While Manitoba has yet to join other provinces in signing on to a national climate change framework, Keystone Agricultural Producers has prepared its own proposal for implementing carbon pricing.
“We hope we have a solution here that will bring producers in as part of the effort to tackle climate change, but do it in a way that keeps costs manageable… a way that works for farmers,” KAP’s climate project co-ordinator Sean Goertzen explained during an information session at Ag Days in Brandon last week.
The provincial government has previously indicated it will outline a “made-in-Manitoba” plan to reduce emissions in the first quarter of this year. Few details of what that plan might look like have been released, but Premier Brian Pallister has ruled out a cap-and-trade system in the past.
What’s certain is that provinces that don’t design and implement their own plan to reduce greenhouse gas emissions will have one imposed on them by Ottawa, beginning with a carbon price of $10 per tonne in 2018. Having ratified the Paris agreement on climate change, along with China, the U.S., India, the European Union and others, Canada has agreed to cut its emissions by 30 per cent from 2005 levels by 2030.
Goertzen said KAP is working with the provincial government in the hope of exempting on-farm emissions from carbon pricing in Manitoba.
“That means exempting purple gas and diesel, exempting propane and natural gas used to heat barns and shops and greenhouses,” he said. “We believe this is fair because producers will end up paying for certain off-farm emissions.”
Those off-farm emissions include those from fertilizer productions, shipping and trucking.
“Ideally, in the long run, we’d like to see truckers, railways and fertilizer companies find ways to reduce emissions and just avoid paying that carbon price completely,” said Goertzen. But he added that at least in the short term, that cost would be passed on to farmers.
“(In) Alberta, where they just introduced a carbon tax, $20 a tonne of emissions, truckers are adding a one per cent surcharge to pay for their increased diesel costs, so we’re seeing this isn’t just a theory that some businesses will pass on their costs, they have said we are passing on these costs because they can,” he said, noting producers aren’t in a position to pass on an increased cost of production.
“Farmers are global price takers, so they can’t pass on carbon costs, they can’t ask for a premium on global prices because not every country has a carbon price yet,” he said.
In addition to exempting on-farm emissions, the general farm organization is also asking the province to reinvest the carbon tax paid out by agriculture back into the industry. Money from carbon pricing should go towards projects that allow farmers to lower emissions, store carbon in the soil or protect wetlands through an alternative land use framework, said Goertzen.
“Dollars could also go to cost-sharing grants for example, to upgrade, to invest in more effective zero-carbon equipment, so that could include looking at geothermal, it could include all sorts of energy-efficient equipment,” he said. “For example, Alberta introduced some grants recently where producers can get up to $750,000 per grant to cover up to 70 per cent of the cost of upgrading equipment, so that is a real help in terms of that upfront cost.”
But the carbon policy KAP is advocating for is not without detractors.
Following Goertzen’s presentation, a man later identified as Gerry Demare commandeered the microphone indicating he represented an undisclosed group of people who opposed carbon pricing in general. While supportive of exempting on-farm emissions, he said farmers should be reimbursed for all costs associated with carbon pricing unless they expressly accepted the concept.
“For those other direct emissions we have an exemption or a rebate like the GST tax credit, and that would be on a voluntary basis,” Demare said. “So if you’re a carbon tax believer you, on a voluntary basis could not, would not, ask for your money back. If you were a carbon tax denier, or that you don’t necessarily know where you stand in terms of carbon taxation, you could ask for a rebate.”
Others have suggested KAP take a stance similar to Saskatchewan’s approach to carbon pricing. That province has dug in its heels and threatened to sue the federal government.
“We’ve had a lot of members come up and ask us, well why aren’t you just taking Saskatchewan’s approach and just opposing carbon pricing entirely, and that’s a good question,” KAP’s Goertzen said, adding the first risk with that approach is that the federal government imposes its own price.
“So I think it’s important to ask the question, what do you think will work better? A carbon price designed by Ottawa, or one designed by your home province?” he asked, noting the second risk that comes with opposing the carbon pricing is the possibility another strategy with higher hidden costs could be implemented.
“We’re not here trying to advocate for carbon taxation,” he said. “We’re saying given the alternatives, given where our government’s headed, we think our approach to this issue could get the best result for farmers.”