National Newswatch

Lawrence plans to reintroduce exemption bill.


Ottawa Exempting farmers from paying the carbon tax on grain dryers and barn heating remains the best choice for them until alternate technologies are available, says a study from the University of Calgary.

The study by Sarah Dobson of the Simpson Centre for Agricultural and Food Innovation, said expanding the exemptions for farmers “is likely to be the least administratively costly to implement and could readily be made available to all farmers.”

This is what Conservative MP Phil Lawrence from Northumberland-Peterborough South proposed in the last Parliament. His bill won approval in the Commons but Parliament was dissolved for the September election before the Senate could approve it. He plans to reintroduce that bill as soon as possible.

Dobson said that “As an expansion of farm fuel exemptions risks dulling the incentive to further innovate and commercialize new technologies, it should at most be introduced as a short-term, temporary measure. This will also ensure the incentive for farmers to shift towards new technologies is in place as they become commercially available.”

The next choice for governments could be to offer carbon tax rebates that can be set at a higher level to reflect that farmers may have limited options in regard to switching technologies. Long term, as more efficient technologies are commercialized and made more readily available, rebates can then be ratcheted down.

Dobson noted that Agriculture Canada’s Agricultural Clean Technology Program includes a $10 million plan to help farmers move off diesel and adopt other cleaner energy options that could help encourage the switch when newer technologies are available.

She also said that agriculture should be subjected to a more formal assessment of its greenhouse gas emissions “to better inform the degree to which the sector is at risk of carbon leakage, as well as the degree to which ongoing support is required to help maintain the competitiveness of Canada’s farmers.”

Such an assessment “could provide further insight on how to best target carbon pricing support to different types of farmers going forward.”

Dobson said farmers need to be encouraged to continue reducing carbon emissions through “either lump sum or output-based rebates, both of which can be designed to preserve the full incentive of the carbon price. This will ensure the carbon tax does not undermine the competitiveness of Canada’s farmers, and conversely, that support for farmers does not undermine the centrepiece of Canada’s emissions reduction plan.”

Any pricing mechanism needs to consider the influence of weather on natural gas and propane use, which also creates challenges in setting benchmarks for agricultural output.

Farmers in Ontario and the Prairies are the ones hit by the carbon tax applied to grain dryers and barn heaters. Dobson said while Agriculture Canada pegs the carbon tax cost for grain and oilseed drying in a range from an average of $210 per farm in Alberta to $774 per farm in Saskatchewan, individual farmers, in contrast, have reported carbon tax costs of up to $10,000.

Dobson also noted that because agriculture is composed of thousands of small producers, it isn’t fully assessed under federal emissions assessment programs.

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