GCPC Workshop No. 1: “Expanding Carbon Pricing to New Sectors” Summary

The Global Carbon Pricing Challenge (GCPC) recently held its first online workshop on the topic of expanding carbon pricing to new sectors. The two expert speakers, Jeppe Leo Rasmussen from the Danish Ministry of Finance and Ada Ignaciuk from the Trade and Agriculture Directorate at the OECD presented complementary perspectives on expanding carbon pricing to the agri-food sector.

Jeppe Leo Rasmussen shared insights from a report on green tax reform that explored possible models for the introduction of a carbon tax on emissions from the agriculture sector in Denmark. The proposed framework suggested a combination of taxation on livestock and fertilizers, alongside incentives for soil wetting in carbon-rich areas and subsidies aimed at encouraging afforestation. This model aims to balance emission reductions with economic impacts, tax revenue generation, and fluctuations in land prices . The full report (in English) can be found here.

Ada Ignaciuk contributed to the discussion by examining mitigation policies in the Agriculture, Forestry, and Other Land Use (AFOLU) sector. She pointed out that although the AFOLU sector is traditionally viewed as a source of carbon credits, it increasingly faces direct mitigation policies. These policies range from carbon taxes to performance and technology standards, all aimed at reducing the sector's environmental footprint. The complexity of accurately measuring and verifying emissions in this sector, due to its biological and non-point source nature, was highlighted as a significant challenge.

The workshop underscored the critical need for integrating effective carbon pricing mechanisms within the agriculture and land use sectors to achieve national and international climate goals. It highlighted the shift towards more stringent mitigation policies within the AFOLU sector, including discussions around the explicit pricing of emissions in several countries. The complexities involved in designing these regimes, coupled with the urgency of reforming current practices to meet stringent climate targets, were recognized as pivotal discussion points.