Thank you, Mr. Chairman.
I'm a professor and grain policy chair at the University of Saskatchewan. I also provide labour and marketing advice for my son, Eric, who operates a 3,000-acre family grain farm in Indian Head, Saskatchewan. By the way, we rely on grain aeration and do not own a grain dryer.
In the absence of explicit policies that recognize the role that crop production plays in the removal of atmospheric carbon, I'm in favour of the tax relief offered in Bill C-234. I would go further to advocate for public investments in research and extension, and direct producer support for investments in less greenhouse gas-intensive grain drying and heating options. As a well-trained economist, I understand that pollution pricing is an efficient way to incorporate external pollution cost into private decision-making. As a grain farmer and an agricultural science graduate, I also recognize that every tonne of harvested grain contains more than a tonne and a half of CO2 that was removed from the atmosphere.
Ideally, this sequestration of carbon should be subsidized at the external cost of carbon. Similarly, when grain is consumed or burned, the carbon emissions should be taxed at this same rate. Unfortunately, neither the sequestration of carbon in grains nor the emissions from burning grain are included in the global greenhouse gas accounting system.
For example, the CO2 that you're breathing out this afternoon is not included as part of the Canadian greenhouse emissions, nor are the CO2 emissions that come from livestock or from trucks burning biodiesel. CO2 emissions coming from burning or digesting grain and other biomass are deemed to be emissions-free. They're assumed to be emissions-free only because it is also assumed that some farmer has recently removed this carbon from the atmosphere. While treating biofuel emissions as carbon-free worked well for the biofuel industry and consumers, the farmer who has actually removed the carbon from the atmosphere receives no explicit credit for this sequestration.
I first realized this flaw in greenhouse gas accounting about three years ago, when looking at about 4,000 tonnes of harvested grain, all rich in carbon and all of which had come from the atmosphere. Since then I've done a lot of reading and discovered that Searchinger and others published an article in 2009 in Science—perhaps the most prestigious journal in the world—entitled “Fixing a Critical Climate Accounting Error”. Despite over 600 citations to this important article, the flaw in the accounting system has not been addressed.
By not measuring grain-related emissions, the incomplete accounting creates strong incentives to use grain to produce biofuels. However, because the grain sequestration is not measured, there are no corresponding incentives to produce the additional grain required for the biofuel. Searchinger and many others, including me, argue that the effect of this is higher grain prices, increased food insecurity, and the carbon-intensive clearing of rainforest and peatlands for agricultural production.
Given it is unlikely Canada can change this flawed international accounting, Canadian policy-makers need to keep a fundamental policy trade-off in mind. If the Canadian taxation of greenhouse gases, or other policies, result in fewer grain exports, these reduced exports will increase international grain prices and will have to be accommodated in the rest of the world through either reduced food consumption or increased greenhouse gas emissions elsewhere. By removing the taxation of grain for grain drying, I believe the amendments contained in Bill C-234 may approximately align with this broader global perspective.
Finally, Mr. Chair, I recognize the enormous power of research and innovation to solve these problems. Finding ways to efficiently reduce greenhouse gas emissions is an important public-good problem that requires public investment. Research investment is needed to continue to develop more sustainable grain drying and heating options. Programs that help producers to benchmark their emissions relative to similar farms may help them identify opportunities for reduction. Finally, using subsidies to increase investment in more efficient systems can reduce emissions without jeopardizing our grain production, which is so much needed in the rest of the world.
That, Mr. Chairman, concludes my remarks.