Denmark is set to spend DKK5bn (USD735m) through 2030 on the green transition of its agriculture sector and other environmental initiatives, with a portion of thefunds coming from revenues of a higher fuel tax, as reported by Bloomberg on April 15. The Danish government will provide subsidies for a range of green initiatives, including methane-reducing feed in the agricultural sector, promotion of plant-based food, reforestation, clean drinking water, and green district heating. To raise funds for the subsidies, the government will raise its diesel fuel tax by 0.5 kroner per liter (orUSD0.27 per gallon) from 2025. The increased fuel tax is expected to result in a reduction of 0.3 million tons of carbon dioxide emissions in 2025.

These initiatives aiming for a greener agriculture industry could set the stage for Denmark’s plan to incorporate farming, the country’s second-largest greenhouse gas (GHG) source, into Europe’s emissions trading system (ETS). The government expectsagriculture to become one of the largest emitters in Europe by 2040, considering that Brussels has introducedstringent regulations to curb emissions from energy and road transport. Therefore, Denmark is actively seeking solutions to decarbonize this sector. The country already set out binding targets in 2021, targeting a 55% to 65% reduction in the GHG emissions from its agricultural and forestry sector by 2030, compared with 1990 levels. Additionally, the government is considering imposing a carbon tax on agricultural production, priced at DKK750 (USD109) per ton of CO2 emissions, to prompt farmers to adopt new decarbonization technologies.

Sources:

https://www.bloomberg.com/news/articles/2024-04-15/denmark-raises-diesel-fuel-tax-to-fund-green-transition-spending

https://www.bloomberg.com/news/articles/2024-02-21/denmark-told-to-put-carbon-tax-on-farmers-to-reach-climate-goal

https://stateofgreen.com/en/news/denmark-sets-binding-2030-climate-target-for-agriculture/

https://www.bloomberg.com/news/articles/2024-03-25/denmark-pushes-to-include-farming-in-europe-s-carbon-market