HomeDanish PoliticsDanish Government and Interest Groups Reach Agreement on Agricultural CO2 Tax

Danish Government and Interest Groups Reach Agreement on Agricultural CO2 Tax

The government and a number of interest groups have reached an agreement on a CO2 tax for agriculture, which will be introduced from 2030. According to the green tripartite agreement, agriculture will pay 300 Danish kroner per ton of CO2 in 2030, increasing to 750 Danish kroner per ton in 2035. However, the agreement includes a basic deduction that reduces the actual tax rates to 120 Danish kroner per ton of CO2 in 2030 and 300 Danish kroner per ton of CO2 in 2035.

The basic deduction is designed to ensure that there is a connection between the tax burden and the actual ability of farmers to take action and incentives to reduce emissions. The funds collected from the CO2 tax in 2030 and 2031 will be used for investments in climate technology and production transition, specifically targeting the most affected farmers.

Economic Minister Stephanie Lose (V) stated that the green tripartite agreement will help Denmark reach its 2030 goal while also ensuring sustainable food production. The agreement also includes the establishment of Denmark’s Green Area Fund, which will manage 40 billion Danish kroner for initiatives such as afforestation and strategic land acquisition. The goal is to plant 250,000 hectares of forest by 2045 and to support the withdrawal of 140,000 hectares of low-lying land before 2030.

Foreign Minister Lars L√łkke Rasmussen (M) and Tax Minister Jeppe Bruus (S) both emphasize the importance of the agreement, with Bruus going so far as to call it “world historic”. The agreement marks the end of a long negotiation process on CO2 taxes, which began with a green tax reform passed in December 2020. The CO2 tax for industry of 750 Danish kroner per ton of CO2, passed in the summer of 2022, but agriculture’s taxes have been postponed several times.

Although the parties in the green tripartite agreement have reached an agreement, the agreement still needs to be presented and adopted in the Danish parliament, which is expected to take place after the summer vacation. Stephanie Lose looks forward to the upcoming negotiations and hopes to find a balance that can ensure broad political support.

Read the danish version here

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