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Farmers in New Zealand complained that a regulated price on methane, carbon dioxide, and nitrous oxide emissions, starting in late 2025, would force some in their industry off their land. As a result of significant lobbying efforts, New Zealand has confirmed that the agricultural sector, which accounts for about half the nation’s greenhouse gas (GHG) emissions, will be excluded from its national carbon pricing system.
On the other hand, Denmark has announced it will introduce a levy on farm emissions in what is set to be one of the world’s first carbon taxes on agriculture, helping the country to meet its 2030 climate target. The levy has the backing of key industry and environmental groups.
What’s the difference between the two countries? Why is one moving ahead with agricultural sector emissions pricing, and the other isn’t?
New Zealand Walks Back Biogenic Methane Measures
The New Zealand government has agreed to remove agriculture from its New Zealand Emissions Trading Scheme (NZ ETS). Instead, it will establish a new Pastoral Sector Group to constructively tackle biogenic methane. Agriculture Minister Todd McClay says New Zealand farmers are already some of the world’s most carbon-efficient food producers, and he claims that the ETS would send jobs and production overseas. That would mean inviting less carbon-efficient countries to produce food.
The amendment will remove agriculture, animal processors, and fertilizer companies from the ETS before January 2025.
The Pastoral Sector Group emphasizes that the total emissions from the agriculture sector have declined about 1% per year since 1990 due to more efficient farm business practices. They cite improved animal genetics, combined with better grassland management and feeding practices, as mechanisms that have created a more efficient industry.
Then again, in fine print at the bottom of their report, How We are Getting There, there is the statement that reduced emissions intensity has been more than offset by the increased overall product they’ve been generating in the agricultural sector.
In other words, New Zealand farmers are raising a whole lot more farm animals, so that methane released by sheep, cows, and other animals contributed about 42% of New Zealand’s gross emissions in 2022, according to government data. Among the commodities derived from cattle production, milk comprises 80% of the industry’s production.
As reported by Bloomberg, Prime Minister Christopher Luxon’s center-right government was elected in October on a platform that included a pledge to delay the introduction of a regulated price on farm emissions until at least 2030. His administration also intends to lift a ban on offshore oil and gas exploration that’s been in place since 2018.
While the reduction of coal-fired generation and switching to electric vehicles continues in New Zealand, the government’s focus for the last few years has been on farming and its significant GHS emissions. Yet McClay says, “National is committed to reaching Net Zero by 2050, but we believe New Zealand’s path to emission reductions in agriculture is through technology, not less production.”
Climate Change Minister Simon Watts adds that the government has committed $400 million over the next four years to accelerate the commercialization of tools and technology to reduce on-farm emissions. Research does show that methods such as the application of genetic technology, nutrition intervention, utilization of chemical inhibitors, immunization, and metagenomics may help to sustain farm animal production in the changing climate scenario.
However, the greatest reductions in agricultural sector emissions come from de-emphasis on diets that foreground cows, pigs, sheep, and the like.
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Denmark will Reduce Emissions by Collaboration & Plant-Based Foods
Denmark’s agriculture and related exports of ingredients are important to its economy, yet pork and dairy exports make Denmark one of the Nordic countries’ biggest emitters. Without intervention, farming would account for 46% of Danish emissions in 2030. Now Denmark’s meat- and dairy-focused national food sector also incorporates plant-based foods, which have seen recent progress in society, business, and policy.
That came about because, by 2019–2020, the societal debate turned to climate as a mainstream topic in Denmark. National elections became known as “climate elections” in the media. This shifted communication on plant-based foods and climate issues. The country made headlines in the plant-based movement worldwide by announcing a sizable fund for furthering the plant-based sector. The agricultural sector also became more vocal towards other stakeholders, according to 2023 research published in Technological Forecasting and Social Change.
Today, in Denmark, plant-based foods comprise a future alternative growth sector — another “export adventure” such as the Danish wind energy, which holds high public approval. Both the largest meat and the largest dairy cooperative launched several plant-based alternatives for the mass market during 2022 and 2023, accompanied by marketing communication efforts and growth expectations. Policy support for emissions reductions in the agricultural sector like this has continued in Denmark, and established companies continue to invest further in the plant-based market.
Denmark has set a legally binding target of -55% agricultural emissions comparing to 1990 by 2030. The country plans to achieve this by increased carbon sequestration and focusing on plant-based protein. Farmers will be taxed $43 (300 kroner) per ton of CO2 equivalent emitted from 2030, Denmark’s government said earlier this week. In 5 more years, the tax will rise to 750 kroner per ton, though farmers will benefit from higher tax deductions.
Carbon pricing can contribute to net zero pathways alongside other policies, yet global price levels and coverage to date have been too low to reduce emissions in line with the Paris Agreement’s goals. Considered a forerunner country, Denmark’s data indicate that the total national ETS sector carbon price should be at least 33% higher than that of the national non-ETS sector. Denmark’s plan is estimated to reduce emissions by 1.8 million ton of CO2 in 2030, enabling the country to meet its target for that year to cut emissions by 70%. Apart from the tax, the government will also introduce subsidies worth 40 billion kroner to support the transition.
Denmark will become one of the world’s first nations to introduce such ETS measures. Negotiations about the tax have been underway since February, involving bodies representing farmers and the food industry, the country’s nature conservation organization, and the Danish government, who have been evaluating taxation models presented by a government-commissioned advisory group.
How Harmful is the Agricultural Sector to the Environment?
The agricultural sector accounts for roughly 12% of annual global greenhouse gas (GHG) emissions and is the largest anthropogenic source of methane and nitrous oxide emissions, which present far greater global warming harm than carbon dioxide.
Livestock farming represents a significant use of natural resources and is highly associated with extensive land degradation and over-exploitation of water resources. The agricultural sector uses enormous amounts of fresh water and stresses already water-weak regions. Plus, runoff from water used in agriculture pollutes rivers, lakes, and oceans by releasing nutrients. Half of the world’s habitable land is used for agriculture — parts of the world that were once covered by forests and wildlands are now used for agriculture. This loss of natural habitat has been the main driver for reducing the world’s biodiversity.
Here are some powerful stats from Our World in Data that reinforce our determination to hold the agricultural sector responsible for its emissions.
- 70% of global freshwater withdrawals are used for agriculture;
- 78% of global ocean and freshwater eutrophication is caused by agriculture (eutrophication is the pollution of waterways with nutrient-rich water);
- 94% of non-human mammal biomass is livestock, so there are only 1.3 wild mammals per 15 livestock animals; and,
- 71% of bird biomass is poultry livestock, so poultry livestock outweigh wild birds by a factor of more than 3-to-1.
Featured image: “Dairy Cow Dairy” by zayzayem is licensed under CC BY-SA 2.0.
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