Carbon tax returned on natural gas, propane


The federal government says it recognizes farmers’ use of natural gas and propane and will return some of the carbon tax paid on those fuels.

The April 19 budget, the first since 2019 and the first delivered by finance minister Chrystia Freeland, estimated farmers in Alberta, Saskatchewan, Manitoba and Ontario could receive $100 million in payments the first year but it didn’t provide details on how that would occur.

Future returns would depend on the rising tax and how much is paid. Freeland is expected to provide details later this year.

The four provinces could in the meantime develop their own carbon pricing programs, which would affect this federal offer.

Farmers had asked for the carbon tax on these fuels to be exempt from Ottawa’s price on pollution after skyrocketing costs from drying grain during the wet harvest of 2019.

The budget noted that the expanded $165.5-million Agricultural Clean Technology Program will allocate $50 million “for the purchase of more efficient grain dryers for farmers across Canada.”

“These initiatives will help farmers transition to lower-carbon, more fuel-efficient ways of farming,” it said.

The document said farmers are major players in the fight against climate change and have the potential to scale up climate solutions.

The budget provides an additional $200 million over two years, beginning this year, for immediate, on-farm climate action under the Agricultural Climate Solutions program.

“This will target projects accelerating emission reductions by improving nitrogen management, increasing adoption of cover cropping, and normalizing rotational grazing,” it said.

Spending of $60 million over the next two years through the Nature Smart Climate Solutions fund will protect existing wetlands and trees on farms, “including through a reverse auction pilot program.”

Also on the climate solution side, $10 million from the clean technology program will be spent over two years to help power farms with clean energy and move them off diesel.

Environment and Climate Change Canada will get $17.4 million over two years to work with provinces and other stakeholders on how to establish the Canada Water Agency’s scope of work.

A location for the agency’s head office wasn’t named, although Regina has made its bid public.

ECCC and Natural Resources Canada will get more money to replace and expand aging ground-based infrastructure that support satellites that monitor earth and climate change.

Climate considerations must be implemented throughout federal government decision-making, the budget said.

The document also noted that border carbon adjustments ensure that regulations on a carbon price apply fairly to trading partners. If a different carbon tax is levied at source that difference is applied on imports and exports between countries.

The government said it will launch consultations this summer with provinces and territories, importers and exporters, particularly those that deal in emissions-intensive goods. Consultations with the public are expected to follow in the fall.

The budget said a common understanding of border carbon adjustments is required.

Other agriculture and food-related budget items include $292.5 million over seven years for a Processor Investment Fund that will support private investment in processing plants in the supply-managed sector, and $101 million over two years, beginning next year, to support wineries as they adapt to trade obligations.

The 4,000 employers who rely on temporary foreign workers to fill about 60,000 jobs will see support through $57.6 million to extend the Mandatory Isolation Support For Temporary Foreign Workers program.

Employers will receive up to $1,500 per worker until June 15 to help pay for costs of the mandatory 14-day isolation period. That will go up if the worker has to quarantine elsewhere.

After June 15, the support drops to $750 per worker until the program is over Aug. 31.

The federal government will also add $140 million to top up the Emergency Food Security Fund and Local Food Infrastructure Fund to address hunger issues.

Overall, this budget includes more than $101 billion in spending over three years to help Canada recover from what Freeland said is the worst recession since the Great Depression.

Spending includes establishing a nation-wide early learning and child-care system, extending emergency support through the recovery, increasing Old Age Security for those over 75, helping small- and medium-sized business through new programs and establishing a $15 federal minimum wage.

Freeland said the budget addresses three challenges: conquering COVID-19, recovering from the recession and building a better Canada.

“That means investing in Canada’s green transition and the green jobs that go with it, in Canada’s digital transformation and Canadian innovation, and in building infrastructure for a dynamic, growing country,” she said during her speech.

“The resource and manufacturing sectors that are Canada’s traditional economic pillars — energy, mining, agriculture, forestry, steel, aluminum, autos, aerospace — will be the foundation of our new, resilient and sustainable economy.”