Danish farmers face carbon tax as part of climate goals

ROEDOVRE, Denmark (CN) — Danish farmers will have to pay taxes for climate-polluting agricultural activities, if the government adopts the suggestions of an expert panel that offered three new models of taxation and regulations in a report on Wednesday.

The most comprehensive model would apply a carbon dioxide tax of 750 Danish kroner (about $100) per ton emitted for all farmers, while the alternative schemes opt for $50 and $8 respectively, including deductions and financial support for developing new technologies.

Politicians now enter tough negotiations to finalize the tax proposal.

The Danish Agriculture & Food Council said in a news release that finding a solution will be a big political task. They also warned that imposing the highest tax would run counter to government promises of “securing jobs, competitiveness and a green transition for strong Danish food production.” 

No matter the outcome, the decision will have a huge impact on the Danish agricultural sector, which takes up 60% of the country’s total land.

Courthouse News spoke with dairy farmer Nis Kristian Hjort, who runs a 100-hectare farm with 120 cows in southern Denmark. He worries that high taxes would accelerate the existing problem of smaller farms having to close or merge into "mega farms."

“The main issue with milk production is the methane emitted by cows and their digestive systems, and that is generally a difficult thing to limit,” he said, arguing that it would be easier to adjust to a small tax introduced over time. That way, farmers will have time to change their practices and lower emissions.

The new taxes primarily target emissions from animals, especially cows and pigs, and fertilizers. Experts also suggest offering farmers tax credits for reforestation projects.

For years, politicians have been eyeing an overhaul to make the Danish farming industry more climate friendly. Though the sector is steadily improving, it still accounted for a third of Denmark’s total carbon dioxide emissions in 2021.  

There has been growing scrutiny of the agricultural sector’s use of pesticides and chemicals, with issues including dead zones in the sea last fall linked to nutrients from fertilizers.

All of the models will likely lead to a loss of agricultural jobs. According to the report, the best outcome would cost just over 1,500 farmers or assistants their work. But that number could rise to almost 8,000 workers if politicians opt for the highest tax.

Hjort thinks politicians should help farmers develop new technologies and practices, instead of forcing people out of business.

“There is a big potential in making new types of feed for the animals," he said. "The same goes for investments in how to better transform fertilizer and plant leftovers into biochar through pyrolysis, so we can layer material in the ground rather than emitting CO2.”

Hjort said it would be difficult for Danish farmers to compete on the European market if they have to pay a high climate tax. Currently, around 75% of food is exported — which explains why experts dropped the idea of a consumer tax on meat.

Minister of Economy Stephanie Lose was hesitant to respond to the taxation models, but she told Danish media DR that the government does not intend to “send jobs out of the country” or hurt Danish farmers' competitiveness.

Negotiations will be tough and are expected to continue for months.

Denmark is far from the only European country where farmers face financial challenges as part of bigger transitions. Over the past several months, farmers in Germany, France and many other nations have been demonstrating over agricultural subsidies, the Green New Deal, inflation and other issues.  

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