Full VAT on meat could cut environmental impacts of EU diets, study finds

Applying full VAT to meat products such as beef, pork, lamb and chicken could deliver rapid, low-cost reductions in the environmental impacts of European diets, new research suggests.

The findings come from a new study published in Nature Food by researchers at the Potsdam Institute for Climate Impact Research (PIK), which assesses the environmental footprint of food consumption across all 27 EU member states and evaluates policy options to reduce it through pricing reforms.

VAT reform offers quick policy lever

The most immediate option analysed focuses on VAT reform. While standard VAT rates apply to most goods, food is often taxed at a reduced rate. In 2023, 22 of the 27 EU member states applied reduced VAT to meat, effectively favouring consumption of one of the most environmentally intensive food categories.

The modelling shows that applying the standard VAT rate to meat would reduce the overall environmental damage caused by food consumption by between 3.48 and 5.7 percent, depending on the impact category. Average annual food spending per household would rise by €109, but this would generate an additional €83 in tax revenue per household. If recycled through social compensation mechanisms such as per-capita payments, net costs would fall to just €26 per household per year.

Diets drive majority of food-related environmental impacts

The study finds that diets account for 23 percent of greenhouse gas emissions generated directly and indirectly by private households in the EU. When wider environmental pressures are considered – including nitrogen and phosphorus pollution, land and water use, and impacts on biodiversity – the contribution of diets rises to between 56 and 71 percent. Meat consumption alone is responsible for around 28 percent of food-related greenhouse gas emissions.

Drawing on representative household expenditure surveys and an established economic input–output model, the researchers mapped food value chains and quantified their impacts on climate and ecosystems. This allowed them to test policy scenarios that would internalise environmental damage into food prices and influence consumer behaviour.

Charlotte Plinke, PIK researcher and an author of the study, explained:

From an economic perspective, you should add the product-related environmental costs incurred during production to the price.

This would mean that the more CO₂ is emitted, the more expensive it becomes. Implementing such a graduated system for the enormous variety of foodstuffs, however, is very complex and therefore impractical, at least in the short term. That’s why we initially examine a straightforward option that is currently under political consideration: removing tax reductions on meat products.”

In a second scenario, the researchers examined a more comprehensive approach: a differentiated environmental tax on food based directly on greenhouse gas emissions. They found that a price signal equivalent to €52 per tonne of CO₂ would achieve the same emissions reductions as removing reduced VAT on meat. By comparison, Germany currently prices carbon for fuel and heating at €55 per tonne, with plans to integrate this into an EU-wide system in 2028.

PIK researcher Michael Sureth, an author of the study, added:

Such a comprehensive price signal would reduce the other environmental impacts, beyond greenhouse gases, even a little more than the selective VAT price signal for meat.

And above all, the comprehensive price signal could be enhanced over time in such a way that the policy fully addresses the problems, such as the climate and biodiversity crisis. Of course, this must be accompanied by a correspondingly strong social compensation through the reimbursement of revenues. The net costs of such a differentiated environmental tax on food would then fall to 12 euros per household per year. This would be a difficult, long-term project, that’s why our study also describes the option for a quick first step.”