Denmark: World's first country to impose a carbon tax on livestock

Danish dairy farmers face having to pay an annual tax of 672 kroner ($96) on greenhouse gas emissions per cow.

Denmark's coalition government agreed this week to introduce the world's first agricultural carbon tax. This will mean a new tax on livestock starting in 2030.

Denmark is a major exporter of dairy products and pork, and agriculture is the country's largest source of emissions. The joint agreement also calls for an investment of 40 billion kroner (US$3.7 billion) in measures such as reforestation and the establishment of wetlands, designed to help Denmark meet its climate goals.

"Through this agreement, we will invest billions of dollars in the largest renovation of Denmark's landscape in recent times," Danish Foreign Minister Lars Lokke Rasmussen said in a statement on Tuesday. "At the same time, we will become the first country in the world to impose a (carbon) tax on agriculture."

Danish dairy generally welcomed the agreement and its goals, but also angered some farmers.

Months earlier, farmers staged protests across Europe, blocking roads with tractors and throwing eggs at the European Parliament, raising a long list of complaints that included complaints about environmental regulation and excessive red tape.

The global food system is a huge factor in the climate crisis, accounting for about 1/3 of its greenhouse gas emissions.

Animal husbandry has a particularly large impact, with livestock accounting for approximately 12% of global emissions in 2015, according to data from the Food and Agriculture Organization of the United Nations. Part of the pollution comes from methane, a powerful gas produced by cows and other animals through hiccups and feces that warms the planet.

Reduce livestock emissions

The Danish parliament is expected to approve the tax later this year, and carbon dioxide equivalent emissions from each ton (1.1 tons) of livestock will be levied at 300 kroner (US$43) starting in 2030 and will increase to 750 kroner (US$107) by 2035.

A 60% tax break will apply, which means farmers will actually be charged 120 kroner (US$17) per ton of livestock emissions per year starting in 2030 and will increase to 300 kroner (US$43) by 2035.

According to Danish green think tank Concito, Danish dairy cows (which account for the majority of the dairy population) emit an average of 5.6 tons of carbon dioxide equivalent per year. If a lower tax rate of 120 kroner was adopted, each cow would have to pay 672 kroner, or US$96.

If tax breaks are implemented, the tax per cow will increase to 1,680 kroner (US$241) by 2035.

In the first two years, tax revenue will be used to support the green transformation of the agricultural industry, which will then be reassessed.

Torsten Hasforth, chief economist at Concito, told CNN: "The whole purpose of the tax is to get the agricultural sector to find solutions to reduce emissions. For example, farmers can change the feed they use."

But Danish farmers 'organization Bæredygtigt Landbrug believes the measures are nothing more than a "terrible experiment."

"We believe the agreement is purely bureaucratic," Chairman Peter Kiær said in a statement. "We acknowledge that there is a climate problem... But we don't think the agreement will solve the problem because it will put a spoke on the wheel of green investment in agriculture."

Peder Tuborgh, CEO of Arla Foods, Europe's largest dairy group, said the agreement was "positive" but that farmers who "really do what they can to reduce emissions" should not be taxed.

"The tax base of the (carbon) tax must be based entirely on emissions that can be eliminated," he added in the statement.

Kristian Hundeboll, CEO of DLG Group, one of Europe's largest agricultural companies and a cooperative owned by 25,000 Danish farmers, said "fixing" carbon taxes in EU legislation is "crucial to competitiveness." "Denmark's unilateral actions are not good for the climate, agriculture or supporting industries," he said.