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Design of a climate tax on food consumption: Examples of tomatoes and beef in Sweden

Gren, Ing-Marie, Moberg, Emma, Säll, Sarah, Röös, Elin
Journal of cleaner production 2019 v.211 pp. 1576-1585
beef, carbon dioxide, climate, food consumption, global warming potential, greenhouse gas emissions, greenhouse gases, methane, nitrous oxide, prices, taxes, theoretical models, tomatoes, Sweden
This study examined appropriate design of efficient climate taxes on consumption of food by constructing a simple theoretical model and exemplifying the results using the examples of tomatoes and beef in Sweden. The theoretical results showed that, for the tax to be efficient, i) existing taxes on greenhouse gases (GHGs) should be considered when calculating the climate impact in order to avoid double taxation, and ii) taxes should be differentiated between GHG (here carbon dioxide (CO2) methane (CH4) and nitrous oxide (N2O)) because of their differing climate impacts. The calculations of climate taxes on tomatoes and beef in Sweden indicated considerable differences in the tax level depending on whether conditions (i) and (ii) were considered or not. The commonly applied approach in the literature on climate taxes on food, i.e. taxing carbon dioxide equivalents (CO2e) using global warming potential over 100 years (GWP100) and neglecting existing taxes on GHG emissions, results in a tax that is 1.4–2.8 times higher than the efficient tax for tomatoes and a tax that is between 30% lower and 20% higher than the efficient tax for beef. Despite the relatively low variations in the climate tax on beef, estimated reduction in emissions from beef ranged between 23% and 35% depending on choice of tax. The price increases on food due to a climate tax and associated effects on emissions can thus show large variation depending on the tax calculation method.