Farming fuels should be exempt from participation in the carbon market, according to the UPA's petition.
TRASHDHint: The agricultural union in Quebec is pressing the Legault government to exclude farm-used fuels from the province's carbon market. Farmers argue that the current system saddles them with unnecessary costs, hampering their ability to compete and innovate. However, experts warn that this demand could undermine Quebec's climate targets and destabilize its market-driven carbon pricing system.
Union des producteurs agricoles (UPA) Urge Legault Government to Exempt Farm-Used Fuels from Carbon Market
A month has passed since the federal carbon tax on fuels was scrapped, but the issue isn't fading away for farmers in Quebec. The Union des producteurs agricoles (UPA), a prominent agricultural union, is demanding that the provincial government exempt farm-used fuels from Quebec's carbon market.
Earlier this week, about a hundred producers rallied in Saint-Jean-sur-Richelieu to voice their support for the UPA's Montérégie chapter's request. UPA's President, Martin Caron, accused the government of perpetuating an "injustice" by making farmers pay for greenhouse gas emissions while still being excluded from subsidies enjoyed by other industries.
Caron highlighted the substantial financial burden that current carbon market regulations impose on farmers, estimating the annual toll at over 80 million dollars - a fraction of their total turnover. Critics argue that this levy is a barrier to growth and puts Quebec's farmers at a competitive disadvantage compared to their counterparts in other provinces.
Quebec's agricultural sector is exempt from the province's cap-and-trade system, nicknamed the "carbon market." However, farmers are still subject to the system indirectly through the fuels they buy, such as diesel for tractors, propane for grain drying, and natural gas for barn heating.
Montérégie-based egg incubation producer, David Phaneuf, calculated that the carbon market costs him $25,000 per year. Phaneuf expressed concern that this money could have been allocated to reducing the carbon footprint of his business or improving its financial standing. Organic producer, Hélène Campbell, shared similar sentiments, claiming that the system penalizes organic farms due to a lack of pesticides and necessitates increased tractor usage.
Farmers aren't casting blame on the climate emergency; they claim to be doing their part to address it. Jérémie Letellier, a local farmer and Montérégie UPA President, emphasized the agricultural sector's awareness of the climate crisis and its impact on crops, working conditions, and yields. Still, he criticized the current cap-and-trade model for failing to offer practical and affordable solutions to reduce fuel consumption.
A Bit of Perspective
Farmers outside Quebec aren't experiencing the same challenges because the federal carbon tax on fuels was eliminated by Mark Carney. However, Canadian farmers have benefited from a rebate for diesel used in tractors and combines, as well as a tax credit. Yet, experts like Charles Séguin, a specialist in carbon pricing at the University of Quebec in Montreal, caution against assuming that Quebec farmers carry an unfair burden.
While Séguin concedes that an "injustice" exists between Quebec and other provinces, he asserts that the arguments put forth by Quebec farmers do not prove that the system is failing to meet its targets. According to Séguin, the market puts pressure on industrial sectors struggling to decarbonize. The agricultural sector must adapt, perhaps by transitioning to market gardening or other sustainable alternatives.
Proceeds from Quebec's cap-and-trade system fund the Electrification and Climate Change Fund, which supports projects aimed at reducing greenhouse gas emissions across the province. Agricultural enterprises, in particular, benefit from initiatives in greenhouse and aquaculture. Despite this, some farmers contend that they do not receive adequate compensation for their contributions to the fund since its inception in 2015.
On Thursday afternoon, the Ministry of the Environment replied to the UPA's request, stating that they had "taken note" of the opinion and encouraged farmers to keep apprised of the next update for the Green Economy Plan's implementation. It remains to be seen whether the Legault government will take action on this pressing issue.
Additional Insights
The Quebec government's cap-and-trade system, as outlined in the Regulation respecting a cap-and-trade system for greenhouse gas emission allowances, does not explicitly mention farm-used fuel exemptions in the available documentation. However, broader implications of Quebec’s carbon pricing framework and recent policy shifts may provide context for potential exemptions or their effects:
- Quebec's Climate Targets and Cap-and-Trade System
- Quebec aims to reduce GHG emissions by 37.5% below 1990 levels by 2030 and achieve carbon neutrality by 2050.
- The province relies on its linked cap-and-trade system (with California under the Western Climate Initiative) to regulate industrial and fuel-sector emissions.
- While specific agricultural fuel exemptions are not explicitly outlined in the available sources, Quebec’s system includes free allowances for sectors at risk of carbon leakage, which may indirectly apply to certain agricultural industries.
- Arguments for and Against Exemptions
- Pro-Exemption
- Cost Relief: Removing carbon costs on agricultural fuels could reduce operational expenses for farmers, particularly amid rising fuel prices.
- Competitiveness: Exemptions might prevent cross-border carbon leakage (e.g., agricultural producers relocating to regions without carbon pricing).
- Anti-Exemption
- Emissions Risk: Exemptions could undermine Quebec’s climate targets by increasing unregulated emissions from agriculture.
- Market Distortion: Uneven application of carbon pricing might reduce the cap-and-trade system’s effectiveness in driving fuel efficiency and innovation.
- Government Response and Trends
- No Direct Exemptions: Quebec's current cap-and-trade rules do not explicitly exempt agricultural fuels, focusing instead on free allocation for trade-exposed sectors.
- Federal Context: The federal consumer fuel charge was set to $0 in 2025, removing carbon costs for many fuel users, though Quebec's system remains distinct.
- Policy Stability: Quebec has maintained its cap-and-trade system despite federal changes, emphasizing linkage to the WCI and auction proceeds for climate initiatives like the Electrification and Climate Change Fund.
- Comparative Approach
- Washington State recently proposed reducing the biomass-derived fuel emissions exemption threshold to 35% below petroleum equivalents, reflecting a trend toward tightening exemptions. Quebec may face similar pressures to balance exemptions with climate goals.
- The Union des producteurs agricoles (UPA) in Quebec is urging the Legault government to exempt farm-used fuels from the province's carbon market, citing unnecessary costs and competitive disadvantages.
- Martin Caron, UPA's President, estimates that the annual financial burden on Quebec farmers from the carbon market regulations amounts to over 80 million dollars.
- David Phaneuf, a Montérégie-based egg incubation producer, highlights that the carbon market costs him $25,000 per year, which could have been allocated to reducing his carbon footprint or improving his business financially.
- Experts like Charles Séguin, a specialist in carbon pricing at the University of Quebec in Montreal, caution against assuming that Quebec farmers carry an unfair burden and assert that the agricultural sector must adapt to reduce emissions, perhaps by transitioning to market gardening or other sustainable alternatives.
- Despite the Quebec government's cap-and-trade system's indirect impact on farmers through fuel purchases, some farmers claim they do not receive adequate compensation for their contributions to the system's Greenhouse Gas Emission Allowances since its inception in 2015.
