Farmers propose tying carbon credits to carbon tax

Saskatchewan’s crop producers say it’s time farmers were compensated for the contributions they’ve made toward reducing greenhouse gas emissions.

They want provincial crop commissions and grower associations to lobby government for a system that does just that.

During Crop Production Week meetings, numerous provincial crop commissions representing oilseed, cereal grain, pulse crop and special crop producers passed resolutions aimed at pushing the provincial and federal government to recognize environmentally friendly farming practices that have been adopted by the province’s farmers.

The resolutions advocate for the creation of a government-endorsed system that allows farmers to generate and sell carbon credits at rates that coincide with carbon pricing mechanisms already established by Ottawa.

The federal carbon tax is currently set at $30 per tonne but it is scheduled to rise to $170 a tonne by 2030, an increase of more than 465 percent in nine years.

Vicki Dutton, a grain grower from Paynton, Sask., believes farmers have an opportunity to create a significant new revenue source based on carbon tax prices of $170 a tonne.

“At this price, we either have a problem or we have an opportunity,” Dutton told growers during the Saskatchewan Canola Development Commission’s annual general meeting, held Jan 12.

“I believe this is an opportunity.”

“We sequester carbon and we have Agriculture Canada collaborated science that proves we do…..”

“The challenge for us is to figure out how to get value for the carbon sink we produce annually.”

Generating and selling carbon credits is not a new concept in the agriculture sector.

The government of Alberta has had a provincially regulated carbon market in place since 2007. Over that time, participants in the market — including farmers — have generated about 65 million carbon credits.

A credit is created when the adoption of approved greenhouse-gas-reducing activities diverts one tonne of carbon dioxide equivalent (CO2e) emissions from the environment.

Alberta farmers who comply with the province’s so-called “conservation cropping protocols” have been creating and selling credits to carbon credit aggregators for more than a decade.

Details of Alberta’s agricultural protocols can be viewed online here.

Outgoing Saskatchewan Pulse Growers chair Brad Blackwell said compensating Saskatchewan crop producers for carbon sequestration has been discussed at past SPG meetings.

A year ago, pulse growers passed a similar resolution calling on SPG to lobby for a system that would pay producers for carbon sequestration.

Blackwell said SPG partnered with the Saskatchewan Soil Conservation Association, which has been the province’s lead organization on the topic for years.

The SSCA has been involved in a number of projects aimed at assessing greenhouse gas mitigation in the ag sector and promoting low-disturbance land management and crop production practices.

The Prairie Soil Carbon Balance Project, launched in the late 1990s, was a 10-year project designed to determine the changes in soil carbon levels after conversion to direct seeding systems.

And from 2004 to 2006, the SSCA participated in the Greenhouse Gas Mitigation Program, a national program designed to demonstrate and promote best management practices that either reduce GHG emissions or sequester soil carbon.

The objective of that program was to promote low disturbance direct seeding systems, reduced fallow, increased forage production, and improved fertilizer and manure management in annual and perennial crops.

In Saskatchewan, work is taking place to ensure that farmers will be able to cash in on the carbon sequestering activities that they’ve adopted, said John Bennett, chair of the Saskatchewan Soil Conservation Association’s carbon advisory committee.

Bennett said it’s unlikely that Saskatchewan will develop its own provincial carbon offset market.

Instead, Saskatchewan growers will most likely have an opportunity to participate in a national offset market currently being considered by Ottawa.

Bennett said the design of that program and the protocols that apply to agriculture will have a huge impact on the value of credits produced in the province.

It is also unclear how quickly a national system could be rolled out.

But if Ottawa’s offset market recognizes the sequestration potential of zero-till or minimal till cropping, which is used on the vast majority of Saskatchewan’s cropland, then the potential for generating extra value in the province’s farming sector is “absolutely huge,” Bennett said.

According to some provincial estimates, Saskatchewan’s agriculture sector has the capacity to divert 12 to 13 million tonnes of carbon dioxide emissions per year.

At $170 a tonne, carbon credits produced by Saskatchewan’s ag sector could exceed $2 billion annually.

Alastair Handley, president of Radicle, a Calgary-based technology company and carbon credit aggregator, said there is significant interest in developing protocols and establishing carbon offset markets in jurisdictions outside of Alberta.

However, the task of developing protocols, measuring emission reductions and establishing offset market mechanisms is complex and time consuming, he said.

What’s more, the political will to establish systems that are regulated by government is not always sufficient.

That’s why aggregation companies in many North American jurisdictions are buying so-called credits in non-regulated or voluntary carbon credit markets.

The federal government has indicated that it is looking into developing GHG reduction protocols for the agriculture, forestry and waste sectors, however it remains to be seen what emission-reducing activities would be endorsed.

Last month, government officials with Environment and Climate Change Canada also indicated that Ottawa is hoping to establish a national Greenhouse Gas Offset System that would have “opportunities for agriculture to be recognized for carbon sequestration through carbon credit revenues.”

However, the development and rollout of a national offset system could be years in the making.

In the meantime, the amount that Saskatchewan farmers pay for carbon taxes on so-called “non-exempt” activities such as grain transportation, heating farm buildings and grain drying with propane or natural gas continues to rise.

“My hope is that governments will make the effort to create protocols that the agriculture sector can use to participate in national and sub-national carbon markets,” Handley said.

“Producers, like everyone else, face the carbon tax and the amount of carbon tax associated with running a grain dyer, for example, is not insignificant.”

“While I’m not opposed (to increasing the carbon tax) as we try to green our economy, I believe that the agriculture sector would be well served if government were to give farmers an opportunity to participate in the market as credit developers….”

Saskatchewan grain producers offered a similar assessments.

“If the pricing of carbon is based on science, then the corresponding science proving the sequestration value is a legitimate claim to carbon credits for the producers of Saskatchewan,” said Miles Hecks, who supported a carbon sequestration resolution at the Saskatchewan Barley Development Commission’s annual general meeting.

“If you believe the science on emissions, then you also have to believe the science on sequestering (carbon),” added grain grower Dave Marzolf.

“We’re just looking to get some money back to the farm (in return for) our contributions to the environment.”

For a related story on the development of carbon credit opportunities for the Canadian agriculture sector, click here.

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