Denmark takes a step in a greener direction and becomes the first country in the world to introduce a climate tax for agriculture, and nature gets more space with 250.000 hectares of new forest. However, both the tax model and nitrogen regulation of agriculture should be improved upon revisiting.

This is what the Green Transition Denmark says after the government has entered into an agreement with SF, the Radical Left, the Conservatives and the Liberal Alliance on i.a. to introduce a climate tax for agriculture and launch a number of nature initiatives. It follows in the wake of the Tripartite Agreement from June 2024. The climate tax for agriculture will be phased in from 2030, and DKK 43 billion will be set aside. DKK to a green land fund, which must convert 15 per cent. of the agricultural land and plant more forest for the benefit of nature and the aquatic environment. Of this, 140.000 hectares of low-lying soils and marginal land must be taken out of operation. Green Transition Denmark is pleased that extra money was found in the negotiations for the green land fund and for plant-based foods.

"We must hope that the outside world will be inspired by the fact that Denmark is the first country in the world to put a price on agricultural emissions and will plant significantly more forests. The climate tax is an important first step, but it is not sufficient to ensure the fundamental transformation of agriculture that the climate, the environment and nature call for.” says Niklas Sjøbeck Jørgensen, senior advisor for food and bioresources at the Green Transition Denmark.

"With the tax model, we risk maintaining a large and intensive animal production instead of a structural development with a focus on more plant-based foods, fewer production animals and more ecology. It would be far better for the climate, nature and our distressed marine environment,” concludes Niklas Sjøbeck Jørgensen.

Uncertainty about the water environment efforts

The agreement must meet Denmark's poor marine environment and our obligation to comply with the EU's Water Framework Directive, which requires good ecological condition in fjords and coastal waters by 2027 at the latest.

"It is positive that people have realized that a good water environment requires far less agricultural land and that the water environment efforts have received a large bag of money. Several opposition parties also succeeded in pushing for accurate nitrogen figures. But both the effect and the pace of the efforts are still challenged,” says Niklas Sjøbeck Jørgensen and continues: "You are exceeding the EU's deadline for when we must be on target with nitrogen reductions and you are betting on voluntary agreements without safe nitrogen regulation".

The engine in the nitrogen effort is the targeted nitrogen regulation, which was already agreed in the Agricultural Agreement from 2021. The effect of this is still uncertain. If it is too low, it can make extraction both more expensive and slower. Therefore, going forward, it should be ensured that the full potential of targeted regulation is exploited and supplemented with additional measures.

"Overall, far more tangible regulation is needed to ensure nitrogen reductions. Agriculture and other landowners must be able to expect a significant regulatory pressure if the target of land acquisition is not reached," says Niklas Sjøbeck Jørgensen.

Still great need for structural adjustment in agriculture

The climate tax is introduced to reduce CO₂ emissions and drive development in agriculture. But due to built-in tax rebates, it becomes too low to create the reductions and development that is needed, namely more plant-based foods and ecological principles.

"Getting a tax is a big step forward, but the tax model itself unfortunately contains several weaknesses. People are betting hard on new, unsafe technological fixes, but they have an uncertain climate effect. At the same time, they have chosen to maintain an intensive and unsustainable large-scale production of animals, which takes up large parts of Denmark's land. Instead, plant-based production and ecology could have been prioritized much higher," concludes Niklas Sjøbeck Jørgensen.

He praises that in the negotiations it has been agreed to raise support for plant-based food production by DKK 420 million. kroner. It is important for the development of agriculture. But overall, animal production continues to receive far more state support.

In the model, the actual tax is followed by a discount – a so-called basic deduction – of 60 per cent. for animal producers. The high discount means that it will potentially only require a few measures to completely avoid the tax.

"There will be only a very small incentive to produce plants rather than animals, a limited incentive for new technology development and a large incentive for investments in intensive animal production," assesses Niklas Sjøbeck Jørgensen, who recommends that in the future work to lower the minimum deduction and move support from animal to plant-based production.

The climate effect of pyrolysis is still questionable

One of the technologies that is heavily invested in in the agreement is pyrolysis and biochar. During pyrolysis, manure and straw are converted into biochar, which is subsequently spread on agricultural fields. The technology may have potential for our long-term climate goals. But studies of the environmental and climate effect of pyrolysis and biochar have not yet been completed, and therefore we should wait for the results before we become dependent on pyrolysis, believes the Council for the Green Transition. However, it is positive that in the negotiations it was agreed to revisit the pyrolysis pool in 2027.

"According to the agreement, the fulfillment of agriculture's climate goals for 2030 is still dependent on pyrolysis succeeding. We still know too little about which environmentally hazardous substances are formed in the process, and what long-term consequences biochar can have for the environment and the food grown in the fields. At the same time, it may take decades before the technology even has a real climate effect. It doesn’t add up,” says Trine Langhede, advisor for food and bioresources at the Green Transition Denmark and continues,

"We won't know the climate effect of biochar until 2027, and there will only be three years to find other solutions if the effect is lower than assumed. That is why I am happy that the political agreement has included a revisit of the pyrolysis pool in 2027."

"Although biochar can store CO2 in the ground for many centuries in the long term, there is a risk that we use pyrolysis as a solution to achieve short-term climate goals without knowing the full impact on the environment. In other words, we risk selling the hide before the bear is shot," concludes Trine Langhede.