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FARMING

Danish agricultural sector softens stance on emissions tax 

After years of firm opposition to any carbon tax on agriculture, the Danish Agriculture & Food Council (Landbrug & Fødevarer) interest organisation is changing tact on a likely tax on CO2 emissions in the sector.

Danish agricultural sector softens stance on emissions tax 
A new Danish government is likely to implement a CO2 emissions tax on agriculture. Photo: Mads Claus Rasmussen/Ritzau Scanpix

The organisation is to shift strategy from strongly opposing the tax to participating “constructively within negotiations” on a green agricultural tax reform, newspaper Berlingske reports. 

Despite the organisation’s change in stance, its chairperson Søren Søndergaard said he still maintains that taxing agriculture based on CO2 emissions is not sensible climate politics.

“But there has now been an election and there are [ongoing] negotiations to form a government. We can see that the parties that are close to the negotiations all want a CO2 tax on agriculture,” he told Berlingske.

The Danish Agriculture & Food Council (DAFC) therefore wants a seat at the table when the rules –which it accepts are coming — are set.

It has proposed five principles for reform. According to Berlingske, the principles strongly resemble the organisation’s longstanding arguments against a CO2 tax.

READ ALSO: Denmark proposes uniform CO2 tax for most businesses

Among its principles, DAFC wants to retain the 2021 reduction targets at 5 million tonnes of CO2 per year by 2030. Politicians are considered likely to push for a more ambitious schedule.

Other items on the organisation’s wishlist are measures to protect competitiveness and relocation of jobs; and a promise that funds collected from a CO2 tax will be reinvested in the food industry. It also wants incentives for farmers and companies.

The Liberal (Venstre) party, which could be part of a future government, was previously against the CO2 tax but has also changed its position.

“You can argue against a tax but you will not win,” Liberal leader Jakob Ellemann-Jensen told Danish Agriculture & Food Council representative earlier this month.

“It will happen, because there is a majority behind it,” he said. 

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ENVIRONMENT

Danish government agrees to half krone hike in diesel tax

Denmark's government has struck a deal with four opposition parties to hike tax on diesel from the start of next year, as well as deciding the priorities for 4.9 billion kroner of green spending.

Danish government agrees to half krone hike in diesel tax

The three-party coalition government, which includes the Social Democrats, Liberal and Moderate parties, reached agreement on the tax hike as part of a green spending deal with the Socialist People’s Party, the Conservative People’s Party, the Red Green Alliance and the Social Liberal Party. 

The deal will see tax on diesel increased by half a kroner per litre from the start of 2025, with owners of diesel cars compensated in the first two years by a reduction in the udligningsafgiften or “equalisation tax”, meaning that only those who drive frequently or long distances will see their costs increase. 

“If you drive less than 20,000 kilometers per year, there will be a small cut in your costs. If you drive further, it will be a little more expensive,” Denmark’s climate minister, Lars Aagaard, from the Moderate Party, said at a press conference announcing the deal. “It will become a little but more expensive at the pump. On the other hand, your ongoing payment for having a car will be slightly less in the first few years.” 

The government estimates that hiking the tax on diesel will reduce greenhouse gas emissions by 0.4 million tonnes of CO2 in 2025 and 0.3 million tonnes of CO2 in 2030.

The tax is significantly lower than the 0.9 kroner hike in the diesel tax recommended by the Danish Climate Council, but Aagaard said that this was necessary given the risk that truck drivers might opt to fill up their tanks elsewhere. 

“We have adopted a tax which will lie between those of our two large neighboring countries, Sweden and Germany. It is not put into the world to bother people,” he said.

“We all have to remember that in 2027 it will get a step up because we are implementing the European rules. Those who sell fuel must buy CO2 allowances. The tax system is also dynamic, so we are looking at neighbouring countries.” 

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