Denmark’s Tax on Farmers May Trigger More Costs, Watchdog Warns

(Bloomberg) — Denmark’s plan to cut agricultural emissions is probably not enough for the Nordic nation to meet its 2030 climate target and may require the government to take more expensive measures later, the state’s fiscal watchdog warned.
Denmark, a big exporter of pork and dairy, will introduce a carbon tax on farmers by the end of the decade alongside other moves to support the industry’s transition. The cabinet expects the pioneering step, laid out earlier this year, to curb emissions by 1.8 million tons of CO2 in 2030, enabling the country to reach its 70% reduction target for that year.
But there’s a “big risk” that the assumed outcome of the move won’t be realized and that additional and more expensive measures will be needed to achieve Denmark’s climate target, the Economic Councils said in a report on Tuesday.
The plan comes with uncertainty because it involves unproven technologies such as pyrolysis — a process of heating material in the absence of oxygen — while the tax on livestock will only be fully phased in by 2035, the watchdog said. It suggested the government should mitigate this risk by aiming for greater emissions reductions in 2030 than what is immediately deemed necessary.
The Economic Councils also criticized the government’s failure to calculate the socio-economic costs of achieving Denmark’s climate goals. The aim to preserve farming jobs and production in Denmark will come with lasting costs that cannot be justified by short-term savings, it said.
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