Skip to content

Greenhouse Gas Pollution Pricing Act

Bill to Amend--Third Reading--Debate

November 9, 2023

The Hon. the Speaker [ + ]

Stand. Senator Wells is not here.

Hon. Donald Neil Plett (Leader of the Opposition) [ + ]

No, there are a number of other speakers on here —

The Hon. the Speaker [ + ]

Senator Wells is not —

Senator Plett [ + ]

Well, first of all, you should not make comments about whether people are here or not, but there are other speakers on the list.

The Hon. the Speaker [ + ]

Senator Wells, would you like to move third reading?

Hon. David M. Wells [ + ]

Moved third reading of Bill C-234, An Act to amend the Greenhouse Gas Pollution Pricing Act.

He said: Honourable senators, today I rise to speak to Bill C-234, An Act to amend the Greenhouse Gas Pollution Pricing Act. I would like to begin again by thanking the Standing Senate Committee on Agriculture and Forestry for their study of this bill; the chair of that committee, the Honourable Senator Rob Black; and the vice-chair, the Honourable Senator Paula Simons, who also chaired one of the meetings. I would like to thank all committee members, both regular members and those who came in for the rigorous discussion.

There has been some commentary on the presence of the non‑regular members leading discussions on certain aspects of the bill’s study, but I want to note that no senator plays a subordinate role on a committee. Aside from voting privilege, it is the right of any senator to join a committee for the study of a bill, and they have every equal right to do so, and I welcome that, especially when their views are not in accord with mine.

As we have heard in the debate at the report stage, the committee held 10 hours of meetings, heard from 24 witnesses and received 12 briefs in addition to further debate all senators listened to at report stage on Tuesday.

Colleagues, as you know, this bill amends the Greenhouse Gas Pollution Pricing Act, also known as the carbon tax, to provide an exemption for propane and natural gas for agricultural purposes. It is a commonsense bill which I believe is worthy of the support of this chamber for a number of reasons. I will outline these for you.

First, the purpose of the carbon tax is to create an incentive for consumers to reduce their use of carbon-intensive fuels by adopting more efficient and lower-carbon options. This is a worthwhile objective; however, farmers have no viable fuel alternatives to which they can easily switch; it is either unavailable or cost-prohibitive. Where it has been neither of those, farmers, ranchers and growers have switched because it makes business sense to do so.

In my speech at report stage, you will recall that I spoke about the added installation of sun shields, increased ventilation and many other initiatives that can make their operations more efficient when it comes to their fuel costs. This means that retaining the carbon tax for propane and natural gas does not serve the purpose. This is even more clear when we note that diesel and gasoline — common fuels for heaters, coolers and grain dryers — are exempt from the carbon tax. This point was raised repeatedly at committee. The Ontario Federation of Agriculture put it this way in their brief:

. . . the fuel charge in Part 1 of the Greenhouse Gas Pollution Pricing Act is an ineffective mechanism to drive greenhouse gas emission reductions in the agricultural sector in a short to medium term outlook. With no viable alternatives to propane and natural gas for grain drying and barn heating, and high price inelasticity for energy use, the charge collected on these fuels simply takes money out of farmers’ pockets, who are already working with very tight margins.

The carbon tax is supposed to send a price signal to incentivize a transition to lower carbon-emitting fuels. However, because of the absence of such alternatives, this price signal does not work when it comes to propane and natural gas used for agricultural purposes. An exemption — and that is the focus of this bill — is warranted.

Farmers can already apply for an exemption certificate which exempts them from paying any carbon tax on gasoline and diesel fuel. Bill S-234 merely seeks to extend that existing exemption to propane and natural gas. This doesn’t undermine the effectiveness of the carbon tax but is a logical extension of the existing policy, especially because that propane and natural gas are considered transition fuels and thus emit less carbon in the atmosphere than diesel and gasoline.

In addition to the existing exemption on gasoline and diesel fuel, the government also introduced a rebate which acknowledged the need to provide relief from the carbon tax on propane and natural gas used for agricultural purposes.

When the rebate was announced in the Economic and Fiscal Update 2021, the government stated:

Recognizing that many farmers use natural gas and propane in their operations, and consistent with the Budget 2021 commitment, the government proposes to return fuel charge proceeds directly to farming businesses in backstop jurisdictions via a refundable tax credit, starting for the 2021-22 fuel charge year.

The public policy objective was clear: to return fuel charge proceeds derived from agricultural use of natural gas and propane directly to farming businesses. Regrettably, however, the rebate fails to achieve this objective because it is calculated according to farm size and, to quote the Department of Finance:

There is no link between propane or natural gas actual usage on a farm and the amount of credit received.

Colleagues, this means that the rebate is not actually a rebate, because it is not connected to actual carbon tax costs. Instead, it is an ad hoc refundable tax credit calculated at $1.73 per $1,000 of eligible farming expenses for all farms. Eligible farming expenses are those amounts deducted in calculating income from farming for income tax purposes, excluding any deductions arising from mandatory and optional inventory adjustments and transactions with non-arm’s length parties.

To be clear, this means that the non-rebate rebate has no connection to actual expenses incurred by farmers from the application of the carbon tax on propane and natural gas. It is not linked.

Colleagues, there has been some discussion about double‑dipping on the rebate and the exemption, and I would like to address that here. You will recall Bill C-8, sponsored in the Senate by the Honourable Clement Gignac, which addressed that rebate. Here is what we heard: Jenna Robbins, Senior Director, Strategic Planning and Policy from the Department of Finance, said the Minister of Finance sets the payment rate. If Bill C-234 were to pass, the payment rate would be set to zero. This was also mentioned at the bottom of the older Library of Parliament report that was circulated to some colleagues earlier this week.

Another measure the government could take to ensure there would be no double-dipping, in addition to the one outlined above, is a policy directive to the CRA to stop processing payments past the date on which C-234 receives Royal Assent. This was mentioned in the What We Heard Report from the Agriculture Carbon Alliance. We can expand on that: The formula in Bill C-8 has the ability to adjust the qualifying rebate days within a taxation year. Therefore, the CRA has the ability to process rebates up until the date on which C-234 becomes law. After that point, the Finance Minister can set the payment rate to zero. Eventually, the Income Tax Act would be amended to remove the vestigial provision brought in under C-8 using a legislative vehicle like a Budget Implementation Act.

Colleagues, the government’s objective was correct; many farmers use natural gas and propane in their operations, and the fuel charge proceeds from those fuels should be returned directly to them. Regrettably, the rebate does not accomplish this, which is why Bill C-234 is warranted and necessary. It will achieve the stated objective.

Colleagues, we should also support this bill because retaining the carbon tax on propane and natural gas not only fails to reduce carbon emissions, but also inhibits farmers’ efforts to transition to lower-carbon energy options. The reason for this is quite simple: It takes money out of the pockets of farmers, which cannot be recaptured by passing on the cost immediately or changing to a low-carbon fuel source. This means that rather than furthering the public policy purpose of the carbon tax, it works against it.

You’ll recall that I noted in my report stage speech that one medium-sized poultry operation would be paying $250,000 per year once the carbon price reaches $170 per tonne. Any payback analysis that included a yearly contribution like that would make a far more efficient capital investment decision that would actually go toward reducing emissions from barn heating and cooling and grain drying.

The Parliamentary Budget Officer, or PBO, reported that the carbon tax on natural gas and propane will cost farmers $978 million by 2030. This will extract almost $1 billion from the farmers’ bottom line, which significantly impacts their ability to invest in new technologies. By passing Bill C-234, we can help ensure that farmers retain this capital in their operations, giving them greater opportunity and resources to continue reinvesting in more sustainable farming practices.

Implementing Bill C-234 would be good for farmers, ranchers and growers and better for the environment because it acknowledges that propane and natural gas are lower-emitting fuels and does not disincentivize operators from using them.

Colleagues, while federal programs such as the Agricultural Clean Technology Program and tax rebate programs are aimed at providing relief to farmers from the fuel surcharges for natural gas and propane, these programs have proven difficult to access and are oversubscribed. The programs are welcomed and needed, but they reach only a small percentage of farmers.

Further, these programs only cover a portion of the actual costs expended by farmers in order to upgrade their fuel source. This means that farmers must be in a position where they need to replace their grain dryers before the program becomes economical for them. The Senate Standing Committee on Agriculture and Forestry learned that a grain dryer will last for decades and is a significant capital purchase. Upgrading them just because the government will cover a portion of the cost does not mean such a move is automatically economical. Even if the government’s budget for these programs were unlimited, farmer uptake would not be.

The final reason that I would like to give you today for supporting Bill C-234 is because the carbon tax on natural gas and propane places Canadian farmers at a disadvantage in comparison to international competitors who are not subject to similar fuel charges. That means our businesses are automatically less cost-efficient than their competitors, and this additional cost is not only more expensive for farmers but also Canadian consumers.

Nicholas Rivers, an associate professor at the University of Ottawa, told the committee:

There are some exemptions to the carbon price for fuels used on farms, but these exemptions currently do not apply to fuel used for grain drying or for heating buildings. This means that grain farmers face the full carbon price on fuel used for grain drying, and do not receive output-based rebates. However, like cement and steel, grains are an internationally traded commodity, and there are legitimate concerns that the carbon price puts Canadian grain farmers at a disadvantage relative to their international peers.

Colleagues, farmers are price takers, not price makers. Thus, in order to stay competitive, they are forced to absorb the cost of the carbon tax into their operations and charge more in the following years if it is in their power to do so, and often it is not.

Here is how the government put it in their backgrounder on the Greenhouse Gas Pollution Pricing Act, or GGPPA:

The purpose of the GGPPA is to reduce greenhouse gas emissions by ensuring that carbon pollution pricing applies broadly throughout Canada.

At the same time, the Government recognizes that particular groups or sectors have a need for targeted relief from the fuel charge – in particular because of the small number of alternative options they may have in the face of carbon pollution pricing.

Colleagues, exemptions are not a bug or a “carve-out.” I recall sparring with our colleague Senator Woo over this word at second reading back in June. The government’s backgrounder specifically stated that exemptions are a feature of a carbon tax system. They are necessary to ensure that the policy is targeted and effective and does not create undesirable results. Exemptions already exist for farmers and fish harvesters, along with additional targeted relief for residents of rural and small communities, users of aviation fuels in the territories, greenhouse operators, power plants that generate electricity for remote communities, Indigenous Peoples and — as we heard recently — those who heat their homes with oil.

Bill C-234 is not breaking new ground. It is one small but necessary adjustment to the existing suite of fair exemptions and, in this case, will have significant impact on the ability of farmers to compete on a level playing field with international competitors and continue to adopt more efficient technologies. Canada’s farmers, ranchers and growers have spoken with one voice on this bill, and we’ve all heard it loud and clear.

Finally, colleagues — and perhaps on a more personal note — I signed up to sponsor this bill not because I come from a farming background or even a strong farming region. I’m from Newfoundland, and there is probably a good reason the Agriculture Committee didn’t go to a place called “The Rock” for a soil study. I wanted to be the sponsor because it seemed like advocating for fairness was the right thing to do.

The debate on this bill has been vigorous, contentious, affects significant public policy and has forced me to do my homework. It has included not just honourable colleagues but sparked an important debate among farmers, ranchers, growers, public policy-makers and consumers. It is an excellent example of what the Senate does best, and it has been an honour to be a small part of it with you. Thank you.

Hon. Denise Batters [ + ]

Will Senator Wells take a couple of questions?

Senator Wells [ + ]

I will, Senator Batters.

Senator Batters [ + ]

Thank you. I appreciate that.

Senator Wells, thank you very much for your detailed speech on Bill C-234, which is so crucial to farmers not only in my home province of Saskatchewan but across the country.

You mentioned in your speech that grain dryers are a significant capital expense, and just having a tiny bit of experience with this — being that many years ago and for about 30-some years my dad sold farm equipment, including grain dryers, I know how significant this expense is. I wanted to give some of our colleagues a chance to know about that as well.

Isn’t it true that a new grain dryer, which is the most efficient type that can be purchased right now, is probably an expense costing between $100,000 to $150,000 each for a farm? I’m not talking about a commercial grain dryer, just a regular farm one. It may even be more now as the costs have gone up considerably.

Senator Wells [ + ]

Senator Batters, thank you for your question. I will be frank — I don’t know the price of a grain dryer. But I do know that after debate finished on Tuesday, I went to the Canola Growers Association reception and I spoke with a family farmer who has a canola farm about an hour north of Ottawa. She told me that if Bill C-234 passes — and it is not a big farm — they will be able to buy a grain dryer instead of having to send grain to North Gower, just south of Ottawa, and their payback period would be 12 years with the savings that they would realize from not having to pay the carbon tax.

I don’t know the price of a dryer, but I do know that for this small canola farmer, who wishes to dry their own grain on their own farm because they have more control — and, of course, there would be fewer transport costs sending it out — that a 12‑year payback is reasonable on a piece of industrial equipment. Further, with that additional money in their pockets, going to the bank and seeking credit would be a lot easier than if it were otherwise.

Senator Batters [ + ]

With respect to the natural gas that’s used to heat the barns and that type of thing, Senator Wells, can you give us some indication as to the costs for that? I understand that you’ve recently received some correspondence from a chicken farmer in Alberta who talked about the massive costs. I think they relayed that, last year, the heating cost for their barn was $120,000, and that it was $180,000 this year. When the carbon tax reaches $170 per tonne, it will be $480,000 annually.

Are those the types of costs that we are trying to help farmers with so that food can eventually cost less for us?

Senator Wells [ + ]

Thank you for your question. Now, I will also tell you I don’t know a lot about chicken farming, but I did visit a poultry farm in southern Alberta. I asked for a tour. They wouldn’t give me a tour because of biosecurity and that sort of thing, which I understand. But I spent a lot of time asking about their operation. I hope to get to your question.

The time it takes from the hatching of an egg to the selling of a chicken is eight weeks. This is a constant. They have eight barns on two sites. I think they actually use propane because their community is not furnished with natural gas. They have limited choices already, so they use propane. They gave me their numbers based on the price of carbon, and at $170 per tonne, it will be close to half a million dollars per year. That was a modest-sized operation. It wasn’t big.

I do know that the price of natural gas is decreasing. Senator Dalphond pointed that out at committee, and he is correct. But that’s not a constant. We don’t know what the price of natural gas will be next year. Or propane. We live in a volatile, geopolitical world, and hope is not a plan when you are trying to make money from a business.

Other than that, it is costly. I know this particular farmer was doing all they could — again, it was a family farm. They had the best insulation, and heat shields on the sunny side of the barn to deflect the heat so it wouldn’t have a greater effect on their barn. They used ventilation. Of course, in the prairie winter, they have to heat the place.

Again, I think I mentioned this in an earlier speech, but there is a very narrow range in which they have to keep these chickens. Three or four degrees above, and they last minutes. Anything below, and he said they last a little bit longer, but they will still die. That’s what I know about the price and the cost that it takes these farmers with respect to the fuel they need for heating and cooling the barns.

Hon. Julie Miville-Dechêne [ + ]

Senator Wells, would you take a question?

Senator Wells [ + ]


Senator Miville-Dechêne [ + ]

Like you, I tried to do my homework on this bill, because I hate to see inequities between the regions.

The past few days have been difficult. I became particularly interested in the refundable tax credit that the government implemented in 2021 after noticing how unfair the situation was.

Does this refundable tax credit offset a certain amount of the carbon tax? If we do the math, we see that, in Alberta, the average amount a farm spends on heating and on the carbon tax is 0.5% of all its expenditures. As for the carbon tax, the refundable tax credit offsets 0.17% of those costs. That means that, on average, farmers get a cheque that offsets about a third of their heating and carbon tax expenses.

Given that the carbon tax costs a lot less than heating costs, farmers are receiving a rather substantial amount of compensation. It is true that we are talking about an average and that the cheque is an average amount for everyone.

However, in a way, doesn’t this reward those who use less energy, while penalizing those who use more natural gas and diesel?

That is my somewhat complicated question.

Senator Wells [ + ]

Now I regret saying yes to answering your question.

I will take the percentages you gave at face value. With the refundable tax credit, or the rebate, it is not targeted specifically even at farms that use propane and natural gas. It is targeted at all farms for all eligible expenses, which, again, those eligible expenses don’t have to include propane or natural gas.

The other thing I learned is that refundable tax credit is altogether about 7% to 10%. It’s a very low percentage of what the full expenses would be on natural gas and propane.

I don’t know if this fully answers your question, but while it is applied over a broader number of farms, it is not targeted at those specifically who use the fuels we are talking about, natural gas and propane.

Senator Miville-Dechêne [ + ]

Since I am not an accountant and you may not be one either, we will have to agree to disagree. I think that different numbers are making the rounds on refundable tax credit repayments and on what all that is really creating. Thank you.

The Hon. the Speaker [ + ]

Was that a question?

Senator Wells [ + ]

I agree with you. The fact that this legislation is very clean in giving the exemption for exactly that purpose — the purpose of not paying the pollution pricing amount specifically on natural gas and propane — causes the circumstances of not having to worry about applying credits elsewhere on other eligible farm costs that are not fuel.

Hon. Pierre J. Dalphond [ + ]

Would Senator Wells take another question?

Senator Wells [ + ]

Of course, Senator Dalphond.

Senator Dalphond [ + ]

Thank you, senator. Thank you for your speech. There is a lot that has been said, and I am glad that you agreed with some of the things I said speaking of Budget 2023.

Do you know how much it costs for somebody who is raising chickens or turkeys in Ontario using natural gas? How much does the carbon tax cost this year per cubic metre on the price of gas?

Senator Wells [ + ]

I do not know that exact amount, no.

Senator Dalphond [ + ]

I spoke with farmers, and I can give you the information. I have the bills. The tax on carbon this year is two cents per cubic metre. That is the increase. Last year it was two cents. The year before it was two cents per cubic metre. Maybe, Senator Wells, you can tell us the price of natural gas in Ontario?

Senator Wells [ + ]

Thank you, Senator Dalphond, for your question. I do not know the price of natural gas in Ontario. I only know the amount of actual dollars that farmers have to pay — large, medium and small — is considerable and derives no benefit to their farm and probably no benefit to the environment.

Senator Dalphond [ + ]

Would you accept another question?

Senator Wells [ + ]


Senator Dalphond [ + ]

The price now is $1.21 per cubic metre. It was $1.39 a year ago, including the tax on carbon.

My next question is about the need to maintain competitiveness. I certainly agree with the principle that we should have an agricultural sector which is competitive.

Senator Wells, maybe you missed it, but some witnesses before the committee mentioned, and the evidence has shown, that for 60% and more of the grain growers in Ontario, Bill C-234 will not apply. Why? Because they use third-party warehouses and dryers. These people will not benefit from your bill. So 60% or even 65% of grain producers in Ontario will not benefit from it.

You say we have to maintain competitiveness. The bill does not seem to achieve that.

One of the representatives — I do not know if you are aware of it, but I asked him questions in committee. The question to you is the following: What is the difference of the competitiveness between the producers who will have access to the rebate and those, the 60% and even more, who will not have access to it?

Senator Wells [ + ]

Thank you, Senator Dalphond.

That’s a great question. First I will go to the question of the 60% or more who don’t use or have on-farm drying.

You will have possibly heard my answer to Senator Batters’ question that led me to talk about the farmer I spoke with Tuesday night who currently does off-site drying in North Gower, and they are an hour north of here. North Gower is a little bit south of here. This is an opportunity for them to do on-site drying and gain the benefit. I would imagine that 60% or more, whatever the number is — I do not even know if it is that, but if you say it is, I will take it at face value — will give the opportunity for that grain drying to be done on-site and, therefore, benefit from Bill C-234.

Frankly, I have to say that I cannot remember your second question.

Senator Dalphond [ + ]

I can repeat it. Is it true that the difference between the grain producers in Ontario who will benefit from your bill and those who will not benefit from it, the majority, is, according to the witnesses, maybe 1%, more likely less?

Senator Wells [ + ]

Thank you, Senator Dalphond.

I would have to say that in the enormous outpouring we received from farmers, ranchers and growers and their associations that speak for their total amounts, including mushroom producers and others, it would appear to me that there will be a greater benefit than 1%. I think we would all agree that of all the emails and outreach and phone calls, if it were a 1% question, I don’t think we would have received that much.

Of course, the Parliamentary Budget Officer said that a billion dollars taken from the industry would be reinvested in the things we want for businesses: to be more productive, have a greater volume of goods for the price, upgrade their infrastructure, which would actually make an impact on the environment. A billion dollars back into the sector is significant enough that it would take care of that 1% you referenced.

Senator Dalphond [ + ]

Will you accept another question?

The Hon. the Speaker [ + ]

Do you have a question, Senator Quinn?

Hon. Jim Quinn [ + ]


The Hon. the Speaker [ + ]

Senator Wells, will you accept a question?

Senator Wells [ + ]

Yes, I’ll accept a question from Senator Quinn.

Senator Quinn [ + ]

Thank you, Senator Wells, for your speech and the debate and questions back and forth.

Regarding your example of the farm south of North Gower that ships up to North Gower to have grain dried, the place that dries the grain, will it benefit from Bill C-234? If so, would it be safe to assume that the person sending the grain to that facility would have less likelihood of increased costs going to the right to use that facility?

Senator Wells [ + ]

Thank you, Senator Quinn. That is a good question. The farmer who would send the grain to North Gower for off-site drying told me they proposed to dry the grain on their own farm with a new dryer. She showed me a picture on her phone of what this dryer looked like. I was highly engaged because I do not know anything about this, and I am happy to learn what a grain dryer looks like. They would do it on their own site. They would have immediate savings in their costs because if they send it to North Gower, they are also paying the additional cost of transport.

They are probably absorbing some of the higher costs that the off-site dryer would have because they would be subject to a carbon tax.

The first part of your question was, “Would the off-site grain dryer in North Gower benefit?” Probably not because they will get less product, because that will be staying on the farm for a more efficient, less costly drying that would not, obviously, include the carbon tax.

The Hon. the Speaker [ + ]

Senator Dalphond, do you have another question?

Senator Dalphond [ + ]

I do not know if Senator Wells will take another question from me.

Senator Wells [ + ]

Senator Dalphond, it is my policy to take questions until my time is up.

Senator Dalphond [ + ]

Thank you very much. I will not take that as an invitation as there are 12 minutes left.

In evidence before the committee, the President of the Saskatchewan Association of Rural Municipalities said that he bought himself a new dryer. According to his experience, which he shared as I questioned him, and as the Ontario Ministry of Agriculture published numbers on this, there were savings of approximately 30% on the cost of natural gas. You use far less natural gas.

Don’t you see that what you are proposing now is that we should not have the tax because they want to keep the old equipment but we should remove the tax in order for them to buy new equipment?

Don’t you think it will be better to keep the tax and force them to buy new equipment — and save 30% on their cost of gas?

Senator Wells [ + ]

Thank you, Senator Dalphond, for that final question.

I have run a number of businesses. I would take 30% savings on anything any day. If you go back to the example I used, it was clear, in fact, and it was recent — two days ago — they are not currently drying. They are sending it off-site, and that costs them. They will dry. They are going to install their dryer, and that will be a saving into the future. She said, “This is a 12-year payback and that is perfect for us. We can afford that and cover that.”

The money that will not be going to the government under the carbon tax program will help them pay for it. I do not see the downside of that in any way. I do not see it. It gives them certainty of scheduling of drying. Some weeks or some months they need to dry more, some they would need to dry less. But they would be able to make that decision based upon what is on their farm. Those are operational savings that they would have as well.

Hon. Pamela Wallin [ + ]

On this topic about drying off-site, I happen to come from a province that has 40% of the country’s farmland, so this is what we do for a living. When you keep wet grain on your farm waiting in the queue to go somewhere else to dry it, you lose quality. That is the first loss of money.

The distances are huge in Saskatchewan to go to drying facilities, or they can be. There are huge transportation costs. The differential there is significant. The difference between old equipment and new equipment in terms of efficiency is also very important. I am looking for your thoughts on this, that we just keep a bunch of old equipment around because it might justify this kind of program is an absurd way to approach dealing with the environment or, for that matter, feeding the world.

Senator Wells [ + ]

Senator Wallin, thank you for your question.

Sometimes people won’t upgrade their equipment because they can’t afford it. They have to make do with what they have. We see that not just in farm operations; we see that in homes as well.

Depending upon what the grain is, you will have different requirements in drying. Corn, I learned, takes longer because it absorbs more water. It does not dry as quickly. The weather is not always consistent for drying, so that is why they have to use automatic dryers.

I learned it is also true that if a product is not dried in the right amount of time, you will get mould and rot. You mentioned the reduction in quality. That is the elimination of quality and elimination of any revenue from that, despite having the costs to get it that far.

All I can say is, you are absolutely right: Having on-site drying gives not just a financial benefit but an operational benefit.

Senator Wells, will you take a question?

Senator Wells [ + ]

I will, Senator Simons.

This is the editor and fact checker in me. Senator Quinn asked you a question about whether this would lower costs for off-site grain drying.

To clarify for everyone, is it not true that this bill does not apply to off-site commercial grain dryers but only, in fact, applies to farmers using grain dryers on their own farms?

Senator Wells [ + ]

Thank you, Senator Simons. You are right. This only applies to on-site grain drying. But having been in business and having done quite a bit of production costing in my life, I would make the assumption that it would be more expensive per unit for the off-site grain dryer, regardless of the tax, only because they would have less volume. They would still have their drying costs but less volume. Perhaps I should not assume, but normally the higher the volume you have, to a certain point, the less costly your per-unit costs are.

To clarify again, for the record, if this bill is to pass, it will have no impact whatsoever on industrial dryers who will still have to pay the full carbon tax?

Senator Wells [ + ]

To be clearer, off-site dryers will not have the benefit of an exemption from the carbon tax. I can’t say they won’t have a benefit, or it will be worse, because they will have a different volume.

In that respect, it may be different. But that is not what we’re talking about. I have been doing production costing since my early twenties. Their production costs will be different because their production balanced against their fixed costs and their variable costs will be different.

Senator Batters [ + ]

Isn’t it true that brand-new grain dryers that are the most efficient do have a saving on the energy costs; however, the substantial cost is that a brand-new very efficient grain dryer could be $150,000 or more? Isn’t that correct?

Senator Wells [ + ]

Thank you, Senator Batters.

A grain dryer is a huge cost. If you have a larger farm, you are going to require more drying capacity. That would either be multiple dryers or a dryer that has that higher capacity. I can only imagine that will be a higher capital cost. Certainly, if it is on‑farm, then at least you have some of the benefit of not having to pay the tax on the drying operation.

Senator Batters [ + ]


Senator Wells [ + ]

Certainly, one of the things that I did learn is when a farmer goes to a bank or goes to a lender, their case is a whole lot better when they don’t have this additional burden and they can apply that benefit that is retained in their earnings to their application for funds. Normally it is a long-term lease. Certainly, it would be more beneficial along those lines.

Hon. Robert Black [ + ]

Senator Wells, will you take a question?

Senator Wells [ + ]

Yes, Senator Black.

Senator Black [ + ]

For my clarity, did you say that you spoke with someone on Tuesday evening who was using a commercial grain dryer, but if this benefit or exemption came into being, they would build a dryer on their farm and stop using that commercial dryer, in which case the one they build is likely going to be a new one and likely high-efficiency? Am I correct?

Senator Wells [ + ]

Thank you, Senator Black. Yes, she showed me a picture of a grain dryer. I did not know what a grain dryer looked like until I saw the picture.

Yes, it would. It was new. They showed the tanks of propane and all that would go with it. It clearly would be more efficient, and that is also a saving. I do not know. They are one hour north of Ottawa. North Gower is about a half-hour south of Ottawa. I don’t know the state of the equipment in North Gower, but something brand new would certainly be more efficient than something that exists now.

Hon. Lucie Moncion [ + ]

I really liked the questions that were asked, because they were all about figures and numbers. If there is one thing we didn’t study about Bill C-234, it was the whole financial side of things, which would have allowed us to distinguish between capital expenditures, taxable expenses, expenses related to heating costs, and so on. The fact that we skipped this aspect means that part of the conversation around Bill C-234 was left out.

I rise today to speak at third reading on Bill C-234, An Act to amend the Greenhouse Gas Pollution Pricing Act. Amending the Greenhouse Gas Pollutioning Pricing Act is a complex issue.

The Agriculture Committee heard from numerous experts during their five meetings on Bill C-234. Many of those witnesses told the committee that while alternatives to propane and natural gas grain dryers were limited, many efficiency improvements are already available, which can offset the cost increases associated with the carbon price by reducing fuel use by 30%.

In short, there was no clear consensus on Bill C-234. Many witnesses opposed the exemptions set out in this bill, particularly those who don’t stand to benefit from it.

Given that the Agriculture Committee report was rejected, this bill, once again, deals with barn heating. Witnesses spoke about technologies that are available today to reduce the greenhouse gas emissions in barn heating. Tom Green from the David Suzuki Foundation said there are evermore examples of farms that are reducing their fossil fuel consumption and improving energy efficiency.

For instance, a poultry farm in Linden, Alberta, has a 175‑kilowatt rooftop solar system. In other cases, a poultry barn built with a high-efficiency thermal envelope reduces energy consumption by 83% per ton of eggs — 83% efficiency increases. This technology is now available.

Colleagues of mine on the Agriculture Committee could have spent significant time digging further into the benefits and drawbacks of this policy decision. They also said they would have appreciated a report from the Standing Senate Committee on National Finance which never came and which I think would have been important for the calculations that are very important in this bill, as I said earlier.

Importantly, the committee didn’t fully explore the realities of climate change and the potential cost to the agricultural sector if left unmitigated. However, we must conclude that those costs are consequential.

We heard that this bill will lead to less action on climate change. Mr. Lindberg, a manager with Environment and Climate Change Canada, said that:

. . . economics and massive experience with markets tell us that without this incentive, all things being equal, less action will be taken to reduce the use of these fuels. . . . All things being equal, without carbon pricing, we definitely see higher emissions globally in the economy.

Senators, we need action on climate change. We should not incentivize inaction. While some colleagues have determined this legislation is necessary to present circumstances, I think we can all agree that we do not know whether such a carve-out will be necessary in eight years from now. But this legislation assumes we will need to extend the carve-out far into the future, which is why this legislation includes a very unusual set of clauses which empowers the government — eight years from now — to extend the sunset period through an order-in-council and motions in both houses. This, colleagues, is a low bar and the decision to extend the sunset period for this carve-out implies a willingness to perpetuate it in the future.

As Senator Woo pointed out at the Agriculture Committee on October 24, the eight-year sunset period will make it more difficult for any farmers to make a transition if they have not done the necessary preparations in the intervening period. The carbon price will have gone up substantially between now and 2031.

I don’t think we heard evidence that this justifies the inclusion of this uncommon, low-bar approach to extending the effective life of this carve-out.

Given the real and devastating crisis caused by climate change, it is incumbent upon parliamentarians to conduct fulsome analysis of our policy decisions and their impacts today and into the future. If, when this legislation sunsets, lawmakers wish to create a new carve-out, they can introduce new legislation to address this issue.

For those reasons, I would like to move the following amendment, which eliminates Bill C-234’s mechanism to extend the exemption beyond the sunset period by Governor-in-Council resolution and motions of the House of Commons and the Senate.

Back to top