Bill C-206 (Historical)

An Act to amend the Greenhouse Gas Pollution Pricing Act (qualifying farming fuel)

This enactment amends the Greenhouse Gas Pollution Pricing Act to extend the exemption for qualifying farming fuel to marketable natural gas and propane.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Mr. Ghatala, I want to follow up on what we were discussing. You said that you thought that it was quite possible to incorporate 15% renewable gas into the fuels used for grain drying and other purposes by 2030, without changing the current equipment. It would be quite ironic to continue to tax producers who make that effort for the other fuels that they use.

I gather that you're suggesting that we pass Bill C-206. I have many questions, but we don't have much time. Let's try to proceed quickly.

If Bill C-206 were passed, would you propose an amendment to encourage producers to use biogas?

How else should the government encourage them to do so?

[Virginia Labbie]

As you mentioned, we're on the ground every day, talking to our members about these issues and consulting them through our various member surveys. When we talk to farmers, they all say the same thing: Exemptions are preferable to rebates. That's why we're here today to support this bill.

Certainly, we have to wait to see what that looks like in terms of the details of that rebate—how they would qualify, who would qualify, how their business can participate, those sorts of things—so we would need more information before commenting on any kind of rebate system, and we would need to consult our members, as we always do. We always go to our members in terms of their views.

We are encouraged that the federal government has recognized that the federal carbon tax on natural gas and propane is a problem. We've seen that in the budget. We're encouraged that all opposition parties showed support for Bill C-206 at second reading, and when we talked to farm members, we found that they support exemptions, which is one of the reasons why CFIB is supporting Bill C-206.

[Neil Ellis, Liberal, Bay of Quinte, ON]

At the last meeting, we had Farmers for Climate Solutions testify. I assume you are familiar with them. They released a press release on the federal budget that said it brought “good news” for Canadian agriculture “as farmers begin preparing for the upcoming growing season.”

The government has allocated unprecedented funds to support Canadian farmers in adopting climate-friendly practices, a move that is expected to significantly reduce greenhouse gas emissions that are generated on farms. “Ottawa will invest $200 million in new funding over two years to support farmers to reduce emissions”, “$60 million over the next two years to protect existing trees and wetlands”, and “$10 million over the next two years to power farms with clean energy.” Those are some of the things in the budget.

Farmers for Climate Solutions are happy with the budget, and I believe they do not support Bill C-206. They have over 20,000 members, and one of their members, Ian McCreary, a grain and livestock farmer in Saskatchewan, commented:

Our national and international customers want us to grow food more sustainably, and with only nine seasons left to achieve Canada’s 2030 target under the Paris Agreement, this investment will support farmers across the country to scale-up practices that are proven to reduce our sector’s emissions. Climate change poses the single largest threat to our sector, and this investment is an imperative for our ongoing success.

I guess my question is this: If Bill C-206 fails, what are the suggestions of your organization's members? Are they willing to do grants and rebates moving forward on what they pay for pollution?

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

Thank you very much.

Thank you to the witnesses. It has been a very informative hour.

For the CFIB, I think you've emphasized some of the numbers and the costs for farmers that are associated with the carbon tax. My question is twofold. I will try to sneak in two questions here and ask if you have any comments.

One is on the fact that farmers are leading the way in innovation surrounding environmental stewardship and low-carbon practices, but the way this bill is structured is, specifically, to ensure that farmers, during a difficult year, have a bit of a break at a time when generally costs have gone up because of challenging weather and scenarios like that.

Would the CFIB have any comments on that and the impacts that Bill C-206 would have?

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you very much.

I'm a bit of a numbers guy. We hear different implications about the cost of Bill C-206. You've estimated $14,000 per average farm, but that's carbon tax across the board. We heard AAFC say $290 to $810, and that is specifically for grain drying. However, the denominators that they used were all farmers—all census farmers—as opposed to grain farmers.

Do you have any more data on the actual cost for the average grain operation, the carbon tax for grain drying on the average farm?

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Mr. Chair.

Mr. Ghatala, I'll start with you. I think I may have missed it in your conversation and referral to the committee of what the state of the industry is like for advanced biofuels. Could you clarify your position on Bill C-206?

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Okay.

The agricultural sector representatives whom we hear from almost unanimously state that they don't have an economically viable alternative for their business at this time. We're trying to apply the principle of group decision-making. Sending the bill to producers, who, as price takers, are simply seeing their profit margins shrink, seems very punitive. It would be possible to pass Bill C-206 while implementing an incentive program.

I'm glad that we have an expert on biofuels here.

What are our options, Mr. Ghatala? In your opinion, how soon could we implement an economically viable alternative for businesses, especially when it comes to grain drying?

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Do you think that this could be done through an incentive program, even if Bill C-206 were passed, which would exempt propane and natural gas for now?

[Jasmin Guénette]

We are here today to express our support for this particular bill. We want to see policies implemented that are fair to small businesses, that help small businesses cope with the cost and cope with the current pandemic. When we take a position and when we present that position to a committee such as the one today, we do so based on our members' views. Our members believe that the system currently in place needs to be more fair to them and they hope to see Bill C-206 pass—

[Virginia Labbie]

As you heard in my opening comments, we know that farmers on average paid about $14,000 in the first year it applied to them. I think you heard from testimony earlier today that going to $170 per tonne is a real game-changer, according to Professor Charlebois.

As we mentioned when we surveyed our members, $14,000 for the first year it applied to them, this was when the carbon tax was set at $20 per tonne. As we know, the federal carbon tax is scheduled to rise to $170 per tonne. This amounts to an increase of more than 325% from today and a 750% increase from when this data was collected.

I think it's fair to say there's a significant impact on farm income, on their competitiveness. That's why we believe Bill C-206 offers the opportunity to provide some much-needed carbon tax relief moving forward.

[Virginia Labbie, Senior Policy Analyst, Agribusiness, Canadian Federation of Independent Business]

Thank you, Jasmin.

CFIB regularly surveys our farm members on issues that impact their agribusiness. It is clear that farmers care about the environment. In fact, almost 80% of farmers have taken action in the last several years to lessen their environmental impact, including 85% of those in the field crop sector.

When asked what motivates their business to implement measures to improve environmental quality, 87% of farmers said they were motivated by their own personal views.

CFIB continues to hear from farmers that the federal pricing backstop plan has already had a significant impact on their bottom line. When CFIB surveyed our farm members, 82% of respondents agreed that the federal carbon tax is negatively impacting their business.

When analyzing the data by sector, 94% of farmers in the field crop sector, and 93% in the livestock sector have been most negatively impacted. When asked to estimate how much their business expected to pay in federal carbon taxes in the first year it applied to them, farmers, on average, paid almost $14,000.

It is important to note that these costs were incurred when the federal carbon tax was set at $20 per tonne of CO2. As you know, the federal carbon tax is scheduled to rise to $170 per tonne by 2030. This amounts to an increase of more than 325% from today and a 750% increase from when this data was collected.

One of the recurring themes in the member comments in our surveys is that farmers cannot pass these additional costs on to their customers. In fact, 83% in the field crop sector said they would be able to pass on less than 10% of the federal carbon tax cost to customers. Over 78% said they would have to eat the entire cost of the federal carbon tax.

Given that most farmers are price-takers, the magnitude of these increases in federal carbon taxes will hamstring farmers' ability to compete and invest in their business and in new technology. In addition, the ripple effect throughout the agriculture sector has ratcheted up indirect costs for farmers from the carbon tax applied to farm inputs and transportation services such as railways and trucking.

It is clear that even an incremental annual increase to the price on carbon emissions is worrying to farmers. When the federal carbon tax was set to increase from $30 to $40 per tonne on April 1, almost three-quarters said it would have a significant impact on their agribusiness.

It is fair to say that farmers are deeply concerned about what these costs will escalate to by 2030. This is why it is important to provide carbon tax relief now, and why Bill C-206 is an urgently needed, positive first step in addressing this unfair burden on agriculture.

CFIB believes that a carbon tax on propane and natural gas to dry grain punishes businesses for utilizing a product for which there are no practical alternatives. In the context of the pandemic, we must look for ways to help farmers and ensure the agriculture sector is competitive and performs to its potential to help lead Canada's economic recovery.

Therefore, CFIB urges all members of Parliament to support Bill C-206.

Thank you for the opportunity to appear before your committee today and present our farm members' views on Bill C-206.

[Jasmin Guénette, Vice-President, National Affairs, Canadian Federation of Independent Business]

Good afternoon, Mr. Chair and committee members.

My name is Jasmin Guénette. I'm the vice-president of national affairs at the Canadian Federation of Independent Business, or CFIB. I'm joined by my colleague, Virginia Labbie, a senior policy analyst for agri-food. I'll give my short presentation in French and my colleague will give her presentation in English.

I want you to know that we're very pleased to be here today. You have been emailed a PowerPoint presentation, which will serve as the basis for our comments.

I want to remind you that CFIB is a non-partisan and non-profit organization that advocates on behalf of SMEs to governments. We have 95,000 members across the country who work in all sectors of the economy, and 6,000 of those members work in the agricultural sector.

As you know, the pandemic has been very challenging for small independent businesses. Our most recent survey shows that only 56% of SMEs have fully reopened. The situation is even more worrisome when we consider that only 29% of SMEs have normal revenues for this time of year. This isn't the time to add costs or to increase taxes for businesses that are already struggling financially. Instead, it's the time to find ways to lighten their tax burden.

We're here today to support Bill C-206. My colleague, Virginia Labbie, will provide several pieces of information that substantiate our position.

Ms. Labbie, the floor is yours.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

You're maintaining your position that passing Bill C-206 is a good idea. Are you also saying that the parts of the country not covered by the bill, such as Quebec, should at some point do the same thing and use more incentives up front?

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

I'll stop for a comment. You raise some fair points, but I think when it comes to agricultural emissions, we can be concentrating our efforts in far more efficient ways. Madam Turcotte already illustrated the release that comes from inefficient fertilizer use and the production of fertilizer. There are so many other emissions coming from farms that I think can be tackled. Also, we should give farmers recognition for good agricultural practices, regenerative farming, use of cover crops and no till. There are so many ways we can start giving them credit for the work they do. In my opinion, this is a very small and narrow band.

Professor Charlebois, I want to turn to you because there has often been a comparison between Bill C-206 and the measures that were announced in budget 2021 last week. Looking at the rebates being offered through budget 2021 and at what Bill C-206 is offering, can you, in the last minute and 15 seconds I have, give us your opinion on those two measures and which one you think is the best?

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you so much, Chair.

Mr. Green, maybe I'll start with you. I very much agree with you that carbon pricing is there to send a powerful signal that we need to change our ways and that it creates an incentive to find a less costly and ultimately less polluting way for people to operate in their lives. It has worked for me. I moved to an electric vehicle, and I'm already celebrating the reduced gasoline costs from that purchase each and every month.

I guess the problem I've had is that, in terms of the alternatives, your testimony has been refuted by farmers who actually dry their grain. If we're trying to incentivize farmers into alternatives, I agree that's a very worthy goal, but right now, for farmers who dry tonnes and tonnes of grain every year.... I did reference the biomass system that exists, and they said they're not really aware of that, and they're not sure that it can be scaled up to the level they actually need. It would also require them to take the crop residue off their fields each year, which would be an additional cost, but it would also rob their fields of that important carbon content that is needed to feed next year's crops.

I know that you've had versions of this question from my colleagues, but if there are no viable alternatives at this moment—this is what we're hearing first-hand from farmers—wouldn't Bill C-206 serve a useful purpose in giving them a financial break in the meantime, until these technologies come into existence?