Denmark will be first to impose CO2 tax on farms, government says

By Isabelle Yr Carlsson

COPENHAGEN (Reuters) - Denmark, a major pork and dairy exporter, will introduce a tax on livestock carbon dioxide emissions from 2030, making it the first country to do so and hoping to inspire others to follow, the government said on Tuesday.

A tax was first proposed in February by government-commissioned experts to help Denmark reach a legally binding 2030 target of cutting greenhouse gas emissions by 70% from 1990 levels.

The centrist government late on Monday reached a wide-ranging compromise with farmers, industry, labour unions and environmental groups on policy linked to farming, the country's largest source of CO2 emissions.

"We will be the first country in the world to introduce a real CO2 tax on agriculture. Other countries will be inspired by this," Taxation Minister Jeppe Bruus of the centre-left Social Democrats said in a statement on Tuesday.

While subject to approval by parliament, political experts expect a bill to pass following the broad-based consensus.

The deal proposed taxing farmers 300 Danish crowns ($43.16) per tonne of CO2 in 2030, increasing to 750 crowns by 2035.

Farmers will be entitled to an income tax deduction of 60%, meaning that the actual cost per tonne will start at 120 crowns and increase to 300 crowns by 2035, while subsidies will be made available to support adjustments in farm operations.

The tax could add an extra cost of 2 crowns per kilo (2.2 pounds) of minced beef in 2030, Minister for Economic Affairs Stephanie Lose told public broadcaster DR. Minced beef retails from around 70 crowns per kilo at Danish discount stores.

New Zealand this month scrapped plans to introduce a similar tax after facing criticism from farmers.

But while Danish farmers had expressed concerns that the country's climate goals could force them to lower production and cut jobs, they said the compromise makes it possible to maintain their business.

"The agreement brings clarity when it comes to significant parts of the farmers' conditions," the L&F agriculture industry group said.

($1 = 6.9511 Danish crowns)

(Reporting by Isabelle Yr Carlsson, additional reporting by Alison Withers and Stine Jacobsen, editing by Louise Rasmussen, Terje Solsvik and Susan Fenton)