A new report has argued that Ireland should slap a tax on agricultural greenhouse gas emissions to speed up progress towards looming climate targets.

The Institute of International and European Affairs (IIEA) released a report this week that calls for farm emissions to represent a direct cost to farmers, in a bid to force farmers to factor emissions reductions into farm management decisions.

The think tank referenced two systems of taxing of farm carbon that could be considered for rollout: an emissions trading scheme that would grant farmers an emissions threshold at farm level, as part of a combined sectoral threshold that keeps the sector on track with emissions targets; and a direct levy on emissions at farm level, with rebates available to reduce this tax liability, like the system planned for introduction in Denmark.

The report’s authors argued that while the latter scheme could be easier to administrate, the former could be rolled out at processor level and would be the more likely option at EU-level.

“What they both have in common is the idea that we send a signal to farmers that this is something they need to integrate into their decision-making,” report author and Professor Emeritus of European agricultural policy at Trinity College Dublin Alan Matthews said. “So, just as there is a cost to using fertiliser or feed there is a cost to emitting or using our carbon budget in this way. I would argue that relying on subsidies has inherent limitations. Generally, with subsidies, how we have implemented these they are not results-based, so the impact is uncertain.”

Matthews said that the aversion to an emissions penalty may provide a stronger motivator for farmers to act on reducing emissions than a subsidy intended on achieving a similar cut.

Concern

The paper acknowledges that introducing an emissions trading scheme for agriculture would see the dairy sector operating in a “structurally similar way” to when milk quotas had been in place.

It also recognised farmers in other countries with “laxer” climate rules could become more competitive in the marketplaces Ireland competes in, saying that “some carbon leakage is acceptable, but it is desirable to try to minimise it”.

The authors went as far as stating that the worst-case farm carbon tax implementation scenario would result in a net increase in global emissions “despite a decrease in emissions at home”.

They also acknowledged that farmer opposition to taxing emissions is “rooted in legitimate fears” of income loss, competitive disadvantage and bureaucratic overload, but claimed that a consultation process could help alleviate these fears.