Climate Action Insights: The argument for carbon tax on food

Climate Action Insights: The argument for carbon tax on food

March 5, 2021

How can we fairly legislate for a lower carbon food environment?

A discussion by Emilien Hoet, ClimatePartner UK

How can we fairly legislate for a lower carbon food environment? That is the pressing question facing scientists, climate activists, policy makers and the food and farming industries as we focus on a collaborative effort to reach net zero to limit global warming to 1.5℃.

Food production accounts for one-quarter of the world’s greenhouse gas (GHG) emissions and the meat and dairy industry combined contribute approximately 14.5% of this.[1] There is now overwhelming evidence and a growing body of opinion that our diets need to change in order to prevent further and considerable damage to the environment.

To date, legislation to avoid the worst effects of climate change have been focused on decarbonising energy and transportation. However now, ahead of COP26 the suggestion of a ‘carbon tax’ on food with high emissions has been gathering pace.

Carbon taxes: a tool gaining momentum

The idea is simple: increase tax and introduce charges on foods with greater carbon emissions. Many advocate this can act as an effective tool in influencing consumer choice, however critics say it will only serve to hike up costs for consumers at a time when there are great challenges with unemployment and food poverty.

Carbon taxes and/or emission trading schemes have already been implemented in over 40 countries.[2] However, only a small proportion of these focus on food production related emissions – of which the EU’s Common Agricultural Policy is one, which provides direct and voluntary incentivised payments to farmers to take action to mitigate emissions. These include good soil management, crop rotation and diversification, grassland protection, organic methods and restoration of wetlands, among other initiatives.[3] No country has yet introduced a food-specific carbon levy.

Who pays?

In the UK, an influential coalition of the country’s leading healthcare bodies – The UK Health Alliance on Climate Change (UKHACC) – is calling for a climate tax to be imposed on food items with a heavy environmental impact by 2025, unless the food industry itself takes voluntary action to significantly curb emissions.

They suggest the tax should fall to the producer in the first instance – following the “polluter pays” approach, but it is likely that many producers will choose to offset these added costs by increasing the price that retailers, and ultimately consumers, pay.

Even if consumers ended up paying higher prices, the UKAHCC argues that economic policies such as the tax on sugary soft drinks and plastic bags have, in the past, been effective in bringing about behavioural change and curbing harmful consumer habits. It is estimated by the UK Treasury that 50% of food manufacturers adjusted the sugar ratios in their recipes after the so-called sugar tax was introduced in 2014.[4]

Modelling research from other countries also supports the efficacy of such food taxation policies. In a much-cited study from Sweden, when a hypothetical tax was applied to seven meat and dairy items according to their environmental impact, results found it would reduce livestock-related GHG emissions by 12%.[5] 

A taxation challenge

A growing number of organizations are offsetting their emissions, effectively implementing a voluntary tax which contributes to carbon avoidance, reduction or removal elsewhere. Growing awareness and demand for carbon neutral products proves anecdotally that some consumers are willing to pay more for products that have reduced and offset their emissions – not too dissimilar to the probable outcomes of mandated carbon neutrality through carbon taxation.

However, such policies have not always been as successful. When France installed a diesel tax in 2018, this was perceived as a good idea in theory, but it affected many impoverished rural areas where people rely on their cars due to lack of public transportation. The imposition of the tax resulted in a severe backlash which then grew into a wider protest known as the ‘yellow vests’ movement.

It is therefore evident that carbon taxation on food is a complicated affair and not without risk. Any taxation needs to be introduced so as not to disproportionately affect those struggling financially and this has never been more important, considering the current economic recession. The reality is that some high-carbon foods like meat and dairy are not only calorie rich and nutrient dense, they also play an integral social and cultural role in our societies. Asking for cultural change overnight is very difficult and this is especially true when vegan-substitutes are not yet widely available, nor affordable.

A fair tax for all

While applying levies to producers might also act as an incentive to bring about change at the production level, such taxes could contribute to jeopardizing livelihoods. Livestock farmers undoubtedly have a crucial role to play in reducing global warming, but they need to be protected from imports of cheaper, high emission animal produce which might escape domestic carbon levies.

The UK government has dropped plans to introduce a carbon tax on certain food items for now, however food items are included in a carbon reduction blueprint, which prices up emissions across all areas of the economy, to be unveiled ahead of COP26. Part of this could include a carbon tax within the next decade, and while it could be an effective way to accelerate our low-carbon transition, we need to ensure it is fair rather than an over-simplistic, one-size-fits-all policy which does not adversely affect those who are already disadvantaged.

Looking at subsidies for more ‘sustainable’ foods, that either practice low-carbon, regenerative farming or that aim to replace high carbon foods entirely may also be a better policy. Revenue from carbon taxation should also be used to positively incentivise producers, champion sustainable practices and encourage carbon removal on farms through agroforestry and soil carbon sequestration, as opposed to relying solely on punitive measures. 


[1]UN’s Food and Agricultural Organization (FAO)

[2] The World Bank; 2021; Carbon Pricing Dashboard

[3] EU Climate Policy Information Hub; Agriculture and Climate Change in the EU: An Overview - Policies relating to agriculture

[4] Gaynor Selby; 6 April 2018; UK sugar tax comes into force: Key suppliers react to levies as low sugar claims strongly influence purchases; Food Ingredients First

[5] Sarah Sall & Ing-Marie Gren; August 2015; Effects of an environmental tax on meat and dairy consumption in Sweden; Swedish University of Agricultural Sciences