DENMARK, Copenhagen. The introduction of a higher CO2 tax would lead to a significant slump in meat and milk production in Denmark, with further consequences for consumer prices and jobs.
This is shown by calculations made by experts from the Danish Environmental Economic Council (Miljøøkonomiske Råd), who nevertheless advocate a climate tax equivalent to € 161.40 per t of CO2 equivalent. If the levy is implemented at this level, the panel expects beef production to fall by 37% by 2030 compared to current levels. Under this premise, pork production is expected to decline by 23% and milk production by 34%. This would be associated with a significant price increase for most agricultural products, 14% for milk and 17% for beef.
Pork is likely to become 9% more expensive by 2030, according to the Council of Economic Advisers, if a climate tax of just over € 160 per t is implemented. Danish consumers would then also have to pay considerably more for vegetables; the surcharge is estimated at 14%. In March, the Council had already conceded that such a climate tax could cost up to 19,000 jobs in agriculture in Denmark due to a drop in production and declining international competitiveness.
Nevertheless, environmental economists are convinced that this would be the "socioeconomically cheapest way" to achieve the Danish government's climate protection targets. These envisage a 70% reduction in total greenhouse gas emissions by 2030 relative to 1990 levels. The decline in employment in the agricultural sector is expected to be offset by increases in the environmental and service sectors, according to the Environmental Business Council. The panel also points to other positive consequences of "shrunken" agriculture, such as reductions in nutrient discharge to the environment and the associated lower external costs of agricultural production.