Denmark to Implement World’s First Carbon Tax on Gassy Cows and Pigs

Denmark will begin taxing livestock farmers for the greenhouse gases emitted by their cows, sheep, and pigs starting in 2030. This landmark initiative marks Denmark as the first country globally to implement a carbon tax specifically targeting methane emissions from livestock. Methane, while less discussed than carbon dioxide, is a far more potent greenhouse gas, trapping approximately 87 times more heat in the atmosphere over a 20-year period, according to the U.S. National Oceanic and Atmospheric Administration. This significant heat-trapping capability makes methane a critical target for climate change mitigation efforts. Livestock farming, which contributes around 32% of human-caused methane emissions as reported by the U.N. Environment Program, is thus a key sector for reducing greenhouse gas emissions.

The introduction of this tax is part of Denmark’s broader strategy to combat climate change and achieve a 70% reduction in greenhouse gas emissions from 1990 levels by 2030, as stated by Taxation Minister Jeppe Bruus. The tax will start at 300 kroner ($43) per ton of carbon dioxide equivalent in 2030, escalating to 750 kroner ($108) by 2035. Due to a 60% income tax deduction, the effective cost will initially be 120 kroner ($17.3) per ton, rising to 300 kroner by 2035. This policy is designed not only to curb emissions but also to encourage innovation and more sustainable practices within the agricultural sector. By imposing this tax, Denmark aims to set a global precedent, demonstrating the feasibility and importance of direct economic measures to address the urgent issue of methane emissions from livestock.

FILE – Cows graze in a field in Luncavita, Romania, on May 21, 2019. Denmark will impose cattle farmers with a tax on livestock carbon dioxide emissions from 2030, claiming it will be the first country to do so, in a move to reduce greenhouse gas emissions from each of their cows. (AP Photo/Vadim Ghirda, File)

Emission Reduction Goals

The Danish government aims to reduce national greenhouse gas emissions by 70% from 1990 levels by 2030, according to Taxation Minister Jeppe Bruus. This ambitious target is part of Denmark’s broader effort to combat climate change and achieve climate neutrality by 2045. By imposing a carbon tax on livestock farmers, Denmark is tackling one of the most significant sources of methane emissions head-on. The country’s focus on reducing methane is particularly crucial as this gas has a much higher heat-trapping ability compared to carbon dioxide, making it a potent contributor to global warming. Livestock farming, which accounts for a significant portion of methane emissions, is thus an essential area for targeted action.

This carbon tax initiative represents a critical component of Denmark’s comprehensive strategy to meet its climate goals. Starting in 2030, Danish livestock farmers will be taxed 300 kroner ($43) per ton of carbon dioxide equivalent, with the tax increasing to 750 kroner ($108) by 2035. However, due to a 60% income tax deduction, the effective cost will initially be 120 kroner ($17.3) per ton, rising to 300 kroner by 2035. This financial mechanism is designed to incentivize farmers to adopt more sustainable practices while gradually increasing the economic pressure to reduce emissions. By leading the way with such forward-thinking policies, Denmark not only aims to significantly lower its greenhouse gas emissions but also hopes to inspire other nations to implement similar measures, ultimately contributing to global efforts to mitigate climate change.

Details of the Carbon Tax

This carbon tax initiative represents a critical component of Denmark’s comprehensive strategy to meet its climate goals. Key details of the tax include:

Starting in 2030: Danish livestock farmers will be taxed 300 kroner ($43) per ton of carbon dioxide equivalent.
Increasing by 2035: The tax will rise to 750 kroner ($108) per ton.
Effective cost due to income tax deduction:
- 2030: The actual cost per ton will be 120 kroner ($17.3) after a 60% income tax deduction.
- 2035: The actual cost per ton will increase to 300 kroner.

This financial mechanism is designed to incentivize farmers to adopt more sustainable practices while gradually increasing the economic pressure to reduce emissions. By leading the way with such forward-thinking policies, Denmark not only aims to significantly lower its greenhouse gas emissions but also hopes to inspire other nations to implement similar measures, ultimately contributing to global efforts to mitigate climate change.

Importance of Methane Emissions

Although carbon dioxide is often highlighted for its role in climate change, methane is significantly more potent, trapping about 87 times more heat over a 20-year period, according to the U.S. National Oceanic and Atmospheric Administration. Methane levels, emitted from sources including landfills, oil and natural gas systems, and livestock, have risen particularly rapidly since 2020. The U.N. Environment Program states that livestock accounts for about 32% of human-caused methane emissions.

Legislative Process and Farmer Reactions

The tax proposal follows months of protests by farmers across Europe, who argue that climate change mitigation measures and regulations are driving them to bankruptcy. Despite this, the tax agreement, described by the Danish Society for Nature Conservation as “a historic compromise,” was reached late Monday between the center-right government, farmers, industry representatives, unions, and other stakeholders.

“We have succeeded in landing a compromise on a CO2 tax, which lays the groundwork for a restructured food industry – also on the other side of 2030,” said Maria Reumert Gjerding, head of the Danish Society for Nature Conservation.

Legislative Approval

The tax is expected to pass in the 179-seat Folketing, or parliament, given the broad-based consensus supporting it.

Denmark’s Livestock Industry

Denmark, a major dairy and pork exporter, will tax pigs as well as cows, although cows produce far higher emissions. A typical Danish cow produces 6 metric tons (6.6 tons) of CO2 equivalent per year. As of June 30, 2022, there were 1,484,377 cows in Denmark, a slight decrease from the previous year, according to Statistics Denmark.

Comparison with New Zealand

New Zealand had passed a similar law set to take effect in 2025. However, the legislation was repealed after significant criticism from farmers and a shift from a center-left to a center-right government following the 2023 election. New Zealand has decided to exclude agriculture from its emissions trading scheme and will explore other methods to reduce methane emissions.

Conclusion

Denmark’s groundbreaking carbon tax on livestock emissions marks a significant step towards addressing climate change. As the first country to introduce such a tax on agriculture, Denmark hopes to set an example for other nations to follow in reducing methane emissions and achieving climate goals.