Denmark CO2 Tax May Have No Impact on Industry, but Cyclical Nature of Leather Was Ignored

Does Denmark’s tax on livestock carbon emissions, to run effective from 2030, make scientific sense? Will it help the environmental, human health or farming livelihoods? Will the move impact the leather industry outside of Denmark? texfash probes.

Long Story, Cut Short
  • The legislation is based on assumptive rather than good science, and the systems to accurately measure methane and reduce it are not clear.
  • According to a recent national inventory report, the agricultural sector is the second-largest source of emissions, accounting for 28% of total GHG emissions—and more than 80% of methane & nitrous oxide emissions. The blame’s been pinned on livestock.
  • Recovering hides and skins from slaughter animals and transforming them to leather is a recycling operation. If Denmark penalises this circular process, it will create more problems than anything else.
A farm house with cattle grazing outside. A tax of around DKK 300 per tonne will be imposed from 2030, increasing to DKK 750 in 2034. A basic deduction of 60% will be applied to the average emissions from different types of livestock. Climate-efficient farmers will have an economic advantage.
Taxed cattle A farm house with cattle grazing outside. A tax of around DKK 300 per tonne will be imposed from 2030, increasing to DKK 750 in 2034. A basic deduction of 60% will be applied to the average emissions from different types of livestock. Climate-efficient farmers will have an economic advantage. Wolfgang Sauber / Wikimedia Commons

The agricultural sector is Denmark’s second largest source of emissions after the energy sector, contributing around 28% of its total greenhouse gas emissions, and accounting for more than 80% of methane and nitrous oxide emissions specifically.

The stats come from Denmark’s National Inventory Report 2023: Emission Inventories 1990–2021—submitted under the United Nations Framework Convention on Climate Change.

A “major part” of the emissions, says the report, stem from livestock production. The Nordic country has more than 15,000 livestock farms comprising millions of cows, pigs and other animals. Cattle are a major source of methane emissions, contributing to global warming and climate change. In total, the methane or CH4 emission or the ‘burps’ from the agriculture sector from 1990- 2021 has increased by 2.8%.

With agricultural production taking up two-thirds of the total Danish land area, the green tax is expected to significantly reduce that area to allow more room for nature and forests to the benefit of the environment. The taxes levied on livestock farming is expected to reduce the total emission of CO2e by 1.8–2.6 million tonnes per year by 2030.

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."

Cattle on a farm outside Aarhus in Denmark. The intrinsic recycling nature of leather has been ignored.
An Ecosystem Cattle on a farm outside Aarhus in Denmark. The intrinsic recycling nature of leather has been ignored. AlexAAdersen / Deviant Art

The cyclical nature of livestock

The intrinsic recycling nature of leather has been ignored. Says Gustavo Gonzalez-Quijano, Secretary General of COTANCE: “We believe that recovering hides and skins from slaughter animals and transforming them to leather is a recycling operation. I don't know how the Danish law works, but if it penalises this circular process, it will create more problems than anything else. If hides are not tanned to leather, they will rot and produce greenhouse gas. Leather stores carbon efficiently and durably. If responsibly produced, leather is the most sustainable choice for fashion and lifestyle.”

There is also a need to look at the ecosystem. Politicians, according to Redwood, appear determined to use the GWP100 calculation for methane when for livestock it is accepted that GWP gives a higher initial figure but a fairer long-term one. “We are also learning that separating arable and livestock in farming in the 1940s and 50s was a big error. Using chemistry to replace what the mixed farm obtained through rotational grazing and crops gave us nitrogen and potassium additions that ignored life below the soil. It decimated biodiversity because as the soil got poorer the crops needed not only more fertiliser but also weed killers and pesticides, all with excess running off into streams and rivers.”

He continues: “The world is desperately short of grasslands and most of what is, is in poor shape. Areas like Brazil have already seen research that shows more, controlled, cattle grazing is vital to improve them and since the grass has long roots, it sequesters more carbon than the grass in Europe. Planting trees is not the one-size-fits-all solution that was once thought. Wildfires are increasing and decimating huge areas. Often the wrong type of trees are planted and do little good, and carbon payment schemes involving trees are full of cheating holes. So, increasingly we are told that long term grassland is often better than planting trees.

“Yet, some 500 years ago, the US had up to 100 million buffalos, far more than it has cattle today. They stayed in tight herds, ate half the grass and greenery, trampled the rest pushing the carbon down to the roots, and then moved on. This left their excrement to fertilise the land and things grew rapidly after they left—a perfect system now being copied worldwide as 'mob or adaptive’ grazing. And long-term grassland is exceptionally resilient to both floods and drought—the big new indicators of rising temperatures.

Senior talks about “turning hides into leather avoids the climate impact of their disposal and this could and should be considered as a credit to the whole system. It might be that value of leather manufacturing in mitigating the climate impact of livestock rearing starts to be properly recognised.”

Adds Dr Luis A. Zugno, Executive Secretary of the International Union of Leather Technologists and Chemists Societies (IULTCS), “Animals are raised for meat and the hides and skins as a byproduct represent less than 3% of the value of the animal. With the carbon tax, the hides and skin prices will increase. This will affect primarily the cow hides as most of the pig skins are used for food. On the other hand, this carbon tax on livestock can be seen as a competitive advantage for the meat and hides as cow producers will have a greater incentive to reduce emissions, and therefore they will be producing meat and hides with lower emissions. Maybe this can be a good thing for the leather industry.”

Redwood hits on a term now pretty much in vogue. “What is called regenerative farming—hard to precisely define as it involves correcting degeneration which is different from place to place—involves reintegration of livestock with crops as part of the process of recovering soil quality and lost biodiversity.

“With climate change advancing a bit faster than expected livestock will be difficult, if not impossible to keep in many currently important regions. Northern Europe will be one place where people and livestock can live comfortably, together.  In general, Europe is a good place for grass grazed livestock and the emissions are nowhere near those suggested in the various announcements related to this legislation.

“It does not make scientific sense and will not help the environmental, human health or farming livelihoods; and takes impetus from needed research. Perhaps the legislators are motivated by ideology rather than fact, which in the face of the challenges we face in the world is a mistaken route; collaboration, cooperation and sometimes compromise are better approaches.”

Green Denmark
  • To support farmers and the agricultural industry in this important transition, funding has been allocated to develop and invest in new technology. The agreement specifically provides for funding of DKK 10 billion for the production and storage of biochar through pyrolysis and other funding opportunities are expected to materialise. 
  • The government, alongside the Danish Agriculture and Food Council, the Danish Society for Nature Conservation, several trade unions, the employers' organisation Danish Industry, and Local Government Denmark, has decided to eimplement a tax on livestock emissions and converting agricultural land to nature. 
Highlights
  • Introduction of a CO2e tax on emissions from livestock. A fee of DKK 300 per ton CO2e in 2030 increasing to DKK 750 per tonnes of CO2e in 2035 with a deduction of 60%.
  • Reductions in greenhouse gas emissions of 1.8 million tons of CO2e in 2030 with the potential of up to 2.6 million tonnes.
  • Proceeds to be returned to the industry in the form of a Transition Support Pool to support the green transition of the industry.
  • Establishment of a new Green Acreage Fund of DKK 40 billion to support afforestation, extraction of carbonaceous lowland soils, and investments in green initiatives and technology 
  • Afforestation of 250,000 hectares.
  • Extraction of 140,000 hectares of carbonaceous lowland soils incl. peripheral areas.
 
 
 
  • Dated posted 23 October 2024
  • Last modified 23 October 2024