Regional economic effects of the green transition in the Nordic Region

16-01-2025

GreenREFORM forms the basis for the chapter on Denmark in Nordregio's newly published report for the Nordic Council of Ministers.

Nordregio has published a report for the Nordic Council of Ministers focusing on specific climate challenges in each of the Nordic countries. The chapter on Denmark addresses the regulation of agricultural emissions and is based on calculations developed by GreenREFORM.

The abstract below is from the chapter on Denmark, which can be found on page 26 of the Nordregio report.

Abstract

A carbon tax on emissions from agriculture, as well as land use, land use change and forestry (LULUCF), is widely regarded as a necessary tool if Denmark is to achieve its greenhouse gas reduction obligations. In assessing the impact of levying such a tax, the present study finds that the combination of a carbon tax of €50 per tCO2e, combined with subsidies for emission-reducing technologies, would provide roughly three-quarters of the remaining national reduction required by 2030. These results are based on the GreenREFORM model: a dynamic multisector model focused on the interactions between economic and environmental policies. Crucially, given a significant portion of emission reductions are achieved through drops in agricultural and food processing production, the results are reliant on assumptions made about the market structures of these sectors, especially regarding export elasticities and expectations around future prices. The study investigates, through a series of sensitivity analyses, how altering these assumptions impacts emission reductions. The drop in production is expected to have different impacts on e.g. employment and production in different regions of Denmark, as some regions have a larger share of production within the agriculture and food processing sectors than others.