Reaching the political goals for reduction of greenhouse gas emissions in the Danish agricultural sector requires significant effort. Pyrolysis of biomass represents a large reduction potential in the sector, but there is currently insufficient incentive for farmers to utilize biochar on agricultural soil. In this study, the effects of a Danish carbon tax on the economic incentive to utilize pyrolysis is investigated. Through a dairy farm case study, climate footprints are calculated and the reduction potential of pyrolysis is quantified. Combining these results with an analysis of the carbon tax structure and the carbon credit market, the economic burden of the dairy farm through the carbon tax is estimated in a range of scenarios.The farm is expected to pay between 2,7 and 4,1 mio. DKK in carbon tax corresponding to 8-11% of the annual turnover. Through pyrolysis, the farm savings in carbon tax are dependent on the details of the implementation of the tax. With subsidies for negative emissions in the agricultural sector, pyrolysis is estimated to reduce the carbon tax between 25% and 60%. Without subsidies, the savings are between 15% and 45%. In addition to the incentive for pyrolysis achieved through reduced carbon tax, the sale of carbon credits provides additional value. It is necessary to establish business models that distribute the value between farmers and pyrolysis plant owners, in order to realize the potential of pyrolysis in the agricultural sector.