Full VAT on meat could cut diet-related environmental impacts by up to 6%, study found

A new study from the Potsdam Institute for Climate Impact Research (PIK), published in Nature Food, found that removing reduced value added tax (VAT) rates on meat across the EU could deliver a measurable and rapid reduction in the environmental impacts of diets, while adding only modest costs for households.

• EU diets accounted for 23% of household-related greenhouse gas emissions and up to 71% of impacts on land use, water, nutrients, and biodiversity.

• Applying full VAT to meat could cut diet-related environmental damage by 3.48-5.7%, depending on impact category.

• Net costs to households were estimated at €26 per year on average, after accounting for potential tax revenue recycling.

The research analyzed consumption data from private households across all 27 EU member states using an established input-output model that mapped food value chains and quantified their associated climate and ecosystem impacts. By combining expenditure data with environmental indicators, the authors assessed how different pricing policies could shift consumption patterns and reduce damage linked to food production.

According to the study, diets represented a disproportionately large share of household-driven environmental pressures. While food accounted for 23% of greenhouse gas emissions generated directly and indirectly by EU households, its contribution rose to between 56% and 71% for nitrogen and phosphorus pollution, land and water use, and biodiversity loss.

Meat consumption emerged as a central driver. Across the EU, meat accounted for around 28% of food-related greenhouse gas emissions, despite representing a smaller share of caloric intake. Yet in 2023, 22 EU member states continued to apply reduced VAT rates to meat products, effectively subsidizing consumption with a high environmental footprint.

“From an economic perspective, you should add the product-related environmental costs incurred during production to the price,” said Charlotte Plinke, a researcher at PIK and an author of the study. She said that while a fully differentiated pricing system reflecting the precise environmental footprint of each food product would be theoretically optimal, it remained impractical in the short term due to complexity.

Instead, the researchers examined the impact of a simpler and politically realistic intervention: removing reduced VAT rates on meat and applying the standard rate. In Germany, for example, this would mean shifting meat from a 7% VAT rate to the standard 19%.

Taking into account empirically observed consumer responses to price changes, the model showed that applying full VAT to meat would reduce overall food-related environmental damage by between 3.48% and 5.7%, depending on the category measured. Average annual food expenditure per household would increase by €109, but this would generate an additional €83 per household in tax revenue.

If recycled back to citizens through mechanisms such as per-capita rebates, the researchers said net costs would fall to around €26 per household per year. The authors argued that such revenue recycling would be essential to ensure social fairness and political feasibility.

In a second scenario, the study explored a more comprehensive approach: a differentiated environmental tax on food products based directly on their associated greenhouse gas emissions. The researchers calculated that a uniform price signal of around €52 per ton of CO₂-equivalent would achieve a similar reduction in food-related emissions as removing VAT reductions on meat.

That figure closely matched existing carbon pricing levels. Germany’s national carbon price for fuels and heating, which is due to be integrated into an EU-wide system in 2028, stood at €55 per ton of CO₂-equivalent at the time of the study.

“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,” said Michael Sureth, a PIK researcher and co-author of the study. He added that a differentiated tax could be strengthened over time to address wider challenges including biodiversity loss and nutrient pollution.

Under this broader pricing approach, and assuming full recycling of revenues, net household costs would fall further to around €12 per year on average, according to the model. However, the researchers acknowledged that implementing such a system would be politically and administratively demanding.

As a result, the study framed full VAT on meat as a pragmatic first step rather than a final solution. The authors argued that the measure could be implemented quickly using existing tax structures, send a clear price signal aligned with environmental objectives, and generate revenues that could be redistributed to protect low-income households.

The findings arrived amid growing debate in Europe over how food policy could contribute to climate and biodiversity goals without relying solely on voluntary behavior change. While the study did not propose restricting consumption directly, it reinforced the idea that pricing mechanisms could play a significant role in reshaping diets by better reflecting their environmental costs.

By quantifying both environmental benefits and household impacts, the authors said the research aimed to inform policy discussions with evidence rather than ideology, highlighting how relatively small fiscal adjustments could deliver measurable ecological gains.