MPs to vote on a new carbon-pricing exemption for farmers

A private member’s bill that would exempt certain agricultural activities from the federal carbon price is heading back to the House of Commons with a few changes.

The bill would amend the federal Greenhouse Gas Pollution Pricing Act to add natural gas and propane used to dry grain and heat livestock barns to the list of farm fuels — including gasoline and diesel — already exempt from the federal price on pollution.

The Standing Committee on Agriculture and Agri-Food finished its study of Bill C-234 in November, and it is expected to pass a vote in the House despite the Liberal Party’s opposition.

“I know that I'm going to vote in support of it … I think the Bloc Québécois probably will,” NDP MP Alistair MacGregor told Canada’s National Observer in an interview. MacGregor sits on the committee and is the NDP’s agriculture and food critic.

Over five committee meetings, MacGregor and Conservative MPs made the case for the fuel exemption because farmers don’t have other commercially viable fuel options, particularly for grain dryers. Ontario Conservative MP Ben Lobb tabled C-234, which is similar to a previous private member’s bill that died on the order paper when the last federal election was called. That bill was conceived after the 2019 “harvest from hell” on the Prairies when farmers had to use more energy than expected to deal with a wet grain harvest.

Liberal MP and committee member Ryan Turnbull says the bill will disincentivize investment in developing alternative technology because it removes the carbon price from the equation. Instead of passing a bill that erodes the strength of the carbon price, the solution should be to increase access to financing for farmers to move to renewable energy, he told Canada’s National Observer in an interview.

Compared to heating livestock buildings and greenhouses, grain-drying technology is trickier because while climate-friendlier options exist, they are not widely available in Canada, Turnbull said.

“But we could solve that problem in another way rather than just exempting farmers … basically just saying, ‘OK, well go ahead and burn fossil fuels for the next eight years.’”

Biomass-fuelled grain-drying technology looks promising, Turnbull and MacGregor both noted.

“What I heard very loudly and clearly at committee and from my meetings with various stakeholders is that it's just not feasible at this moment in time and that they would appreciate a little bit of a break, especially when they are having some of those extreme weather events that are leading to very wet harvests for their grain,” said MacGregor, referencing the biomass technology, which he “would love to see us develop” in the coming years.

The committee amended the bill to include a sunset clause that will end the exemption eight years after it comes into force, though there will be the option to extend the exemption if viable technologies are not available. Several witnesses who spoke to the committee recommended they add a clause like this, including National Farmers Union representative Glenn Wright.

The problem is an eight-year exemption leaves no incentive to change or invest in new technology, said Turnbull. “That's the power of the price signal, and that's why the price on pollution is often revered and talked about as the most effective market-based mechanism for moving to a zero-carbon economy.”

MacGregor agrees the price signal from the carbon price is “absolutely crucial” to encourage people to change their operations but said without options available to switch to, there won’t be results.

“C-234 is an important measure only for this interim period … the industry will understand that this is only for a set amount of time,” said MacGregor. The sunset clause means the industry will get “a little break right now, but it's not going to last forever.”

The NDP’s decision to support the bill surprised Turnbull.

“I'm really shocked that a party that has been calling for the end to all fossil fuel subsidies is essentially supporting a fossil fuel subsidy,” he said.

He cautioned that eroding the price signal in one industry also runs the risk of setting a precedent where any industry can ask for an exemption when there are no commercially viable alternatives.

“I think that that's the wrong move to make. It's precisely at that moment that we have to say, ‘OK, how do we advance and assist as a government and how do we work together with industry partners … advance and scale up and ensure that commercially viable solutions and alternatives are available in all those industries?’”

Since the 2019 harvest from hell, the federal government has made some changes to help farmers. In December 2021, the federal government introduced a tax credit to return fuel charge proceeds to farming businesses in provinces that use the federal carbon pollution pricing system because they don’t have their own equivalent system in place. These provinces are Alberta, Saskatchewan, Manitoba and Ontario.

A $50-million funding stream for the purchase and research of more efficient grain dryers was announced in 2021. The soon-to-be-launched $15-billion Canada Growth Fund will also be able to help mobilize resources to tackle problems like this, said Turnbull.

“Fossil fuels are some of the most volatile fuel prices on the planet and farmers are going to, naturally, I think, try and find a way to get off of them,” said MacGregor.

Conservative MP John Barlow and Bloc Québécois MP Yves Perron did not respond to requests for comment by the deadline.

Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer