"We will be the first country in the world to introduce a real CO2 tax on agriculture", Taxation Minister Jeppe Bruus said last week. "Other countries will be inspired by this."

New Zealand had been on course to be first to tax farm emissions, until last October's elections resulted in a centre-left to centre-right government change. New Zealand's new Agriculture Minister Todd McClay said: “The government is committed to meeting our climate change obligations without shutting down Kiwi farms. 

"It doesn’t make sense to send jobs and production overseas, while less carbon-efficient countries produce the food the world needs.” 

In Denmark, from 2030 farmers will have to pay €16/t of emitted CO2 equivalent, rising to €40 from 2035 onwards, according to the tax plan of a "green tripartite" which includes the government, the Danish Agriculture & Food Council, the Danish Society for Nature Conservation, the NNF trade union, the Danish Metalworkers' Union, the Confederation of Danish Industry, and Local Government Denmark.

It is estimated that Danish dairy farmers may have to pay an annual emissions tax of nearly €100 per cow.

Agreed after five months of negotiations, the livestock emissions tax plan includes a government commitment to support EU regulation of agricultural emissions through an emissions trading system, with which the tax in Denmark would eventually align.

Land restoration

Also planned is funding for more forests in Denmark, increased peatland restoration, along with new measures to comply with the EU Water Framework Directive. 

Farmers expect the plan would take about 400,000 hectares out of Denmark's agriculture (15% of cultivated areas), including buying up some farmland to reduce nitrogen emissions.

The carbon-rich peatlands restoration target is 70,000 hectares. Farmers who do not wish to participate in peatland restoration would have to pay a CO2 tax of €5.36/t of emissions from the peatlands, starting in 2028.

While the plan is subject to approval by parliament, political experts expect it to meet a broad-based consensus, and to pass into law.

“With this agreement, we are investing billions in the biggest transformation of the Danish landscape in recent times,” Foreign Minister Lars Lokke Rasmussen said.

The tax could add about 14% (€1.40) to the €10 per kilo discount store price of minced beef in 2030, said Minister for Economic Affairs Stephanie Lose.

Revenues from the tax will be channeled back to agriculture for green initiatives, climate technology, and production transformation, and helping the agricultural enterprises facing the most difficulty in transitioning.

Clarity

The Danish Agriculture and Food Council represented farmers in negotiating the plan. The Council said a carbon tax had been a ticking time bomb, but the plan brings clarity. The organisation particularly welcomed a structure around the tax for fast use of climate technology, making it possible to avoid the tax by using climate action measures on the farm.

However, the Bæredygtigt Landbrug (Sustainable Agriculture) farmers' organisation said Danish food production will decrease, and the "Agreement on a Green Denmark" is a "sad agreement for agriculture, for the climate, and for the security of the food supply".

Peder Tuborgh, the CEO of Denmark's Arla Foods, the co-operative owned by farmers which is Europe’s largest dairy group, said it is crucial that farmers who genuinely do everything they can to reduce their emissions are not subjected to a tax now or in the future.

He said Arla can achieve climate goals through voluntary measures, having already cut nearly a million tons of CO2 in two years across the entire Arla Foods group, including 0.21 million tons in Denmark alone.

If there is to be any incentive for making a green transition, one should not be economically penalised, if they take the right measures on the farm.

Mr Tuborgh said the Green Tripartite Agreement's planned largest redistribution of land in Danish history, including 250,000 hectares for new forests and 140,000 hectares of low-lying lands, must support agriculture, biodiversity, and climate adaptation.

However, Denmark's leading climate think tank, Concito in a press statement said the climate tax level is too low, and may fail to ensure the necessary structural transformation in agriculture. 

It will not ensure a rapid climate-friendly transition in agriculture, according to Cincito, which served as an independent knowledge partner of the Green Tripartite, but did not participate directly in the negotiations.

Concito Director Christian Ibsen said the agreement's climate tax would be significantly below the industry tax level, until 2035, not putting enough pressure on agriculture to change. "The tax starts too late and too low".

But he welcomed the agreement's moves towards producing more plant-based food, using less space, while protecting the environment, and repurposing some of the land taken out of agriculture for biodiversity, nature, drinking water, nitrogen management, climate protection, and energy plants for solar and wind.

The new plan is more palatable for farmers than expert group proposals of last February, which included a farm emissions tax as high as €101/t, predicted at the time to reduce Danish agricultural production by between 6% and 15%, with cattle and pig production falling by 20%.

New Zealand

Meanwhile, the New Zealand government decided to keep agriculture out of their Emissions Trading Scheme, instead opting to address methane reductions on farms. 

Farmers will be encouraged to reduce emissions through the use of technology, without cutting agricultural production or exports. However, the government has also indicated it will introduce an emissions pricing system for farms by 2030.

The developments in New Zealand and Denmark are of interest to farmers in Ireland, which also has a high proportion of emissions from agriculture (38.5% in 2022).

In Denmark, agriculture emissions are predicted to account for 46% of total emissions by 2030, because other sectors are reducing emissions much faster than agriculture.

Nearly half of New Zealand's greenhouse gas emissions come from agriculture.