In 2022 Aarhus introduced an internal climate tax. In the first year, it resulted in a 40 per cent reduction of beef consumption and a 12 per cent overall decrease in food-related emissions.
The city of Aarhus, Denmark, has found a simple and effective route towards greener public consumption by introducing an internal climate tax. The initiative targets product categories with a high climate impact, including certain food products.
“It all started with a political proposition brought to the city council in late 2021. The proposal by Socialistisk Folkeparti (the Green Left) was to factor in the carbon footprint when considering public expenditure. It was accepted in January 2022, and it came back to our table to figure out how,” says Jeppe Deleuran, who works as an economist in Aarhus main office and was part of the team that designed the new tax.
Jeppe and his colleagues evaluated the overall climate impact of a range of foods, before deciding which ones to target. The most anticipated is meat from ruminants. Before this climate tax was introduced, beef accounted for only 1.7 per cent of the total food purchases, though it was responsible for a significant 26 percent of food-related emissions.
Juice and lemonades were chosen as the second group of foods to target. While these beverages do not have the highest individual carbon emissions, the sheer volumes consumed made them the third-largest category for emissions. Preventing dehydration among the residents in nursing homes was the motive for much of the consumption. But in conversations with the staff, it became clear that a large percentage of the drinks were wasted. A full glass was served, but only sipped at and the rest was poured down the sink. So, it seemed reasonable that juice consumption could be reduced without significantly affecting the well-being of the elderly.
The city council had decided to set the tax at 1000 Danish krones per ton of CO₂, with a plan to gradually increase this to 1500 Danish krones per ton by 2030. When a chef at a nursing home accesses the municipality’s portal to place an order, an extra 32 Danish krones per kilogram is added to the price of beef and an extra 1.6 Danish krone is added per liter of apple juice.
The large increase in the price of beef has been proven effective. One year after the introduction of the internal climate tax, CO₂, emissions from beef had fallen by a staggering 40 per cent, corresponding to a 12 per cent overall decrease in food-related emissions.
“The large reduction was unexpected for us, we didn’t think it would be that much,” says Rasmus Lillelund Lovring, who was also part of the team that developed the tax.
More expected was that the lower price increase on drinks would have a correspondingly lower effect, a reduction of about 7 per cent. It contributed to a total emission reduction of 25 tonnes of CO₂.
One might imagine that there are legal obstacles that could prevent municipalities from introducing measures like this. Rasmus explains: “The trick that makes it legal is that it is an internal climate tax, so the money stays in the municipality, and that is quite important”.
The revenue is not only circulated within the municipality but is repaid to the same sector, or in the case of nursing homes to the same unit. This means the only cost for the measure is administration, which Jeppe summarises as “not a big deal”.
The risk of increased administration was otherwise what aroused the greatest concern, when planning for the tax. There were also some worries from the kitchens whether they would have to go full vegetarian. But as Jeppe explains, “Communication is really a key word, after a lot of communication within the organization, there was not very much resistance”.
The swift implementation and outstanding results are also due to previous efforts.
Back in 2019 the city council adopted a target to reduce food-related greenhouse gas emissions by 25 per cent by 2025. This was followed by training of kitchen staff in how to make climate-friendly meals. Rasmus stresses the significance of education: “You need to ensure that the staff have the required skills. And then you can push them to use their skills through these economic incentives; you cannot just do one, you must do both, otherwise there would be a lot of frustration.”
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As expected, beef has been replaced by food from several different categories: “We see an increase in pork and chicken, as well as vegetarian alternatives.”
“The main thing to take away from this is that economic incentives work,” says Jeppe when reflecting on what policymakers in general can learn from this initiative. He emphasises the importance of “a price signal when you take action”, in contrast to a fee that is paid later. Rasmus adds: “It is also important that this price signal, the economic incentive, is large enough.”
Aarhus city is now in a process of evaluating the tool. Everything indicates that the internal tax will remain and that the planned increases by 2030 will be implemented. But there is also a discussion about whether a tax can reach a level where it is no longer useful. Rasmus comments: “How much lower we can go on beef? Maybe we are at some kind of end goal for beef, but we will see as time goes on, as we get more data, and we can analyse it.”
Kajsa Pira
This article will be part of a report on sustainable food system policy, which will be published in the beginning of next year.
