TheChek News Flow

Coalition government agrees annual levy on emissions from livestock after months of fraught negotiations

Denmark is moving ahead with the world’s first carbon tax on agriculture, with cattle farmers set to be charged almost €100 a year for the greenhouse gas emissions from each of their cows.

After months of fraught negotiations with trade bodies and environmental groups, Denmark’s ruling coalition on Monday night agreed an effective tax rate of DKr120 (€16) per tonne of carbon dioxide equivalent emissions from livestock.

Countries around the world are struggling to cut emissions from food production — which accounts for almost a quarter of global emissions including land use changes — while maintaining food security.

Ruminant animals such as cows and sheep produce methane through their digestive systems, while synthetic nitrogen fertilisers in the grass they eat also produce greenhouse gases. Livestock accounts for 11 per cent of global emissions, with almost two-thirds of that driven by cows.

The Danish agreement, which lays the ground for the levy to be introduced in 2030, comes just months after farmers protested across Europe against EU environmental measures. Mette Frederiksen, Denmark’s centre-left prime minister, said she hoped the tax would “pave the way forward regionally and globally” for similar initiatives.

Farmers organisation Bæredygtigt Landbrug, which was not involved in the talks, immediately criticised the deal, while some green organisations privately argued there were too many deductions for the tax to be effective.

“I think it’s crazy,” said Peter Kiær, chair of Bæredygtigt Landbrug, adding that it would hinder much-needed technology investment in a country that was already one of the world’s greenest agricultural producers. “[The government] aren’t listening to the farmers.”

Denmark’s parliament is expected to vote to approve the tax later this year, which has a headline rate of DKr300 per tonne of CO₂ equivalent in 2030, rising to DKr750 per tonne CO₂ equivalent in 2035. There are built-in incentives for farmers to reduce emissions, and the tax will be phased in with a basic tax deduction of 60 per cent for at least the first two years.

The average Danish cow produces six tonnes of CO₂ equivalent per year, according to green think-tank Concito. Using the lower tax rate of DKr120 would incur a charge of about DKr720, or €96.50.

Lars Aagaard, the country’s climate minister, said agriculture was Denmark’s largest greenhouse gas emitter. “This cannot continue,” he said. “Agriculture must contribute and be part of the green future.”

Søren Søndergaard, chair of the Danish Agriculture & Food Council, said: “We have succeeded — against all odds — in getting a tax model where the farmer who uses approved and economically sustainable climate solutions can completely avoid the tax.”

But Peder Tuborgh, chief executive of Denmark-based dairy co-operative Arla Foods, said the tax regime could unfairly affect some farmers, including organic producers, who were already doing everything they could to reduce their emissions, and he called for policymakers to further examine this. 

New Zealand this month scrapped an attempt to launch a similar tax on sheep and cow farmers in an effort to cut methane emissions.

The European Commission is studying how it could set up an EU-wide agricultural emissions trading system, looking at options including requiring farmers and landowners to pay directly for their emissions.

Kristian Hundebøll, chief executive of DLG Group, one of Europe’s biggest agribusinesses, a co-operative owned by 25,000 Danish farmers, said it was “crucial” for the tax to be “anchored in Europe” rather than for Denmark to act unilaterally.

At an event held in Brussels last week, Alexandre Paquot, deputy director-general of the commission’s climate arm, said bringing agriculture into the bloc’s emissions trading system should present a “new business case and new opportunities for farmers”.

Investment could revive speculation about takeover scenarios among world’s biggest luxury groups

Bernard Arnault, the billionaire founder of luxury goods group LVMH, has bought shares in Richemont, the rival Swiss-based conglomerate behind high-end jeweller Cartier.

The stake is too small to be disclosed in public registers and is a personal investment by Arnault, one of the world’s richest men, two people familiar with the matter said. It is a holding among many other stocks owned by the family and does not signal any particular move on Richemont, they added.

LVMH and Richemont declined to comment.

The investment could nevertheless revive speculation about possible takeover scenarios among big luxury groups, especially as Richemont, controlled by 74-year-old South African billionaire Johann Rupert, is gearing up for a succession challenge.

Cartier has long been one of the most attractive Richemont assets, one of a rarefied circle of very top brands that LVMH would be interested in if it ever came on the market, people at the world’s largest luxury group have acknowledged in the past.

Arnault completed a $15.8bn acquisition of US brand Tiffany in 2021 as he added to LVMH’s jewellery stall that also includes Bulgari, though the group’s biggest revenue driver remains fashion and handbag maker Louis Vuitton.

Richemont has also drawn interest from LVMH’s French rival Kering, which had tried to approach the Swiss group with a tie-up plan but was rebuffed.

Rupert has long insisted on wanting to preserve Richemont’s independence and recently overhauled the group’s management, by appointing a new chief executive, Nicolas Bos, who formerly ran its Van Cleef & Arpels brand.

It was not immediately clear when the Richemont shares were purchased. Bloomberg first reported news of Arnault’s stake, saying the French billionaire intended to hang on to it as an investment.

Richemont shares are up about 24 per cent this year and rose about 2.8 per cent on Tuesday, though have come off highs reached last July as the luxury sector grapples with worries over weaker demand in the key Chinese market.

LVMH shares are broadly flat since the start of this year, having taken a hit in the past fortnight as jitters over a looming legislative election in France and the rise of the far right roil the stock market.

Arnault, 75, is known as a canny dealmaker who has used stealth before to try and get closer to his targets. He stunned Hermès, the maker of luxury Birkin handbags, in 2010 when it suddenly transpired he had built up a large stake through derivatives and using intermediaries, which eventually grew to more than 23 per cent.

Arnault had insisted at the time that he had no intention to take control of Hermès, whose family backers fought back, and the stake was distributed to LVMH shareholders in 2014.

In an interview with Bloomberg published on Tuesday, Arnault shrugged off questions about future acquisitions, saying he had “ideas for the future” and evoking unnamed brands that would fit well within LVMH, but adding: “We don’t need to do it.”

Danish maker of Wegovy has little competition in the country and massive demand that it can take advantage of

In China, as in many other countries, slimness is an oft-promoted beauty standard. But the actual statistics in the country, with more than half the population classified as overweight, tell a different story. This is good news for Novo Nordisk’s obesity drug Wegovy. 

Wegovy, which contains the active ingredient semaglutide, has been approved in China for long-term weight management for overweight and obese people. The Danish drugmaker has little competition and massive demand it can take advantage of.

The supply of drugs containing semaglutide has been highly controlled and limited in mainland China as, until now, they were approved only for the treatment of type 2 diabetes. Even so, the market was valued at about $1.7bn last year, according to analytics group Clarivate. A severe shortage in the country has resulted in the drugs trading at well over double their prescription price on the black market.

There are just two local drugs that have already been approved for weight loss — Huadong Medicine’s liraglutide and Benamae Pharma’s beinaglutide. There is a strong pipeline of local rivals that are in their final stages of clinical trials. But they will have a difficult time commercialising the drugs in the short term due to Novo’s patent on semaglutide that runs through 2026. Shares in Huadong, down 30 per cent in the past year, reflect investors’ pessimism on the local sector despite promising developments.

That may be too harsh — at least considering their long-term prospects. Demand for weight loss drugs is set to grow at unprecedented levels. In China, the number of adults overweight is expected to triple, with the number of people classified as obese projected to increase more than sevenfold by 2030 from 2000 levels, according to Chinese public health research.

There is even bigger potential for export. India has the third-largest number of people living with obesity, behind China and the US. Novo Nordisk’s Wegovy and Ozempic, plus Eli Lilly’s rival product, are not available in India. There are no plans in the near future to supply the country due to global shortages. Ozempic is designed for type 2 diabetes but is often used off-label for weight loss purposes. More than a tenth of the Indian population is estimated to be living with diabetes. That should give Chinese weight loss drugmakers room for growth in the longer term.

In the meantime, Novo stands to gain an exceptional windfall in one of the biggest markets in the world.

Vauxhall owner could move production to other sites in Europe, as government quotas threaten returns

Vauxhall owner Stellantis has warned it could stop production in the UK unless the British government does more to stimulate demand for electric vehicles or change its current electrification policy.

In the company’s strongest threat yet against the UK’s EV quotas, Maria Grazia Davino, the carmaker’s top UK executive, warned of tough EV mandates amid slowing sales in battery-run cars. “If this market becomes hostile for us, then we will enter an evaluation of producing elsewhere,” she said. “Stellantis production in the UK could stop.”

Her comments follow that of Stellantis chief executive Carlos Tavares, who called Britain’s EV policy “terrible”, which threatened to bankrupt carmakers.

The carmaker, which owns the Vauxhall, Peugeot, Citroën and Jeep brands, said it was considering the future of the whole UK operations.

It directly employs 2,500 people in both Luton and its Ellesmere Port factory in Cheshire. In Luton, it manufactured 90,000 diesel vehicles in 2023 and produced just under 4,500 electric vans in Ellesmere Port in the 3 months to December last year. Luton will start making some larger battery vans from 2025.

Speaking at the Society of Motor Manufacturers and Traders’ annual summit in London on Tuesday, Davino said the UK’s quota regime, which requires manufacturers to meet EV sales targets and rise annually, had put the company’s UK financial return “under stress”.

Her warning is the latest among car executives pushing back on the government’s EV quotas, with EV targets of 22 per cent of overall car sales this year, rising every year until 2030 to 80 per cent.

Carmakers that miss the targets face heavy penalties, though the scheme features concessions that aim to minimise the chance of manufacturers paying fines.

EV sales are rising slower than had been expected, leading several carmakers to warn they risk missing the targets. Ford’s then European boss Martin Sander told the Financial Times last month that the carmaker would divert petrol models to other countries to avoid crippling fines amid weak EV demand.

Davino said the company needed to find the right balance within the government mandate, and that a decision on the future of its UK production would probably come in less than a year.

About 14 per cent of Stellantis’s car sales, including the Peugeot, Citroën, Fiat and Jeep brands, in the UK are electric, while almost 8 per cent of its vans are battery model.

Gapping down
In reaction to earnings/guidance:

Other news:

Gapping up
In reaction to earnings/guidance:

Other news: