Agriculture Committee on April 29th, 2021

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

Thank you, Mr. Chair, and thank you to the witnesses.

I'd like to begin by making a statement. I am correcting the record. What we're talking about today is not a fossil fuel subsidy for agriculture. We're talking about mitigating a cost. There is a huge difference there. This is not a subsidy.

I'll begin with Mr. Green. I believe you're the one who made that statement.

Let's go to heat pumps. I am a farmer. I am from a grain-producing and vegetable-producing area, but I am not familiar with heat pumps. To my knowledge, they are a long ways away from being a credible possibility.

We've heard much testimony—and you've stated yourself—that farmers are price-takers, so let's talk about the signal that we're talking about here. Who should pay the cost of the signal, in your opinion? Should it be the agricultural community or should it be Canadians as a whole?

[Tom L. Green]

First of all, I'd just like to point out that when I said “fossil fuel subsidy”, I based that on the WTO definition of subsidies: “a subsidy shall be deemed to exist if...there is a financial contribution by a government or any [other] public body within the territory of a Member...where [it] involves a direct transfer of funds”, which includes removing a tax. That's why I called it a fossil fuel subsidy.

Farmers are, indeed, price-takers, but they also take prices on things like natural gas inputs. One of the things we've seen is that, since 2006, the price of natural gas has dropped rather precipitously in Canada, much to the detriment of gas-producing regions in Alberta and British Columbia, for instance. It's one of many inputs and, as my colleague at the Pembina Institute testified, assessments of the costs don't show that it would undermine the viability of farms, especially if appropriate supports are made.

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

Thank you, Mr. Green. My time is limited, and we'll get to the cost per average farm in the next panel.

I'd like to switch again to Mr. Charlebois.

It's good to see you again. You were quoted very recently in the Toronto Star with regard to rising food costs. Obviously, in that article, the carbon tax at the present levels was not one of the major drivers of that, but can you talk about rising food costs in the context of $170 a tonne?

[Dr. Sylvain Charlebois]

That's a good question, Mr. Epp.

As I mentioned in my opening remarks, at $50, there is no reason to be concerned about food affordability in the country. We do have a couple of cases with Quebec and B.C., and we haven't seen, really, any differences in terms of pricing patterns in both provinces over the last decade or so. However, $170, I think, is a game-changer. I think we need to look deep into how that tax could impact food affordability over time. The entire supply chain will be impacted by the carbon tax, not just farming.

Again, I think the entire sector is very favourable to pricing carbon. There are good things coming out of this policy of pricing carbon. For example, we are seeing more nearshoring or onshoring in Canada. Kraft Heinz is investing in Canada. AB InBev is investing in Canada. This is because most multinationals are rethinking their green supply chains. There are quite a lot of positives, but at the same time, I think we need to evaluate exactly how the price of our food basket will be impacted by this carbon tax at $170 by 2030.

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

Thank you.

Can you talk about the efficiency of an exemption of a federal fuel charge administered by the CRA versus a rebate program? I know you began answering this earlier. Just talk about the efficiency across the value chain, please.

[Dr. Sylvain Charlebois]

I'm not sure I understand your question. I'm sorry.

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

As far as costs to a system go in order for our agricultural systems to remain competitive, we've been talking about price signals, but what is more efficient about sending money in and getting some of it back versus an exemption and having other methods, too, that drive innovation to address climate change?

[Dr. Sylvain Charlebois]

I tend to agree with my fellow witnesses, Mr. Green and Ms. Turcotte, on incentivizing the sector to move, to do something. I agree.

However, this back-and-forth exchanging of funds is actually quite.... This bureaucracy will only impact the efficiency of the sector. I think we need to think hard about what we're doing with the funding and how we support the sector. That's why I'm very favourable to the bill because it will allow the sector to really focus on doing one thing, and that's focusing on change and becoming greener over time.

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

Thank you.

I think my time is up, Mr. Chair.

[The Chair, Liberal, Pat Finnigan]

Yes, you're right on time. Thank you, Mr. Epp.

Thank you, Mr. Charlebois.

Now we have Mr. Louis for five minutes.

Go ahead, Mr. Louis.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair.

Thank you to all our panellists. I really appreciate your being here.

I'm going to try to get to as many people as I can. I'll possibly start with Mr. Green.

Farmers want to do their part, and they want to lower their carbon footprints. As a government, we want to work together with them to do that, and that's what these conversations are.

Lowering emissions can be accomplished in many ways. We've touched on some of them and heard from other testimony—more than just in grain drying. You've done research on renewable energy, on clean transportation and on digital and broadband investments, which would help automation and artificial intelligence.

Can you tell us some of those ways that we can, even in the short term with technology that exists, work with farmers to support them and incentivize them to lower their carbon footprints?

[Tom L. Green]

It's a great question.

We're seeing a really rapid acceleration in low-carbon technologies. For instance, if you look at the International Energy Agency in the year 2000, it predicted that we would add 18 gigawatts of solar energy between then and 2020. I think around 2016 we added 18 gigawatts in one year, so they've vastly underestimated how quickly this technology would scale up and how much the prices would come down.

One of the benefits we're seeing with carbon pricing around the world is that it is incentivizing these kinds of innovations that in the long run result in more efficiency. There is a transmission period where it creates a need to adapt and so on, and costs may rise temporarily, but as I was mentioning earlier, with the price of natural gas varying so much, the carbon tax is actually a smaller portion of that and the change that happened between 2006 to the present with falling natural gas rates—

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you. I appreciate that.

I'll move to Ms. Turcotte. You mentioned Triple Green in Manitoba. They use a biodrying air system, which is a nascent technology, but it's scaling up quickly because propane is 82% water and natural gas is 66% water, so that moisture turns into water vapour and that's being put into the grain dryers and the grain. By making the heat source dry, it creates efficiency. Their motto is “solutions that save money”.

This technology is growing and it's moving quickly and scaling, but there's also a role for the private sector. Can you explain a bit about the competitive advantages of companies like this that would drive innovations, not only with our government making investments but the private sector also investing.

[Isabelle Turcotte]

Yes, absolutely. More than anything, companies need policy certainty when [Technical difficulty—Editor] their investment portfolios. That requires a [Technical difficulty—Editor] on the price signal. It requires a clearly communicated [Technical difficulty—Editor] increasing price on carbon.

It bears noting that the private sector or the corporate world has gone through flip-flops on carbon pricing, including Alberta and Ontario most notably. In these provinces we're seeing a private sector that is hesitant and is struggling to get [Technical difficulty—Editor] from headquarters, which are not in Canada because they were uncertain about where Canada was going on carbon pricing.

It is really important that we send a strong message to these companies that Canada is a place to invest, to produce your low-carbon products and to be a leader in innovation.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

I thank you very much. I couldn't get all of it as there was a connectivity issue, but I think the gist of it was made clear and I appreciate it.

With the minute I have remaining—

[The Chair, Liberal, Pat Finnigan]

Just hang on a second, Tim.

Mr. Perron, is there an interpretation issue?

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

The interpretation was interrupted very briefly, Mr. Chair.

I had raised my hand, but I lowered it. The interpreter was able to work, but the Internet connection was quite poor.

[The Chair, Liberal, Pat Finnigan]

Okay.

Is everything working?

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

Yes.

The interpreters are very skilled. I tip my hat to them once again.

[The Chair, Liberal, Pat Finnigan]

Okay. Thank you.

I'm sorry about that, Mr. Louis. Go ahead.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Mr. Chair, what do you suggest? That I give Ms. Turcotte some time to answer that question again? Is that all right?

[The Chair, Liberal, Pat Finnigan]

Yes, for sure. Go ahead.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

If you don't mind, please repeat or sum up what you said, as there was a connectivity issue.

[Isabelle Turcotte]

Yes, sure thing. I'm sorry we have these issues.

I'm thinking a really important message to remember is the important policy certainty for our private sector to invest in innovation and in emissions-reduction technologies, and to make them available not only to Canadian companies, through which they will reduce their exposure to the carbon price, but to meet our competitiveness and climate targets and our economic goals.

I was mentioning in Alberta and in Ontario, unfortunately over the last couple of years, there was a lot of turmoil with flip-flopping on carbon-pricing policies, and we're seeing the impact of that. Companies are struggling to convince headquarters, which are not in Canada, to make these investments here.

Moving forward, now that we have this announcement on the price schedule increase up until 2030, let's continue to send that strong policy certainty to companies to say Canada's a good place to invest in low-carbon technologies. There's a strong market here and you can access international markets from here too.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you very much.

Mr. Chair, I don't know what time I have left with that stop—