns per ton of CO2e in 2030, and 300 Danish crowns per ton of CO2e in 2035.

Denmark’s finance minister Nicolai Wammem welcomed the news, describing the day as ‘truly historic’ for Denmark. “We are investing in the future of our agricultural sector, initiating a transition with shared ambitions and goals – laying the tracks to what our country will look like in five, 10 and 20 years from now.

“We know that a CO2 tax model aligned across all sectors gives us the lowest societal costs in total. What we have now done from industry sectors to agriculture shows us that an ambitious green transition is possible.”

Government invests in more trees and forest protection​

At the same time, the Government plans to spend more than 30m Danish crowns on the removal of approximately 140 hectares of carbon-rich lowland soils and plant 240,000 hectares of forest.

A subsidy scheme is also being set up for the storage of biochar by pyrolysis, whereby biochar is made by heating organic materials, such as wood, without oxygen.

The Government expects the agreement will create ‘major changes’ in the industry, and across Denmark more generally, in the ‘coming years and decades’.

“With this agreement, we will reach our climate goals in 2030, and we will take a big step closer to becoming climate neutral in 2045,” said tax minister Jeppe Bruus.

Could Denmark be the first of many to implement a carbon tax?​

Denmark is now set to become the first country to implement a carbon tax on agriculture, but only after New Zealand scrapped plans for a similar tax​ earlier this month.

As to whether other countries will follow suit, the jury is out. But Bruus suggested it could incite action: “We will be the first country in the world to introduce a real CO2e tax on agriculture. Other countries will be inspired by it.”

The predicted greenhouse gas emissions are significant, which indeed could encourage the development of more agricultural taxes around the globe. Overall, it’s expected that Denmark’s greenhouse gas emissions will be reduced by 1.8m tonnes of CO2e by 2030, with the potential for up to 2.6m tonnes.

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