Fight over federal carbon tax ready to escalate

The Liberal government’s new climate plan boasts that most Canadians will receive more in rebates than they pay in additional carbon tax, but nothing in the plan explains how Canada’s export-reliant industries are supposed to remain competitive.

Farm fuel is exempt from the carbon tax and one assumes that will continue to be the case as the tax rises from the current $50 to $170 a tonne by 2030. The 79-page document released by the government is silent on the matter.

However, the tax is costly for farmers in numerous other ways. The carbon tax on natural gas and propane for grain drying has received a lot of attention. Less obvious are the rising costs for manufacturing and transporting fertilizer and the cost of moving grain to export. In fact, almost all other input costs feel the impact.

The purpose of an ever more onerous carbon tax is to direct Canadians to lower carbon alternatives. For most farmers, the ability to pivot is minimal and for farmers serving export markets, the opportunity to recoup their extra costs from the marketplace is practically non-existent.

Most other export-oriented industries face the same dilemma. Liberal chest thumping about a new green economy with well-paid jobs is pie-in-the-sky wishful thinking as compared to the certainty that existing industries will be severely disadvantaged.

The economic theory is that putting an increasing price tag on fossil fuels will incent greener alternatives. Interestingly, the government obviously doesn’t believe that will be adequate on its own since their plan also calls for pumping billions of dollars in taxpayer money into renewable energy projects, energy-efficient building retrofits and subsidies for buying zero-emission vehicles.

The plan also recycles the promise to plant two billion trees over 10 years at a cost of $3.16 billion. If you’re wondering why planting trees sequesters carbon, but agriculture is not given credit for doing the same, it’s really a matter of meeting the Paris Climate Accord, which calls for carbon decreases from the base level.

Trees already growing and current farming practices are “business as usual” and don’t count for emission reductions.

Watch for action on fertilizer use. The plan notes that direct emissions associated with synthetic nitrogen fertilizer application have increased about 60 percent since 2005. A national emission reduction target for fertilizers is set at 30 percent below 2020 levels.

In fairness, the plan does set aside money to “help farmers adopt commercially available clean technology.” Watch for the next Canadian Agricultural Partnership between the feds and provinces to have an emphasis on measures to “boost climate-smart agriculture.”

Soon the other foot will drop. The Liberals are getting set to announce their Clean Fuel Standard whereby the lifetime carbon footprint of liquid fuels will need to be reduced over time. This will jack up the price of fuels over and above the carbon tax and from this increase farmers will not be exempt.

There may be benefits to biodiesel and ethanol production from the Clean Fuel Standard that may trickle down to the farmgate, but that all depends on the details.

The Liberals misled Canadians last year when they said the price on carbon would not go up. For that, they deserve to suffer re-election ramifications. However, to capitalize on the deception, the Conservatives will need a viable carbon reduction plan of their own. Simply criticizing the Liberal plan won’t be enough.

Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at kevin@hursh.ca.

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