Prof downplays carbon tax’s farm impact

U of S researcher says most agricultural emissions are nitrous oxide and methane, which are exempt from the new tax

Farmers are worrying more about the carbon tax than they should, says an agricultural economist, especially since they get a huge exemption that isn’t often discussed.

Tristan Skolrud from the University of Saskatchewan has been studying the issue for a couple of years and said farmers are right to be concerned about carbon, but they tend to overlook nitrous oxide and methane.

“The ag sector contributes about 10 percent to national emissions and the vast majority of that is not carbon dioxide from fuel — it’s nitrous oxide and methane,” he said.

“And all of those emissions are exempt under the Greenhouse Gas Pollution Pricing Act.”

Other industries also emit nitrous oxide and methane, but agricultural emissions are huge, he said.

“I’ve been working on designing an offset program that would allow farmers to get credit for the reductions they would take in nitrous oxide and methane emissions,” Skolrud said.

Farm groups have come out against the carbon tax, and opposition heightened after the federal announcement of a carbon-pricing plan for four provinces, including Saskatchewan and Manitoba.

Farmers said they will have to pay the carbon tax on fertilizer production, off-farm trucking and rail transportation.

But Skolrud said there actually shouldn’t be a lot of impacts from fertilizer production.

“Most of the fertilizer production in Canada is going to be covered under output based pricing, so it’s not like the full carbon cost of production of fertilizer is going to be, first of all, incurred by the fertilizer producer and, second of all, passed on to the farmer,” Skolrud said.

“Each province has exemptions for the industries that produce a lot of emissions, and fertilizer production is definitely one of those.”

It’s difficult to calculate the impact of the tax at the railroad level because the railways will have to adjust as they go through each jurisdiction, he said.

Costs will be higher for off-farm trucking and, in a year like this, propane and natural gas to dry grain.

Skolrud said he doesn’t see the latter two fuels ever being added to the list of exemptions. Some farm organizations have asked for that.

Farmers also raise the fact that they should get credit for the carbon they sequester. Skolrud said the amount still pales in comparison to the amount of the other greenhouse gases emitted.

“It’s difficult to say, ‘we want credit for this,’ but ignore this other part.”

Canada has pledged under the Paris agreement to reduce emissions, and Skolrud said economists agree the carbon tax is the most efficient way to do that regardless of how much carbon dioxide has been sequestered elsewhere.

He is examining the least cost way to reduce emissions going forward. A well-designed offset program would be one way to do that, he added.

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