In June this year, Denmark—a major pork and dairy exporter—became the first country to impose a tax on livestock carbon emissions. The tax, which will run effective from 2030, is ostensibly meant to help Denmark reach a legally binding 2030 target of cutting greenhouse gas (GHG) emissions by 70% from its 1990 levels. Many other countries are expected to follow on Denmark's heels. So far, no one has and no one is saying so either. And, New Zealand even had to take back its burp tax
This is mostly about livestock, and livestock has a direct bearing on an ancillary industry: leather. However, not surprisingly, leather has not figured much in the post facto discussions about the Green Denmark move.
As things stand, the carbon tax is meant to help Denmark accelerate on its ambitious climate targets. According to a recent national inventory report, the agricultural sector is the country’s second-largest source of emissions, after the energy sector. It accounts for 28% of Denmark’s total GHG emissions—and more than 80% of methane and nitrous oxide emissions. The blame has been pinned on livestock.
So, where do the developments leave leather?
The relative tax impact on leather
Mike Redwood, Trustee at the Leather Conservation Centre, believes Denmark has got it all wrong: "The decision by Denmark to start penalising farmers for methane is the wrong way round. They should be rewarding them for reducing methane from cattle."
Redwood argues that the legislation is based on assumptive rather than good science, and the systems to accurately measure methane and reduce it are not clear. "Yet, there are many reasons for farmers to push for technological solutions and assistance, and rewards could create a path of knowledge."
He builds up a case: "First, it is a stretch to put all methane from cows in the “man-made” basket. The figure ignores carbon sequestration in the soil obtained best through long-term grasslands. Globally the number of cattle has not been rushing up as both dairy and beef bards have been getting more efficient. Figures also play with global averages which are unfair in Europe and the US where the figures are lower, and ignore countries like India where cattle have a huge, but different role in society."
Then there’s impact. Kerry Senior, Director of Leather UK, does not think the move will have much impact on the leather industry outside of Denmark. He says: "Denmark is a relatively small exporter of hides. Should this lead to price increases for Danish hides, there are currently many other sources of hides on the market. If this policy was adopted by other countries, it could become an issue but there is no sign that it will."
Mads Sørensen, CCO & Partner at Sorensen Leather, too thinks that Denmark is a very small market for the rawhide/leather industry, and it will have no impact on industry at large. He points out that the livestock in Denmark exists for the meat and milk. "Probably the prices for this will increase somehow, creating less competitiveness for Danish farmers.
"Being Danish, I think it is sad, to be honest, that CO2 tax is being imposed, because our farmers are perhaps some of the best in the world at their job. And if it gets too difficult or too costly, the business will simply move to other EU regions, where they might not work as well with CO2 emissions as we do."
Agrees Deborah Taylor, Managing Director at the Sustainable Leather Foundation. Says Taylor: "It is unlikely that large nations with industrialised farming systems will follow suit—livestock farming is intrinsic to their economies. Plus, Denmark is not a huge livestock producer (around 10th in Europe, but way down in global terms); so, the impact may not be felt. And, more taxation on farming is no solution to sustainability! They need to invest more into the livestock sector, not take more out."