Agriculture Committee on Oct. 17th, 2022

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

Thank you.

When Bill C-234 was introduced, you said that farmers continue to “bear the brunt” of the carbon tax, both paying the tax for on-farm fuel used for drying grains and paying the increased costs added to necessary inputs and services as vendors try to recoup carbon costs on their end.

Can you expand on this and expand on what you meant by this?

[Brendan Byrne]

In general, as farmers, we are price-takers. We have nowhere to pass that on to somebody else.

If a carbon tax is applied to, say, trucking or different things like this that we use on the farm, those costs get passed to us. They stop with us because we have nowhere to recoup that carbon piece. We sell to the Chicago Board of Trade numbers, which are the numbers for our industry. We have no way to pass that on to somebody else.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

Thank you.

That concludes my questions, Mr. Chair.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Ms. Valdez.

We have a couple of minutes left, so I want to go to Mr. Perron and Mr. Johns for two and a half minutes each.

Go ahead, Mr. Perron.

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

Thank you, Mr. Chair. I hope everything is working for Mr. Orb now.

Mr. Orb, I'll repeat the question I wanted to ask you earlier.

In the previous version of this bill, the exemption didn't necessarily include heating buildings. Is it as essential to have an exemption for building heating as it is for grain drying?

[Raymond Orb]

Thank you very much for the question.

I have to apologize that my translation system wasn't working earlier on.

For our farmers in Saskatchewan, the grain-drying aspect is much more important than heating livestock buildings. We do have some people who have buildings that house livestock—in particular, dairy buildings and things like that—so we think it's important for them to have a rebate or an exemption, as the case may be.

In other parts of the country, like perhaps British Columbia, Ontario, Quebec and provinces like that, more livestock are housed that way in buildings. For us on the Prairies, in Saskatchewan in particular, the grain drying is the highest cost for our producers.

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

For grain drying, I think it's been fairly well established that the alternatives aren't very effective at the moment. What about building heating? Are there more options? Is there any research and development in that area?

[Raymond Orb]

Yes, I think we've seen more options going on right now, like geothermal and things like that. We have buildings heated by solar and some are using wind-power electricity as well to serve those buildings.

For the grain drying, our producers—our farmers—put a lot of grain through. These are quite big structures and dry a lot of grain. What a farmer will harvest during the daytime will quite often be redried by his facility during the night, so in the morning these structures are ready to be filled again. A huge volume goes through. There's nothing out there for our farmers that is affordable. To convert is simply.... If that was available, I'm sure our farmers would be looking at those kinds of options.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Orb.

Thank you, Mr. Perron.

Mr. Johns, you have two and a half minutes, please.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I'm going to stay on the same thread.

Maybe I'll ask you this, Mr. Byrne. Are you aware of any scalable or viable alternatives to natural gas and propane that exist for heating and cooling barns? Maybe the question is around.... Are electric heat pumps a viable alternative to fossil fuels for heating and cooling in barns?

[Brendan Byrne]

In terms of barns, I really don't have experience with that as I do not have any animals on my farm.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Leslie, do you want to dive in and try that?

[Branden Leslie]

Not in the heating related to barns....

[Gord Johns, NDP, Courtenay—Alberni, BC]

Okay.

I understand that one change to Bill C-234 that was not in the previous bill from the last Parliament, Bill C-206, is that the new one allows for the heating and cooling of barns or structures “including those used for raising or housing livestock”.

The language seems overly broad. What would you say to amending the bill to ensure it's clear that the heating and cooling exemption is only for buildings used for raising or housing livestock?

[Branden Leslie]

With Bill C-206, in the previous Parliament, the criticism of the bill then was that it was overly broad. I believe the intention of bringing in language such as the example of heating or cooling of livestock barns is meant to actually narrow that a little so that it could be a little more specific.

I would be hesitant, unless we're very careful to make sure that we're not accidentally going back to being what was feared to be too broad in the last version of this bill.

The way it's currently written, I would view it as covering off enough from an example standpoint. I think it's important to note that.... The reason it's important for this to be there is that this is not about the heating or cooling of a house. This is not about a home on a farmyard, which generally would be split from the natural gas connection. That is not covered by this. We don't want to remove the pricing signal from that aspect of the operation. This is meant to be about the farm itself.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thanks.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. Johns.

Thank you to our witnesses. I appreciate your time and effort and patience here with us today.

We're now going to adjourn very quickly, colleagues, for five minutes just to switch over the witnesses at the table and on video conference. Please don't go very far. We want to try to stick to the time as well as we can.

[The Vice-Chair, Conservative, John Barlow]

Colleagues, thanks for making your way back as quickly as possible as we're a little behind today due to the votes.

I want to welcome our new panel of witnesses here for the second hour. Welcome to the Standing Committee on Agriculture and Agri-Food.

I know my colleagues at the table have heard this spiel, but for the benefit of our witnesses we'll go over it.

Proceedings today are taking place in a hybrid format. You can view the proceedings on the House of Commons website. So our witnesses know, no screenshots are allowed during the meeting. For the witnesses on video, you can speak in the language of your choice. Interpretation will be on the go. Speak slowly and clearly to ensure the easiest job for our translation team. If translation is lost, I'll try to grab your attention if I can and we'll get that back up and proceeding before we move on with your time.

Before speaking, please wait until I recognize you by name. If you are on video conference, please click on the microphone icon to unmute yourself. Those in the room, your microphone will be turned on automatically by our verification officer. I remind you that all the comments by members and witnesses should be addressed through the chair.

I would like to welcome our committee members back to the committee table and introduce you to the two witnesses we have with us this afternoon.

From the Agri-Food Innovation Council, we have Serge Buy, the chief executive officer. Mr. Buy, thank you very much for being here. From the David Suzuki Foundation, via video conference, we have Mr. Tom L. Green, who is a senior climate policy adviser.

Mr. Green and Mr. Buy, you will each have five minutes for your opening remarks. I will give you a bit of a wave with one minute left, just to give you a bit of a warning. Then we will move on to questions from our committee members.

Mr. Buy, I'll start with you for your opening comments for five minutes, please.

[Serge Buy, Chief Executive Officer, Agri-Food Innovation Council]

Thank you very much, Mr. Chair. It's nice to be back here in person after two and a half years of virtual meetings and Internet connections in rural regions.

I would like to thank the committee for inviting the Agri-Food Innovation Council to speak on this issue. We spoke earlier on previous legislation that was very similar to this one.

First, I can assure the members of this committee that no one in Canada is waking up in the morning with the idea to use more carbon and pollute our atmosphere—no one, and certainly no one in our farming communities. However, the reality is that, while major improvements have been made to limit carbon emissions by the farming community in Canada, there is still reliance on fossil fuels despite the fact that there has been a huge amount of progress made.

I heard a question from one of the MPs earlier in terms of whether Canada is responsible for 1.6% share of the pollution in the world. Farming is estimated at anywhere from 8% to 10%. That's correct, but it doesn't take into account the huge amount of work that farmers do to offset pollution in the country, and that's important to note as well.

Let me be blunt, Mr. Chair. Two options exist to deal with pollution and the use of fossil fuels. First, we can penalize the faming communities and hope that, by hitting it over their head repeatedly, they magically abandon fossil fuels or polluting sources of energy. Second, we can take measures to support the farming community as it transitions to alternative fuels and less polluting sources of energy.

Imposing a carbon tax on farmers who don't have alternatives feels like we're hitting them over the head, and that's not going over well in the farming communities in this country. Whether it's grain farmers or livestock farmers—you've heard a few questions about livestock producers—the fact is that the availability of alternative fuels and sources of energy in some regions of the country is scarce, if they even exist. To the farmers who are tied to using sources of energy tied to fossil fuels, the carbon tax feels like a punishment. They were told to produce food and play a crucial part in our food security agenda, but to do so, they will be penalized. That doesn't feel like a fair policy.

The document we shared with the clerk, which hasn't been translated, proposes some solutions that will lead us toward decreased reliance on fossil fuels and better adoption of new technologies, support increased research for proof of concept on Canadian farms, fund increased scalability and provide incentive for adoption.

I heard Ms. Valdez talk about examples in various communities. There are examples throughout the country of fantastic technologies. The scalability is simply not there. It's not something you can suddenly increase to all of Canada and all of our producers. The costs are simply prohibitive in some scenes. Yes, some large farms will be able to take advantage of some of those new technologies, but then we're going to write off the family farms, which I'm not sure is something this committee wants to do.

We therefore would advise the government to reverse the trend that has seen the disappearance of extension services, because they are key to the adoption of new technologies and provide support to farmers on that front.

I would like to commend the government on developing some programs that are going in the right direction. Indeed, the government is supporting research for new technologies and is providing limited incentives for adoption, but not enough. If we are looking at an exemption here on this carbon tax, we feel it's important to go for this.

The taxing of fossil fuels is simply penalizing farmers while they have already done so much to decrease their carbon footprint. Precision agriculture, conservation tillage, improving energy efficiency in buildings, using feed that was produced in sustainable ways, conservation cropping techniques, effective manure recycling technologies to reduce methane and nitrous oxide emissions, and grassland management are things that have been adopted on a voluntary basis, not because people were taxed to do so.

Those are only a few of the processes adopted by farmers to decrease their carbon footprint and to support their objectives towards lower GHG emissions in Canada.

To the members of this committee, there is an increasing divide in our country. Rural regions feel ostracized by urban ones. The adoption of this legislation would enable farmers to see that this Parliament recognizes their reality, values their effort and supports them.

Ladies and gentlemen, society is sufficiently divided, and we don't need to further increase the gap, especially between urban and rural regions. If you want to tax the polluting Hummer-driving urban warriors until they are forced to ride a bicycle, please fill your boots, but do recognize that farmers drive trucks because they have to. That is simply not an option. They have to heat their grains to make sure their grains are dry and can go to market. There is no choice. They heat their barns because we are in Canada, and it's cold. There is no choice, and for them to be taxed on those is of major concern for them.

My hope is that we're able to rise above partisan politics, increasingly incentivize the adoption of less polluting technologies, and avoid penalizing farmers. Let's make the decrease of reliance on fossil fuels a positive experience and create bridges between communities. Let's not divide them further.

Thank you.

[The Vice-Chair, Conservative, John Barlow]

Thank you. I gave you a little extra time there, but I will do the same for Mr. Green, from the David Suzuki Foundation, if he is a little over five minutes.

Mr. Green, please start your opening remarks.

[Tom L. Green, Senior Climate Policy Advisor, David Suzuki Foundation]

Thank you for the opportunity to appear before you again. It's always good to be here at this committee.

Bill C-234, like Bill C-206 before it, proposes amendments to the Greenhouse Gas Pollution Pricing Act.

First, I want to begin with reiterating some reasons why Canada's pollution pricing system is so important. I also note that since I last spoke, Bill C-8 recycles revenue from the four backstop provinces to farmers.

I'm speaking to you today from Vancouver, where we are constantly reminded of how the combustion of fossil fuels is accelerating climate change—from wildfire smoke, to a heat dome that killed over 500 people, to atmospheric rivers that destroyed critical infrastructure. Obviously, farmers are being affected by all of these trends.

We are concerned and disappointed that some politicians are spreading misinformation about pollution pricing and misrepresenting the impacts of this key climate policy, even taking advantage of price increases in world oil and gas markets caused by Russia's unjust war of aggression on Ukraine to advance misleading arguments. We have even heard statements in the House recently suggesting that the carbon price is ineffective.

When it comes to affordability concerns, let's remember that 90% of the revenue collected through the federal fuel charge is returned to households in provinces where the backstop applies. Most households actually were served more from the climate action incentive than they paid. Second, provinces have the option of designing their own pollution pricing schemes and deciding how to recycle revenue to households and businesses. They can also address competitiveness concerns.

The commissioner of the environment and sustainable development audited Canada's approach to carbon pricing, and a report was tabled last spring. It stated that there was broad consensus among expert international bodies such as the World Bank, the OECD and the IMF that carbon pricing is critical to reducing greenhouse gas emissions. They also stated that carbon pricing is broadly recognized as one of the most efficient policy approaches to reducing greenhouse gas emissions.

We note with concern that some politicians are saying that pricing pollution is not working, despite the fact that it is one of the most effective policies to reduce emissions. In B.C., we have had a price on carbon for a longer time period, and the benefits are already accruing, with a 19% reduction in transportation sector emissions.

We agree that it's important to get pollution pricing right, and there's room for improvement in both implementation and complementary measures to address disproportionate burden where these occur, but that's not what Bill C-234 proposes. Instead, it would set Canada on a slippery slope of sector-by-sector and interest-by-interest exemptions that risk fundamentally undermining the GGPPA as an economy-wide measure. Each sector can be advancing similar arguments as those being made before the committee today. If all of those arguments were heeded, pollution pricing would be eviscerated.

Furthermore, Bill C-8 ensured that proceeds from the carbon levy on fuels used on farms in backstop provinces are now returned to farmers in a manner that doesn't undermine the incentive to abate pollution. If the current bill passes, farmers will get a duplicate of pollution pricing relief.

One argument being advanced in favour of Bill C-234 is that there are no available fossil-free technologies for grain drying or heating agricultural buildings, so pollution should not be priced until such technologies are available. However, this causes a chicken-and-egg problem, because there is less incentive for firms to innovate and offer lower- or zero-carbon solutions if there is no predictable financial incentive to reduce emissions. Furthermore, such technologies are already appearing on the market, such as heat pump dryers or ways of heating buildings.

To help the agricultural sector, Agriculture and Agri-Food Canada launched the agricultural clean technology program in 2021.

I had the opportunity to testify before you a year ago, and I refer you to my remarks explaining why the exemption is fraught and a slippery slope to undermining carbon pricing. I also reiterate that, like Bill C-206, Bill C-234 would entail a new fossil fuel subsidy at a time when Canada has committed to reduce these emissions.

The David Suzuki Foundation urges the committee to reject Bill C-234 and turn their attention to better ways in which the federal and provincial governments can support farmers in the transition to net zero. There are other solutions that merit your attention. For instance, we have recently published a major study modelling on expanding clean electricity supply across Canada and the pivotal importance of electrification so as to swap out fossil fuels across the economy. We suggest the committee could, for instance, investigate how farms can have sufficient access to a supply of affordable, zero-emissions electricity.

Thank you very much. I welcome your questions.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much to our witnesses for their opening remarks.

We will now turn to Monsieur Lehoux.

You have six minutes.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair.

I'd like to thank the witnesses for being with us today.

My question is for Mr. Buy.

Mr. Buy, I really liked the point you made before you concluded on the dynamic between rural and urban areas. That is a very important element that should not be overlooked in the whole issue of taxation.

Yes, the exemption is important for drying grain, but it's also important for heating buildings.

Do you think there are any technologies that are realistically viable for both small and very large companies?

[Serge Buy]

No, not right now.

The witness Mr. Green was talking about heat pumps, but heat pumps aren't going to be used to heat the grain in the silos or anything like that.

Different technologies are starting to be introduced, the technology is improving, but it's not going to be applied across the country. Canada is often compared to the Netherlands. I often remind people that the Netherlands is a very small country with a high population density. In Canada, you sometimes have to travel several kilometres to get from one farm to another. In short, the solutions to offer the market aren't there.

I understand Mr. Green when he says that if nothing is done, nothing will ever change. However, more research should be done and financial assistance should be given to farmers to adopt new technologies, instead of penalizing them.

[Richard Lehoux, Conservative, Beauce, QC]

Do you have any incentives to suggest?

It seems clear to me that Bill C‑234 must be passed if the agricultural community is to be given the transition period necessary to adapt to reality and new technologies.

What might those incentives be? It must be said that programs have already been put in place but quickly ran out of funds. How could we better support these incentives?