Denmark carbon tax on livestock will cost farmers $145 per cow

Denmark is a major exporter of dairy products and pork, and agriculture is the country’s largest source of emissions. The coalition agreement – which also includes investing 40 billion crowns ($8.6 billion) in measures such as reforestation and wetland creation – aims to help the country meet its climate goals.

“With today’s agreement, we are investing billions in the biggest transformation of the Danish landscape in recent times,” Foreign Minister Lars Løkke Rasmussen said in a statement on Tuesday.

“At the same time, we will be the first country in the world with a (carbon) tax on agriculture.”

The Danish dairy industry generally welcomed the agreement and its goals, but it angered some farmers.

Livestock has a particularly large impact, accounting for about 12 percent of global emissions in 2015, according to the UN’s Food and Agriculture Organization. Some of this pollution comes from methane, a powerful planet-warming gas produced by cows and some other animals through their burps and dung.

Reducing emissions from livestock

The tax, which is expected to be approved by Denmark’s parliament later this year, will amount to 300 kroner per tonne of CO2 equivalent emissions from livestock from 2030, rising to 750 kroner in 2035.

A 60 percent tax break will apply, meaning farmers will effectively be charged 120 kroner per tonne of livestock emissions annually from 2030, rising to 300 kroner in 2035.

On average, Danish dairy cows, which make up a large part of the cattle population, emit 5.6 tons of CO2 equivalent per year, according to Concito, an environmental think tank in Denmark. Using the lower tax rate of 120 kroner results in a fee of 672 kroner per cow.

With the introduced tax breaks, this levy will rise to 1,680 kroner per cow in 2035.

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

“The whole purpose of the tax is to make the sector look for solutions to reduce emissions,” Concito’s chief economist Torsten Hasforth told CNN.

For example, farmers can change the feed they use.

But Danish farmers’ group Bæredygtigt Landbrug said the measures amounted to a “scary experiment”.

“We believe the agreement is pure red tape,” chairman Peter Kiær said in a statement.

“We recognize that there is a climate problem… But we do not believe that this agreement will solve the problems because it will put spokes in the wheel of green investment in agriculture.”

Peder Tuborg, chief executive of Arla Foods, Europe’s biggest dairy group, said the agreement was “positive” but that farmers who “really do everything they can to reduce emissions” should not be taxed tax.

“It is essential that the tax base for a (carbon) tax is based solely on emissions that have the means to eliminate them,” he added in a statement.

Christian Hundeboll, chief executive of DLG Group, one of Europe’s largest agribusinesses and a cooperative owned by 25,000 Danish farmers, said it was “crucial for competitiveness” that the tax be “anchored” in European Union law.

“Neither the climate, nor agriculture, nor the ancillary industries benefit from Denmark acting unilaterally,” he said.