FKII newsletter vol.11（Date 2/20/2025）

◆Contents◆
1. AGREEMENT ON A GREEN DENMARK: MODEL FOR A GREENHOUSE GAS TAX ON AGRICULTURAL PRODUCTION AND EFFORTS TO IMPROVE NATURE, BIODIVERSITY AND WATER 

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1. AGREEMENT ON A GREEN DENMARK: MODEL FOR A GREENHOUSE GAS TAX ON AGRICULTURAL PRODUCTION AND EFFORTS TO IMPROVE NATURE, BIODIVERSITY AND WATER 
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Royal Danish Embassy
Minister Counsellor (Food. Agriculture & Fisheries)
Marie Louise Flach de Neergaard

　

　

On 18 November 2024 a broad political agreement was reached in the Danish Parliament ensuring the necessary prerequisites for the implementation of the Agreement on a Green Denmark. On 24 June 2024, the Danish Government and partners reached an agreement for a long-term transition of Danish food and agricultural production including land use. The multistakeholder dialogue has drawn inspiration from the Danish tripartite tradition of the labour market. Besides the Danish Government, it has involved the agricultural sector, civil society, municipalities, employer organisations and trade unions. The mandate of the multistakeholder dialogue has been to find broad-based and long-term solutions to the agri-food sector's climate and environmental challenges and to come up with recommendations for how best to manage Denmark's land, nature and drinking water resources through implementable solutions. On 29 August 2024, the Danish Government established a new ministry with the responsibility of implementing the agreement.

 Key initiatives 
•    Reductions in greenhouse gas emissions totalling between 1.8 and 2.6 million tons of CO2e in 2030, increasing to 3.3 million tons of CO2e in 2035. This leads the Danish agricultural sector to a 60 pct. decrease in emissions from 1990 to 2030. 
•    A tax on greenhouse gas emissions from livestock, with an efficient tax increasing from DKK 120.1 (approx. EUR 16) pr. ton CO2e in 2030 to DKK 300 (approx. EUR 40) pr. ton in 2035. This includes a base reduction of 60 pct. 
•    Revenue from the livestock tax in 2030-31 is returned to the agricultural sector through a transition scheme to strengthen the green transition of the sector. Use of revenue will be revisited in 2032. 
•    A carbon tax on emissions from agricultural lime of DKK 750 (approx. EUR 100) pr. ton CO2e increasing from 2028 to 2030. 
•    The government will improve documentation, set clear guidelines, and support innovation, enabling farmers to reduce taxes by adopting climate-friendly technologies. 
•    The establishment of a Green Area Fund, which will be allocated a total of DKK 43 billion (approx. EUR 5.8 billion), to support efforts such as afforestation, rewetting of drained peatlands, strategic land acquisitions and additional initiatives related to managing nitrogen reductions. The initiatives in the Green Area Fund will change 15 pct. of the existing agricultural area. 
•    250,000 hectares of afforestation that will enable an expansion of the forest area by 40 pct., which is an expansion from 15 to 21 pct. of the land cover. 
•    Rewetting and peatland restoration of 140,000 hectares drained peatlands in agricultural use, incl. buffer areas, and a carbon tax on emissions from drained peatlands in agricultural use of DKK 40 (approx. EUR 5) pr. ton CO2e in 2028. 
•    A target of at least 20 pct. land areas of protected nature. Altogether, the planting of 80,000 hectares of private, set-aside forest, 20,000 hectares of set-aside state forest, and the rewetting of drained peatlands will expand the protected areas in Denmark considerably. 
•    Establishment of six additional nature national parks with the main purpose of protecting and restoring biodiversity, which brings the total number of planned nature national parks up to 21. The agreement includes earmarked funds for urban and marine environments. 
•    A subsidy scheme for the storage of biochar produced by pyrolysis. The initiative totals approx. DKK 10 billion (approx. EUR 1.3 billion) until 2045. 
•    A new regulation of nitrogen management, paving the way for compliance with the EU Water Framework Directive. The agreement sets an ambitious target for the effort, which will need to be aligned with neighbouring countries.

The agreement 
The Agreement on a Green Denmark includes measures that will enable a just and fast transition to support a strong and competitive agri-food sector. This will ensure attractive jobs and support business opportunities. It introduces a tax on greenhouse gas emissions from livestock from 2030 starting at DKK 300 (approx. EUR 40) pr. ton CO2e, increasing to 750 DKK (approx. EUR 100) pr. ton CO2e in 2035. A base deduction of 60 pct. will be added, which results in an efficient rate of DKK 120 (approx. EUR 16) pr. ton CO2e in 2030, increasing to DKK 300 (approx. EUR 40) pr. ton CO2e. In 2028, a tax of DKK 40 (approx. EUR 5) pr. ton CO2e on emissions from drained peatlands in agricultural use will be introduced. The revenue of the tax will be returned to the agricultural sector through a scheme that will strengthen the green transition of the sector. 

The agreement envisions an ambitious target of increasing the number of forest coverage with 40 pct. and rewetting of peatlands. 

A Green Area Fund, which will be allocated a total of DKK 43 billion (approx. EUR 5.8 billion), will be established to support efforts such as afforestation of 250,000 hectares of new forest, rewetting of 140,000 hectares of drained peatlands in agricultural use incl. buffer areas and strategic land acquisitions. Additionally, a subsidy scheme of just over DKK 10 billion (approx. EUR 1.3 billion) will be introduced to support the production of biochar through pyrolysis. To supplement the Green Area Fund and manage nitrogen reductions, a new emissions-based land regulation will be introduced in 2027, based on the latest knowledge about soil retention, with more adjustment options. 

Funding from the Common Agricultural Policy is expected to play a pivotal role under the agreement in financing more sustainable agricultural practices and the uptake of new technology that decreases the greenhouse gas emissions from the sector. In this regard, a high level of coherence between the Common Agricultural Policy and future national or EU climate regulation is important to ensure that different policy tools supplement each other to facilitate the green transition and bringing the agricultural sector in line with EU sustainability objectives. 
The initiatives presented in the agreement are expected to close the emission gap related to the Danish national climate target of a reduction of 70 percent in 2030. Overall, it is estimated that the efforts will reduce Danish emissions by between 1.8 and 2.6 million tons of CO2e in 2030. The agreement will be revisited to guarantee the reduction of 2.2 million tons of CO2e in 2030. Furthermore, with the initiatives in the agreement, Denmark is expected to meet its obligations under the EU Effort Sharing Regulation and LULUCF Regulation. The parties recognise that the transition requires local anchoring, ownership, and holistic approaches. Thus, the agreement introduces a reorganisation that offers a strengthened mandate for regional water management committees.

Recognizing the large and complex task of implementing the agreement on time, the political agreement has set out three guiding principles: simple, actionable solutions for quick implementation and 
transparency, minimizing state administrative costs and focus on stabilizing land prices. Moreover, the agreement recognises the need for land reform, forest reforestation, and the disbursement of pyrolysis funding to be initiated promptly.

The Danish 'Green Tripartite' - a need for joint responsibility and comprehensive solutions 
A comprehensive and ambitious green transformation of the agri-food sector requires clever solutions and compromises. If the green transition is to succeed, all parties must take joint responsibility and arrive at a common under-standing of challenges and potential solutions. Therefore, in December 2023, the Danish Government set up a green tripartite with the objective of finding a comprehensive solution for the future of agriculture in Denmark through dialogue, common thinking and joint commitments. 

The green tripartite has drawn inspiration from the Danish tripartite tradition of the labour market. It has brought together agricultural business organisations, environmental and nature organisations, the social partners and the Danish Government. The mandate of the green tripartite has been to find broad-based and long-term solutions to the agri-food sector's climate and environmental challenges, and to come up with recommendations for how best to manage Denmark's land, nature and drinking water resources through implementable solutions. 

The green tripartite consists of the Danish Government (the Social Democratic Party, the Liberal Party, and the Moderates) and the Danish Agriculture and Food Council, The Danish Society for Nature Conservation, The Trade Union NNF, The Danish Metal Workers Union, Danish Industry, and KL - Local Government Denmark. The Danish Government has been represented in the green tripartite by the Minister for Economic Affairs, the Minister for the Environment, the Minister for Taxation, the Minister for Food, Agriculture and Fisheries, and the Minister for Climate, Energy and Utilities.