Denmark proposes CO2 tax on farming

Denmark proposes CO2 tax on farming

By Jenny Brunton, Senior European Policy Advisor

On Wednesday 21 February 2024, an expert group commissioned by the Danish government and parties at the Danish Parliament presented proposals for how Danish agriculture can reduce its emissions including the introduction of a farming emissions tax of 750 Danish crowns (€101) per tonne emitted. 1 GBP = 8.717036 DKK.

The scenarios laid out by the government advisors would reduce agricultural production by between 6% and 15%, with cattle and pig production falling by around 20% under the harshest taxation scenario. In the model with the highest proposed tax of 750 kroner per ton emitted, a permanent loss of jobs of 8,000 persons is predicted. This may be seen as a blow by the government, which has stated it does not want its policies to cause job losses or damage competitiveness in Danish agriculture. All three of the proposed options would result in an initial loss of jobs. The medium option (375 kroner) would cost 4,000 jobs and the lightest option – a tax of 125 kroner per ton emitted – would cost around 2,000 jobs.

The committee also calculated how the carbon tax will affect the price of products like meat and milk for consumers in Denmark. The highest rate, 750 kroner, would result in the price of 500 gram packed of beef increasing by 4.5 kroner.For the 325-kroner rate, this would fall to 2.3 kroner. If the tax was 125 kroner per ton emitted, the price of 500g of beef would go up by 1.4 kroner. For a litre of milk which currently costs 13 kroner, the price increases at each increment of the emissions tax would be 0.6 kroner, 0.3 kroner and 0.2 kroner.

It is proposed that the income generated from the tax is redirected into investment in new technology and research in agriculture.

Will it work?  

In 2023, an analysis by The Danish Council on Climate Change found that a tax of DKK 750 per tonne of CO2 could reduce the sector’s 2030 emissions by around 45 percent compared to 1990 levels. However, that would still fall short of the 55 to 65 percent target that was agreed in Parliament in 2021. Though that target is equivalent to reducing 6.1 and 8 million tonnes of greenhouse gas emissions, the agreement only contained real plans for reducing 1.9 million tonnes. The rest is expected to come with the development of new technology, such as feed additives that can reduce methane emissions.

It is hoped that a tax on production will push individual farmers to use these new technologies, or to make structural changes such as switching from animal to plant-based farming and removing lowland soils from circulation. But according to the Danish Council on Climate Change, it will also result in an increase in the proportion of Danish farms with a negative net income from around 25 to 45 percent.

Raising the tax even higher will not incentivise farmers to mitigate emissions as the existing technical solutions for doing so, called ‘carbon abatement measures’, are not cost-attractive. This means that innovation is the only way to ensure the sector’s long-term transition. The council argues that a future tax reform can accelerate these changes.


In 2020 there was broad political agreement to introduce a carbon tax in response to Denmark’s agricultural sector failing to reduce its greenhouse emissions over the past decade. Agriculture emissions in Denmark make up 22.4% of the country’s total carbon emissions, compared with 15.6% ten years ago – a share which has increased as other sectors have reduced their emissions.


New Zealand has delayed a similar tax to the end of 2025.