Here, Niels Peter Nørring Director of Climate and EU Policy at the Danish Agriculture and Food Council (DAFC) explains what’s in the Green Tripartite Agreement (GTA), which DAFC signed up to on June 25th, with a range of other stakeholders from Danish society. He introduces the Danish tradition of Tripartite agreements, the GTA’s main elements, including its livestock tax and funding, and assesses its applicability to the EU more widely.
As the world faces mounting environmental challenges, the need for unified and sustainable solutions has never been more urgent. While there are many paths to progress, no single approach will satisfy all stakeholders. Across the EU, differing perspectives on how to tackle climate change and environmental degradation are becoming increasingly polarised. This was also the case in Denmark, where the gap between various interests in food production and environmental protection was widening.
To bridge the divide, the Danish government took a bold step by establishing a so-called tripartite committee that brought together representatives from government, from agriculture, from environmental NGO’s, from associations representing employers and employees, and from municipalities to forge a comprehensive solution for the agricultural sector’s role in the green transition.
The task was clear: to address greenhouse gas (GHG) emissions, environment, nature and biodiversity, and the future viability of Danish agriculture, all while fostering consensus among diverse and often competing interests.
The Danish Tradition of Tripartite Negotiations: A Blueprint for Agriculture
For over a century, Denmark has relied on a tripartite model of negotiation to resolve labor market disputes. Involving the government, employer organizations, and employee organizations (trade unions), this approach has helped to balance economic growth with social equity on issues like wages, working conditions, and education. Earlier this year, the Danish government decided to extend this tradition to agriculture, recognizing the urgent need for collaboration in driving a swift green transition of the sector.
Several factors underscored the need for such an initiative:
- A parliamentary majority supported the introduction of a climate tax on agriculture.
- The agri-food cluster must deliver on climate targets like other sectors.
- Media and public scrutiny of the impact of food production, particularly on climate, water quality and biodiversity, was intensifying.
- Recurring incidents of oxygen depletion in Denmark’s fjords and coastal waters highlighted the urgency of addressing agricultural pollution.
A Historic Agreement for Denmark’s Agricultural Sector
After 5 months of intense negotiations, a landmark agreement was reached between the government, the Danish Agriculture & Food Council, the Danish Society for Nature Conservation, labor unions, industry associations, and municipal authorities. Described by Denmark’s Prime Minister as “historic,” the agreement commits to reducing nitrogen and CO2e emissions, improving water quality, and enhancing biodiversity, while also introducing the world’s first climate tax on agriculture.
Key outcomes include:
- Conversion of more than 15 % of agricultural land to nature and forests.
- Introduction of a livestock emissions tax, the first of its kind globally.
- Acceleration of the development and deployment of climate technologies.
- Implementation of measures to protect Denmark’s aquatic environment.
The Green Acreage Fund: Investing in area planning
At the heart of the agreement is the establishment of a DKK 40 billion (~EUR 5.4 billion) Green Acreage Fund, aimed at large-scale land management projects. The acreage fund will support afforestation, land conversion, and strategic land acquisitions, with the goal of creating 250,000 hectares of new forests (150,000 hectares of private forest, 80,000 hectares of private untouched forest, and 20,000 hectares of state-owned urban forest) by 2045 and restoring 140,000 hectares of peatlands by 2030, effectively converting 15 % of Denmark’s total arable land.
The establishment of new forests will focus on areas with high nitrogen influence, supporting a multifunctional approach to land management that integrates nature conservation, biodiversity enhancement, food production and carbon capture. Additionally, a DKK 40 (~EUR 5.3) per ton CO₂e tax on emissions from peat soils will be introduced from 2028, applying only to landowners who opt out of conversion projects. Land conversion will be carried out locally and full compensation for land value loss will be offered to ensure voluntary participation.
The world’s first tax on livestock emissions
Perhaps the most groundbreaking aspect of the agreement is the introduction of a tax on livestock emissions. The tax is set at DKK 300 (EUR ~40) per ton of CO₂e by 2030, rising to DKK 750 (~EUR 100) by 2035. The agreement establishes the principle that taxation of unavoidable biogenic emissions should not be pursued, establishing a 60 % tax deduction for livestock farmers that corresponds to the current possibility, through available technology and management measures, to reduce such emissions by 40 %. This provides an opportunity for farmers who invest in climate reduction measures to avoid taxation. The aim of the agreement is not to reduce livestock numbers, but to reduce the climate impact of production. The tax deduction may be revised in the future reflecting continued technological development, but taxation must not go beyond the possible scope of mitigation action.
Revenues generated from the livestock tax will be reinvested into the industry to support its green transition. The goal is to reduce agriculture-related GHG emissions by up to 2.6 million tons of CO₂e by 2030, contributing significantly to Denmark’s overall target of a 70 % emissions reduction compared to 1990 levels.
Can the EU Replicate the Danish agreement?
Whilst the Tripartite Agreement is particular to Denmark’s domestic corporatist context, it includes aspects that set precedents for climate action globally. The agreement is based on a bottom up and inclusive approach, and while it sets binding goals, it is founded on voluntary action by farmers and landowners.
Denmark’s tripartite approach offers valuable lessons, but a copy paste application across the EU may not be feasible. The agricultural sectors in EU countries vary significantly. For instance, converting 15 % of arable land to nature in countries like Sweden and Finland, which already have limited farmland, may not be practical. Similarly, issues related to nutrient loss to aquatic environments differ dramatically across regions, with countries like Denmark, which has over 7,300 km of coastline, facing unique challenges compared to countries with little coastline.
In an EU context, the imposition of an agricultural CO2e tax remains unlikely, as tax policies are not within the Union’s legislative competence. However, there is potential to regulate agricultural emissions through an emissions trading system (ETS) for agriculture. This approach might translate into a system with free allowances for unavoidable biogenic emissions (in a similar way to base deductions) to account for emissions that cannot currently be reduced through available technologies.
Conclusion: A Bold Step Towards a Green Future
The Agreement on a Green Denmark marks a significant milestone in Denmark’s efforts to balance sustainable agriculture with environmental stewardship. It exemplifies the power of multi-stakeholder collaboration, offering a roadmap for other nations seeking to reconcile food production with environmental preservation. Whilst Denmark’s tripartite model may not be directly transferable to other countries, it serves as a compelling example of how diverse interests can come together to create lasting, meaningful change.
As Denmark continues to lead the way in green innovation, it is our hope that this agreement will inspire more ambitious climate legislation and mitigation within the EU and beyond.
More
Paving the Way for Agriculture Emission Reductions – the Danish case
Impact and Opportunities of the 2023-27 CAP Reform in Denmark
Missing Targets and Making Partnerships – Denmark and Climate Change
