Greenhouse gas taxes on animal food products: rationale, tax scheme and climate mitigation effects

Agriculture is responsible for 25-30% of global anthropogenic greenhouse gas (GHG) emissions but has thus far been largely exempted from climate policies. Because of high monitoring costs and comparatively low technical potential for emission reductions in the agricultural sector, output taxes on emission-intensive agricultural goods may be an efficient policy instrument to deal with agricultural GHG emissions. In this study we assess the emission mitigation potential of GHG weighted consumption taxes on animal food products in the EU. We also estimate the decrease in agricultural land area through the related changes in food production and the additional mitigation potential in devoting this land to bioenergy production. Estimates are based on a model of food consumption and the related land use and GHG emissions in the EU. Results indicate that agricultural emissions in the EU27 can be reduced by approximately 32 million tons of CO2-eq with a GHG weighted tax on animal food products corresponding to a,not sign60 per ton CO2-eq. The effect of the tax is estimated to be six times higher if lignocellulosic crops are grown on the land made available and used to substitute for coal in power generation. Most of the effect of a GHG weighted tax on animal food can be captured by taxing the consumption of ruminant meat alone.