Denmark sets the price of a cow's breath as world's first livestock carbon tax takes shape

Denmark published the detailed rules on Tuesday for the world's first carbon tax on livestock, setting out how the emissions of each of the country's 1.4 million cattle and 11 million pigs will be counted, priced and, from 2030, billed to the farmer.

The tax, agreed in principle in 2024, will start at 300 kroner (£34) per tonne of carbon dioxide equivalent, with a 60% deduction that brings the effective rate to 120 kroner. By 2035 it rises to 750 kroner, or 300 kroner net. A dairy cow in Denmark emits the equivalent of about 5.6 tonnes a year, so a farm with 200 cows would pay around 134,000 kroner (£15,000) in the first year and 336,000 by 2035.

The rules published this week settle the question that had worried farmers most: how the emissions will be measured. Rather than monitoring individual animals, each farm will be assessed on a national model that uses herd size, breed, feed type and manure handling, with deductions for feed additives that cut methane and for covering slurry tanks. Farms that adopt the full package of measures can reduce their bill by up to 70%.

“I have 240 cows and I have done the sums three times. With the additives, the slurry cover and the deduction, I pay about 50,000 kroner a year. Without them, four times that,” said Lars Mikkelsen, who farms near Holstebro in western Jutland. “So it is not really a tax. It is a list of things they want me to do with a fine attached. I can live with that. What I cannot live with is being the only country doing it.”

Agriculture accounts for about 25% of Denmark's emissions, the largest share of any sector since the country closed most of its coal plants. The government expects the tax to cut emissions by 1.8m tonnes a year by 2030, about a third of what it needs from farming to meet its legally binding 70% reduction target. The revenue, forecast at 1.1bn kroner in the first year, will be returned to the industry as grants for new technology and for taking marginal land out of production.

Mette Holm, an agricultural economist at Aarhus University, said the design was more lenient than economists had wanted but more durable. “The purist version would have priced every tonne at full rate and let the market sort out who farms. That would have shut perhaps a fifth of dairy farms by 2035 and the politics would have collapsed,” she said. “This version shuts almost nobody and changes almost everybody. That is a smaller result, but it will survive the next election.”

The farmers' body Landbrug & Fødevarer, which signed the 2024 agreement, said it accepted the rules but would seek a review clause if no other EU country introduced a comparable charge by 2028. New Zealand abandoned a similar plan in 2024; the Netherlands and Ireland have discussed one without acting.

The first bills will be sent in January 2031.