In a country where livestock vastly outnumber the human population, Denmark has introduced a groundbreaking tax on methane emissions from cattle and pigs. This initiative aims to reduce the agricultural sector's climate impact while providing tools and incentives for farmers to adapt their practices.
In brief
Denmark has become the first country in the world to implement a tax on livestock methane emissions, passed by Parliament in November 2024. The tax targets methane released through burps, flatulence, and manure, which contribute significantly to greenhouse gas emissions. Starting in 2030, farmers will pay 300 Danish kroner (approximately €43) per ton of CO₂ equivalent, a figure set to double by 2035. This measure is part of a larger strategy to mitigate the environmental impact of agriculture and restore some farmland to its natural state.
This policy highlights the growing tension between environmental demands and economic interests in a powerful agricultural sector, where lobbying remains influential but actors are beginning to adapt for a more sustainable future.
Key takeaways
• Starting 2030: €43/ton of CO₂ equivalent, doubling by 2035.
• Almost 60% of Denmark’s land is used for agriculture.
• Farmers will receive subsidies for adopting sustainable practices (e.g., methane-reducing feed additives, manure processing for biogas).
• Denmark’s dairy industry exports two-thirds of its butter production.
Analysis and Insights
A strong signal for global agriculture: Introducing such a tax in a country with a dominant agricultural economy sends a clear message: sectors traditionally exempt from environmental regulations must now address their climate impact. This move could push other nations to consider similar policies, driving a global shift in agricultural systems.
A testing ground for sustainable farming: By promoting solutions like methane-reducing feed additives and manure biogas processing, Denmark positions itself as a testing ground for innovative agricultural practices. The success of these measures could influence their adoption in other countries facing similar challenges.
Impact on the food value chain: The tax is likely to shift dynamics among producers, processors, and distributors. While it may increase production costs, potentially straining margins or raising consumer prices, it could also drive higher demand for low-carbon products, such as plant-based proteins.
A challenge to food sovereignty: Reducing farmland for livestock in favor of restoring peatlands or growing crops for human consumption raises concerns about balancing local production with reliance on imports. This poses logistical challenges for foodservice providers committed to local sourcing.
Strategic repositioning for farmers: While the tax imposes constraints, it also presents opportunities. Farmers adopting sustainable practices could differentiate themselves in global markets increasingly valuing environmentally friendly products.
Business opportunities
This tax paves the way for new niches within the F&B industry. Technology developers offering methane-reduction solutions, producers of plant-based alternatives, and companies specializing in agricultural waste valorization stand to benefit significantly. Restaurateurs could leverage this policy by showcasing locally sourced, sustainably produced offerings. However, stakeholders must prepare for potential cost increases and their impact on the supply chain.
Alice Polack
