Denmark is advancing the world's first agricultural carbon tax. Among them, dairy farmers may be subject to a carbon tax of approximately 750 yuan per year due to greenhouse gas emissions from each cow
It is reported that after months of intense negotiations, the Danish government finally reached an agreement with participating organizations on an agricultural carbon dioxide tax on Monday evening local time.
According to the agreement, Danish farmers will pay a tax of 120 Danish kroner (approximately 125 RMB) for each ton of carbon dioxide equivalent emitted during the transition period starting from 2030; Starting from 2035, a tax of 300 Danish kroner (approximately 313 RMB) will be paid for each ton of carbon dioxide equivalent emitted.
The agreement also involves issues such as afforestation, nitrogen reduction, and clean drinking water. The Danish parliament is expected to vote to approve the tax agreement later this year, making it the first country in the world to impose a carbon tax on agriculture.
Danish Prime Minister Mette Frederiksen said she hopes this tax can pave the way for similar measures to be promoted on a regional and global scale.
Each cow is taxed approximately 750 yuan per year
Currently, countries around the world are striving to reduce carbon emissions from food production, while also striving to ensure food security as much as possible. Including land use change, carbon emissions from food production account for almost a quarter of the total global emissions.
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Danish Climate Minister Lars Aagaard stated that agriculture is Denmark's largest source of greenhouse gas emissions. "This situation cannot continue, agriculture must make a contribution and become a part of a green future."
From the perspective of agricultural structure, Denmark is a major producer and exporter of dairy and pork products, while ruminant animals such as cows and sheep produce methane through their digestive system. The grass they eat and the synthetic nitrogen fertilizer they need for cultivation also produce greenhouse gases. Animal husbandry accounts for approximately 11% of global emissions, of which nearly two-thirds are generated by cows.
According to Concito's estimation, Danish cows produce an average of 6 tons of carbon dioxide equivalent emissions per year. After the implementation of the new tax plan, even with a lower tax rate of 120 Danish kroner during the transition period, each cow will need to pay a fee of approximately 720 Danish kroner (approximately 750 RMB) per year, which may impose a heavy burden on dairy farmers.
At the same time, although the emissions from cows are much higher than those from pork, pig farmers in the country are also expected to be affected by the new tax burden.
The Danish government has stated that it will invest 40 billion kroner to assist in agricultural transformation. In addition, the tax will be implemented in stages, with a basic tax reduction of 60% for at least the first two years.
Will Europe follow the example of Denmark's declining agricultural output?
According to the evaluation report of the Danish government, the introduction of an agricultural carbon tax means that farmers' costs will increase, which may ultimately lead to a decrease of 6% -15% in the country's agricultural production. When the tax rate increases to 750 kroner per ton, the production of cattle and pigs is expected to decrease by about 20%.
Obviously, there are still many protests in Denmark regarding the introduction of the carbon tax.
The farmer organization Bredygtigt Landbrug, which did not participate in the relevant negotiations, criticized this agreement this week. The chairman of the organization, Peter Kir, said, "I think this is too crazy, it will hinder a country that is already one of the world's most green agricultural producing countries from urgently needing technology investment." The government did not listen to the opinions of farmers.
Peder Tuborgh, CEO of Arla Foods, a dairy cooperative based in Denmark, said that the tax system may affect some farmers, including organic producers, which is unfair as they have already made every effort to reduce emissions. He called on policymakers to further weigh the pros and cons.
It is worth mentioning that Denmark's practice of imposing a carbon tax was originally intended to emulate New Zealand. But New Zealand just cancelled attempts to impose a carbon tax similar to that on cattle and sheep farmers to reduce methane emissions this month.
Whether the EU will follow Denmark's carbon tax approach in the future has also received attention from many industry insiders. The European Commission is currently studying how to establish an EU wide agricultural emissions trading system, which includes requiring farmers and landowners to directly pay for their emissions.
At an event held in Brussels last week, Alexandre Paquot, Deputy Director of the Climate Department of the European Commission, stated that incorporating agriculture into the EU's emissions trading system should provide "farmers with a new business case and new opportunities.".