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Climate fee on food could cut greenhouse gas emissions in agriculture and support social equity
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Climate fee on food could cut greenhouse gas emissions in agriculture and support social equity
by Robert Schreiber
Berlin, Germany (SPX) Jan 13, 2025

Agriculture contributes 8 percent of Germany's total greenhouse gas (GHG) emissions. According to new research, emissions in this sector could drop by 22.5 percent, equating to over 15 million tonnes of GHG annually, if food prices reflected the social cost of carbon. "The Federal Climate Change Act of 2019 set a target to reduce annual emissions from 62 million tonnes to 56 Mt GHG by 2030," said Julian Schaper, guest scientist at PIK and lead author of the study, published in the journal Food Policy.

The social cost of carbon quantifies the economic damage caused by emitting an additional tonne of carbon into the atmosphere. A proposed climate fee of approximately 200 euros per tonne GHG would most impact emission-intensive products like meat and dairy. For instance, beef prices could rise by over 4 euros per kilogram, while yoghurt and milk prices would increase by about 25 cents per kilogram. More sustainable products, such as vegetables, would experience smaller price adjustments.

Using a demand model that reflects how German households react to price changes, researchers evaluated the impact of GHG pricing on consumption patterns and emissions. "Households would generally shift towards less carbon-intensive foods, such as vegetables," explained PIK scientist Max Franks, another author of the study. "A climate fee would directly contribute to climate protection and foster sustainable consumption."

The proposed system would generate approximately 8.2 billion euros, which would be redistributed to consumers as a climate dividend. This redistribution would significantly benefit lower-income households while wealthier households would experience slightly higher costs. "This redistribution mechanism fosters social equity and could enhance public acceptance of such measures," Franks added.

The researchers highlight that clear communication is essential to gain public support for a climate fee and dividend system. Messaging should emphasize the effectiveness of the measures in reducing emissions, the return of all revenues to the public, and targeted support for lower-income households.

Research Report:On the emission and distributional effects of a CO2eq-tax on agricultural goods - The case of Germany.

Related Links
Potsdam Institute for Climate Impact Research (PIK)
Farming Today - Suppliers and Technology

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