Danes Present Innovative Solution for Farm Emission Taxes

An expert group commissioned by the Danish government and Parliament have  presented a report with three proposals on how greenhouse emissions from Denmark’s agricultural production can be reduced by the introduction of a carbon tax.

Professor Peter Birch Sørensen, Department of Economics, University of Copenhagen, a member of the expert group, and Bjarke Møller, Director of the Green Transition Denmark commented on the report’s findings.

Agriculture accounts for a significant part of greenhouse gases in Denmark and in many other countries. Methane and nitrogen dioxide from animals and fertilisers are the main sources.

The Danish report is significant since it is the first time that a systematic and simple methodology has been proposed to deal with these emissions at the level of all individual farms in any one country.

Sørensen explained the report’s methodology for estimating the emissions from data that farms are already required to report on their farm animals and on all fertilisers used on their land.

The authorities only have to use these numbers to calculate emissions by multiplying each given data point by the appropriate emission value for each individual animal and type and amount of fertiliser.

Each farm would then be taxed on the basis of these farm emissions using a carbon tax of €100 for each ton of emissions.

In the highest tax case of €100 per ton the report calculates that reduction of emissions would be close to 15% with the numbers of animals being reduced by 20% and plants production by 12%.

Two other cases were used to calculate results for emission reduction using a carbon tax of €50 and €8 per ton.

The report proposed that the income from these taxes could be returned to those farmers for new investments when they have achieved these emission reductions.

The report also estimated the expected impact on the Danish economy, incomes and on consumer food prices.

They report concluded that the farm sector represents just a small part of the Danish GDP and thus the above production reductions would not have any significant impact on the economy as a whole.

Møller pointed out that the agriculture sector has seen significant and continuous changes and he saw no significant impairment of farmers’ incomes. He commented further that doing nothing would have a far greater impact on the farm sector. The numbers of animals and the numbers of farmers have seen large reductions during the last 20 years, he said.

They estimated that the impact on consumer prices for vegetables would be less than +2%, while pork meat would increase by 5% and beef by around 10%. None of these increases are dramatic in their opinion.

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