Denmark’s tax on greenhouse-gas emissions from agriculture is a reason for hope—but not complacency.
The European Union agricultural model of past decades has focused solely on increasing yields, which has eroded the soil and degraded the environment, threatening the very ecosystems on which we rely to grow our food. In a changing climate, where extreme weather events are becoming more likely and more intense, crop pests and pathogens are more prevalent and pollinator populations are being decimated, we need an agricultural system that builds resilience. Otherwise, Europe risks jeopardising future food security.
In 2022 agricultural emissions in the EU—around 380 million tonnes of carbon-dioxide equivalent (CO2e)—accounted for 12 per cent of the region’s greenhouse-gas (GHG) emissions. They show little sign of declining, having stagnated for two decades. To reach the EU’s objective of climate neutrality, every sector must play its part. Europe needs an ambitious 2040 emissions-reduction target for agriculture and our food and farming system needs to change.
Global first
Denmark, a country with a large intensive-farming industry responsible for a quarter of overall emissions, has decided to introduce a tax on emissions from agriculture—a global first. The agreement reached among various stakeholders, including organisations representing farmers and environmentalists, also includes measures for land restoration through reforestation and the rewetting of peatlands, as well as support for biochar as a carbon-removal technology. It followed the report by the Expert Group for a Green Tax Reform established by the Danish government in 2021.
The move to price emissions from agriculture recognises that it is a significant driver of climate change. The gentle price curve—set at some €15 per tonne of CO2e from 2030, only increasing to €40 by 2035—means however that the plan is unlikely to incentivise fundamental changes to farm practices or consumer diets.
While it is positive to see national action, even if it lacks vigour, more is needed at the EU level. Here, discussions around pricing emissions from agriculture have centred on an emissions-trading system for agriculture, an ‘Agri ETS’. Such an EU-level price incentive would not only spur emission reductions but also level the playing field. It would ensure that pioneering countries, such as Denmark, would not risk losing competitiveness and avoid ‘carbon leakage’—where any gains made domestically are offset by an influx of products from countries without such fiscal measures.
The agri-food system is the main factor in biodiversity loss and a major driver of climate change, soil degradation and water and air pollution, in Europe and globally. If done in isolation, pricing emissions might trigger perverse side-effects. For instance, without dedicated safeguards, further intensification of production, pursued in the name of emissions reduction, could further compromise animal welfare standards, a key aspect of sustainability.
Bigger picture
If we succumb to GHG tunnel vision and resort to technical fixes, which may or may not result in incremental improvements, we could miss the bigger picture and allow for the continued depletion of vital ecosystems, as well water and air quality. Holistic solutions will be crucial. The Danish agreement is at risk of such tunnel vision, by setting its sights high on the potential of feed additives to reduce methane emissions from livestock and on biochar to lock away carbon.
While feed additives have shown some emissions-reduction potential, they fail to address other established concerns intrinsic to intensive livestock farming, such as the vast quantities of land required for the production of feed and the consequent biodiversity loss, the outsized water footprint and the leading role played in air and water pollution. Reducing the production and consumption of animal products is the most effective way to align livestock emissions with overall climate objectives and the only safe way forward from sustainability and health perspectives. Biochar, on the other hand, is an unproven technology at scale, which risks adding pressure to the demand for sustainably sourced biomass and may lead to unintended impacts on soil and water that could be difficult to undo.
Ecosystem restoration should be integrated in agriculture practices. Through changing what we produce and consume, land can also be freed up and returned to its natural state. The Danish government’s decision to buy up areas for restoration—rewetting in some cases, reforestation in others—is welcome and will allow nature to bounce back, mitigating climate change and stimulating resilience. Also commendable is its focus on the areas with the most problematic nitrate runoff, fitting in a country which just months ago held a funeral, attended by more than 1,000 people, for a fjord which had ‘lost its life’ through nitrogen pollution.
No silver bullet
While emissions-pricing systems have the potential to make a difference (if properly designed and implemented), they are not a silver bullet. Pricing emissions can be an important piece of the sustainable-agriculture puzzle, but Europe should not put all its eggs in this basket.
Farmers deserve fair prices for their work, ensuring dignified livelihoods now and in the future. They must be supported in the green transition, to lead Europe towards a more resilient food system. Europe needs a broader, coherent mixture of policies to reshape agriculture, shift diets and tackle food waste, within the overarching framework of a Sustainable Food Systems Law.
It would be an absurd waste of public money if the EU were, as currently, to push forward with a pricing system while subsidies under the Common Agricultural Policy—the largest component of its budget—continued to fund harmful practices incompatible with climate objectives. By making the transition to agroecology, EU agriculture can move from a driver of climate change and environmental degradation to being part of the solution, with benefits for ecosystems, animals, farmers and consumers.
The Danish agreement is ground-breaking but a mixed bag. While the nature-restoration elements are a big step in the right direction, the unambitious pricing and the reliance on technical tweaks raise alarm bells. We need more and we need better.
Still, in times of heavily politicised and polarised discussions around the future of EU agriculture, this gives us hope. It shows that agreements, guided by scientific knowledge, can be reached and that the EU can move towards a brighter future.
Mathieu Mal is the policy officer for agriculture and climate at the European Environmental Bureau, working on EU policy related to agriculture, land use and climate.