Applying the Global Methane Pledge to the Italian Livestock Sector

The Global Methane Pledge was launched by the EU and the US with the aim to cut 30% of methane (CH4) emissions by 2030. Livestock systems are major contributors to CH4 emissions. This study assesses a combined tax and subsidy policy tool applied at the farm level that would allow to reach the 30% reduction target for livestock CH4. The simulation is performed with the Positive Mathematical Programming model AGRITALIM calibrated using the Italian commercial livestock farms as represented by the Farm Accountancy Data Network. The micro-based model simulates at the farm level the imposition of a tax on each unit of emissions that exceeds the targeted amount, or the grant of a subsidy for each unit of emissions that is reduced above the target. The simulation exploits the heterogeneity of farmers’ behaviour to reach a market-clearing permit price of one tonne of emissions to obtain a self-sustaining policy tool that would equate the amount of taxes and subsidies paid. Results point that with a price of EUR 110.50t-1CO2eq. the system would self-sustain itself. Higher negative impacts are foreseen for less productive beef and mixed cattle farms as a result of the profitability and emission intensity of their activities. Findings could be used to help policymakers understand the diversified impacts of the target on farms and evaluate possible compensation they could provide for a more just transition.