Canadian carbon price worries farmers, fertilizer makers

WINNIPEG/TORONTO, Oct 18 (Reuters) – Canada’s plan to price carbon emissions may weaken the farm sector in one of the biggest grain-shipping countries, raising farmers’ costs and discouraging investment in fertilizer production, industry groups say.

Ottawa this month promised a price on carbon emissions by 2018, and will let provinces choose a tax or cap and trade system. Carbon pollution will cost C$10 a tonne in 2018, rising gradually to C$50 in 2022.

At C$50, it would raise fertilizer prices C$2 per acre for farmers, and some experts peg the total farm cost at C$6 an acre, according to CIBC bank.

“Everyone is paying attention to this, especially in a downtime for the economy,” said Robin Speer, executive director of Western Canadian Wheat Growers, which has gathered 2,500 petition signatures opposing the price.

Reduced soil tilling and more fuel-efficient machinery have made farming more environmentally friendly, and crops absorb carbon from the air and leave it underground, Speer said.

Agriculture accounted for 10 percent of Canada’s 2014 total greenhouse gas emissions, according to Canada’s environment department.

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Nitrogen fertilizer producers, among major polluters in western provinces, are leery of a carbon price.

Higher costs will discourage expansion and shift production elsewhere, said Garth Whyte, chief executive of industry group Fertilizer Canada. Provinces should instead credit fertilizer makers for reductions in nitrous oxide, a production byproduct, he said.

Agrium Inc and CF Industries will not be subject to Alberta’s new carbon tax of C$20 per tonne when it takes effect next year, but the separate emitter tax that fertilizer companies pay will rise to C$30 per tonne of carbon from C$20 per tonne, according to Fertilizer Canada. It will be replaced in 2018 by another regulation that charges a carbon price.

Fertilizer producers can justifiably argue they need provisions to stay competitive, and farmers should also receive support, said Keith Brooks, programs director at Environmental Defence.

“You want the price to influence everyone’s behavior but we don’t want it to mean farmers can’t make a living,” he said.

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At a committee meeting on Tuesday, Liberal government legislators rejected an opposition motion to study how the carbon price will affect the farm sector, Conservative legislator David Anderson said.

Ottawa’s carbon price does not directly impose costs on pollution from farm vehicles or their fuel, and the government lets provinces choose how to use carbon revenue, said Caitlin Workman, spokeswoman for Environment Minister Catherine McKenna.

Saskatchewan Premier Brad Wall on Tuesday pitched an alternative approach to carbon pricing, focusing instead on clean energy technology and renewable power.

British Columbia gives farmers an exemption from its carbon tax on farm fuel purchases. Alberta plans to do the same. Ontario’s emissions cap does not cover agriculture.

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  • bufford54

    It is my opinion that this is no more than an additional tax grab imposed by a cash strapped government. There is absolutely no proof that this additional tax money collected will reduce or improve global pollution.

    • Jayson

      The point of a carbon tax isn’t for the tax money to reduce pollution (it can if it’s invested in green technology), it’s the extra expense of the tax that is meant to change behavior. Suddenly being inefficient and wasteful becomes more expense, so people will change their behavior to try and avoid that expense. Companies especially will do it, because they love avoiding expenses at least as much as their competitors do.

      The only way a carbon tax will fail to reduce carbon emissions is if the tax is too low and people don’t even notice the extra expense. A few extra pennies on a heating bill isn’t going to make someone replace the drafty windows in their house, but a few extra dollars a month will suddenly make the new windows worth it.

      • Harold

        Yes Jayson, thats exactly the bill-of-goods you’ve been sold.
        If I understand you correctly, Its likened to how a photo-radar tax hurts the rich, and gets them off the road. The higher the tax, the more off the road, for public safety, and government spending.
        I believe that anyone supporting this Carbon Tax, should be the very one’s who face to face, go to collect it. Supporters should bring a Peace Officer with them to help prove the Theory.

        • Jayson

          It’s the same idea that’s behind speeding tickets and fines.

          Take a bad behavior you want people to stop doing, in the case of photo radar tickets it’s speeding and running red lights. Send people large fines for speeding and running red lights, people who speed and run red lights find out quickly that speeding and running red lights is expensive. So they stop doing it, or at least be more careful to do it only where there isn’t a red light camera. Either way, bad behavior is changed. Sure, some unsuspecting out of towner who blows through a red light while lost might get a ticket. Sure, the safe driver who never speeds but missed a sign might get a ticket. Sure, the reckless idiot who always speeds might get a ticket and continue to speed. Sure, the very rich person might get a ticket and laugh it off as pocket change and continue to run red lights.

          Carbon tax, red light cameras, tobacco taxes. None of these systems will work perfectly to change everyone’s behavior, but more or else they nudge people towards doing what’s right. Worst case, they at least collect a “deposit” from people who refuse to change that can be spent on a wider public good. Healthcare for smokers, green technology for polluters, more municipal police funding for dangerous drivers.

          • Harold

            You’ve validated that I do understand you correctly. However, you have missed the point and clearly you have no investments.
            Everything. is a rich man’s club. and as you have described, you are legally in servitude to that club. Those protesting, believe otherwise.

      • Guest

        Good point Jayson!

  • Wayne Tuck

    This issue of carbon taxation is nothing more than a greedy tax grab by government. All of Canada’s carbon emissions amount to less than 2% of the total global emissions. With that in mind our attempt to regulate carbon emissions should be proportionate to our contribution to the carbon pool.