Should Scotland follow Danish example and tax agriculture?

In an attempt to combat climate change and achieve its legally binding 2030 target, Denmark has introduced a new carbon tax on livestock – the world’s first tax on agriculture.

After months of negotiation, the Danish government reached an agreement with groups including the Danish Agriculture and Food Council to decrease carbon emissions by 70% from its 1990 levels.

Farmers will have to pay 120 Danish Krone (£14) from 2030 per metric ton of emitted carbon dioxide, rising to 300 krone (£34) from 2035.

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In recent years, Europe has faced protest by farmers against environmental regulation and strict climate measures but greenhouse gases from farming practices remain an important factor in reaching climate targets. Therefore, is it inevitable that a Danish-styled carbon tax on agriculture could be introduced in Scotland?

Despite a smaller cattle population of 1.4 million compared with Scotland’s 1.6 million, Denmark, which is a major exporter of pork and dairy, has seen a rise in agricultural related emissions. Rising from 15.6% to 22.4% in the last 10 years, this means that CO2 emissions from farming would reach 46% by 2030.

In comparison, Scotland’s has fallen 12% to 10%, though this is largely a result of the falling number of livestock and not the direct result of specific action.

“A carbon tax on agriculture should be a last resort,” says Karen Turner, director of the Centre for Energy Policy at the University of Strathclyde.

“Most taxes aim to achieve a revenue stream, but a carbon tax tries to change what people are doing. We don’t want a continued revenue stream because that means we aren’t cutting carbon emissions.

“Farmers, and those working in agriculture, have a difficult time because their emissions are hard to reduce.

“Cows are biological beings and farmers can’t stop their behaviour so we should work with them because if they can’t do anything to reduce their emissions then it is just going to put up their costs from other directions.”

The key concerns raised by a carbon tax – which places a levy on the carbon emissions which arise from producing goods or services – is that it could cause an exodus of farmers. Higher costs would therefore force farmers to push prices on to consumers or shut up business.

Professor Turner says: “We have to be careful that reaching net zero doesn’t damage the sector, an additional cost on it will hit farms, leaving them unviable and causing them to pass on the cost which makes it more expensive for consumers.

“Adding costs to agriculture could also make farmers look at other types of farming but then we could lose Scotland’s milk production, meat and other food sources that livestock offers.”

In response to the Climate Change Committee 2023 report, the Scottish Government has outlined a pilot scheme to support the rollout of methane-suppressing food products to reduce emissions from livestock.

The recent pushback of climate targets from 2030 to 2045 has been welcomed by the National Farmers Union (NFU).

However, the net zero secretary, Màiri McAllan (below) announced in April that farms receiving public support will be expected to uptake these products by 2028.

(Image: PA)

Jonnie Hall, NFU Scotland director of policy, said: “The introduction of a carbon tax in Denmark is a development we must acknowledge but we stand in stark contrast to Denmark, where agricultural emissions are rising.

“Compared to Denmark, Scotland in particular has a very different agricultural profile and that is reflected in our farming and food production emissions. The next Climate Change Plan Update and Land Use and Just Transition Plan from the Scottish Government should make this clear.”

IN Denmark, the agreement, which is still to be passed by parliament, is estimated to cut CO2 emissions by 1.8 million tonnes. The revenue from carbon taxes is often used to reinvest in the green transition.

Experts have suggested that with the difficulty involved in cutting livestock emissions, an alternative could be to offset them through the introduction of other measures including peatland restoration which can absorb carbon.

Hall said: “It is important that our farm businesses, key sectors and the industry as a whole continue to respond positively to the incentives that are on offer as there is no room for complacency.

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“We just need to ensure the policy tools work for farm businesses so that they can remain profitable and also deliver what governments want in terms of outcomes for the environment.”

The Scottish Government is currently in consultation on a carbon tax on the land of larger estates. Echoing the advice of experts such as Professor Turner, they are looking at ways to work with the sector to reduce emissions rather than tax Scotland’s 67,000 farmers.

Professor Turner says: “My challenge to the Scottish Government if they opted to follow Denmark’s tax on livestock – do you expect farmers to absorb the cost or is there an alternative which doesn’t damage our food supply chain and cause us to import the problem from elsewhere?”