Ontario's proposed tax to combat climate change has potential to affect agriculture

Wednesday, January 21, 2015

by MIKE BEAUDIN

Ontario farmers could be winners or losers depending on how the Ontario government moves ahead with a tax to combat climate change, says Don McCabe.

McCabe, president of the Ontario Federation of Agriculture (OFA), the province’s largest farm organization, says the government is considering two options: a straight carbon tax and a cap-and-trade tax.

He says farmers could benefit under a cap-and-trade system but a straight carbon tax would be detrimental.

A cap-and-trade system lets the worst polluters buy credits from users that burn less fossil fuel while a straight carbon tax is imposed on all carbon emissions, including gasoline burned by vehicles.

Ontario Premier Kathleen Wynne said publicly earlier in January that the government plans to reduce greenhouse emissions as part of a national strategy on climate change but hasn’t chosen a process. British Columbia, Alberta and Quebec now have variations of a carbon tax in place.

McCabe, a former vice-president of the Soil Conservation Council of Canada, has been involved in the issue for almost 25 years, dating back to the Liberal government under former Prime Minister Jean Chretien.

He says a cap-and-trade system could see farmers make money because companies with carbon emissions could pay farmers to sequester carbon through planting trees, practising no-till farming or developing better nutrient management.

In other words, farmers who follow sustainable land management practices would take carbon dioxide out of the air and transfer it into the soil’s organic matter in a form that doesn’t allow carbon to escape into the atmosphere. That stored carbon would be turned into credits that could be sold.

“If we become better at how we manage these resources, we have the proof in front of us already as to how agriculture has been producing more with less because the Ontario climate change 2014 report will illustrate, compared to 1990, we are actually six per cent lower today and we’re producing a lot more now, and that’s a testament to agriculture.”

He says cap-and-trade would encourage the agriculture industry to be even more innovative.

“By putting a carbon tax down on everybody it doesn’t lead to research or innovation," he adds. "Ontario agriculture has been a leader in Hydro conservation. We need appropriate recognition that farmers have already been giving at the office on this particular front.”

Expanding the ethanol industry would also reduce carbon. Ethanol produces fewer greenhouse emissions and the demand for more corn would benefit Ontario farmers, McCabe says. “Carbon from agriculture is easier to find than dinosaur guts that’s a few kilometres down.”

In 2008, British Columbia implemented a straight carbon tax. Covering most types of fuel use and carbon emissions, it started out at $10 per tonne of carbon dioxide then rose to $30 per tonne, or about seven cents per litre of gas. It’s revenue neutral by law, meaning tax money from the carbon tax has to be spent on reducing other taxes.

Greenhouse vegetable and floriculture growers in B.C. get tax relief for 80 per cent of the tax paid on natural gas and propane for greenhouse heating and carbon dioxide production. The entire farm sector also receives a rebate on farm gas and diesel.

However, a Pacific Institute for Climate Solutions study released in 2014 suggested the B.C. government’s exemptions weren’t necessary because the carbon tax hasn’t had a measurable impact on agriculture in the province.

The study examined trade data from Statistics Canada, Industry Canada, and Environment Canada from 1990 to 2011.

In Alberta, the country’s largest producer of emissions, only larger companies that produce more than 100,000 tonnes of greenhouse gas annually are affected. They can reduce their emissions or buy credits. The money generated is used largely to pay for clean-energy technology and innovations.

McCabe says if the Ontario government implements a straight carbon tax, the OFA would lobby for a complete tax reimbursement for the agriculture sector.

He says various government departments are expected to begin discussing the issue in the spring, and the OFA will ensure its position is heard. BF