Farmers wrestle with carbon tax fallout

Farm groups say they need more breaks than just farm fuel exemptions in looming carbon tax legislation.

In Western Canada, British Columbia and Alberta already have carbon tax laws in place.

B.C. has had a tax since 2008. It amounts to $30 per tonne. In 2014, the province exempted farm gas and diesel from the tax.

Alberta is implementing a carbon tax on Jan. 1, 2017. It will be applied to fuels at a rate of $20 per tonne for the first year and then increase to $30 per tonne. Agricultural fuels are exempt.

Greg Sears, chair of the Alberta Canola Producers Commission, said the farm fuel exemption is beneficial but is not sufficient to cover all the extra costs farmers will face.

He said a carbon tax will drive up a myriad of farm input costs, such as fertilizer, pesticide and grain transportation.

Alberta’s canola, wheat, barley and pulse commissions have hired Viresco Solutions to develop a model to determine what financial impact Alberta’s carbon tax will have on an average farm.

Viresco is using farm data from the directors of the commissions. It hopes to have preliminary results by the end of this month. Sears wants the province to conduct its own assessment as well.

Manitoba is in the process of developing a carbon pricing system.

“The government is just starting consultations, so there’s a lot of options on the table,” said Sean Goertzen, climate project co-ordinator with Keystone Agricultural Producers. The only approach the province has ruled out is implementing a cap-and-trade system.

KAP is surveying its members on what they need to make a carbon tax workable on their farms.

Goertzen said farmers potentially face increased costs on both sides of the supply chain.

“They can’t pass any increase in costs on because they can’t raise global prices,” he said.

Goertzen said even if gas and diesel are exempt, farmers will still pay more for natural gas and propane. He said there needs to be a way to offset the increased costs.

“We really want to see opportunities for farmers to get paid to sequester carbon and reduce emissions,” he said.

David Sefton, a director of the Saskatchewan Flax Development Commission, said it is unclear what is going to happen in that province because the federal and provincial governments are feuding over the issue.

The federal government is implementing a minimum nation wide price starting at $10 per tonne in 2018 and increasing to $50 per tonne by 2022. It will apply where there is no provincial carbon pricing program in place.

Saskatchewan Premier Brad Wall has asked his Ministry of Justice to investigate the legal options for a constitutional challenge to the federal tax.

“We’re not sure just what’s coming at us,” said Sefton.

But if a carbon tax is implemented in Saskatchewan, he wants it to contain more than an exemption for farm fuels.

“That’s really not a solution for agriculture with respect to the total cost because of course every product that we utilize is a product of carbon,” he said.

Sefton wants farmers to be rewarded for carbon-friendly activities such as no-till seeding. Even the simple act of growing a crop reduces emissions because photosynthesis removes carbon dioxide from the air.

“If agriculture is going to be charged for the carbon that we emit, certainly we should be recognized for the carbon that we sequester. I’ll go to my grave with that position,” he said.

A study commissioned by the Saskatchewan Soil Conservation Association determined that no-till seeding results in an average of 0.38 tonnes of carbon dioxide being sequestered per acre per year.

Based on the 2011 census, 23 million acres of Saskatchewan farmland was in no-till, so that is 8.74 million tonnes in annual carbon sequestration.

If the carbon tax were $50 per tonne, that sequestered carbon would have a value of $437 million.

Alberta has paid farmers for carbon sequestration since 2007 through the Specified Gas Emitters Regulation, a program designed to get large greenhouse gas emitters to reduce their emissions.

One of the ways large emitters can comply with the regulation is by purchasing offset credits from farmers willing to participate in the program.

Until 2012, farmers were allowed to apply for early action credits for emissions they reduced prior to the start of the regulation.

Sears said there was good uptake by farmers in the early years of the program because it was simple to use and the credits could be applied retroactively.

“Producers were getting fairly substantial payments,” he said.

It was not unusual for a producer to receive $10 per acre for their early action credits.

But in 2012 the rules changed. Farmers must now prove they are taking actions beyond the normal course of business. The rules have become strict and complex, forcing farmers to hire project developers to help carry out projects and bundle credits together.

“What was a relatively simple system for a producer to manage became a little more burdensome,” said Sears. “We saw more and more aggregators and service companies coming into the market to act as intermediaries be-tween the producers and those who deal on the credits.”

That has led to less participation in the program.

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