Senate to determine the future of carbon tax on natural gas and propane on farms this coming week


Update, June 29: The Senate adjourned until September 21 on Tuesday, leaving Bill C-206 on the Order Paper. It would die there if a federal election is called this summer.

The private member’s bill that would remove the federal carbon tax from natural gas and propane used on farms still has a last-minute chance at crossing the finish line and becoming law, depending on what happens in the Senate on Monday and Tuesday, although the odds do not appear to be in its favour.

For most of the spring, it appeared Bill C-206, which was introduced by Ontario Conservative MP Philip Lawrence, was destined to remain on the Order Paper heading into summer, where it would die if the Trudeau government were to call an election before Parliament resumes again in fall, as is widely expected.

Instead, Lawrence’s bill received final approval at third reading from opposition Members of Parliament during the final hours of the spring sitting in the House of Commons on Wednesday, sending it to the Senate for approval.

The Senate was also scheduled to adjourn for the summer on Wednesday, but senators reached an agreement to add two extra sitting days, on June 28 and 29, to deal with the stack of bills that received last-minute approval from the House of Commons. The stack includes several high-profile and high-priority pieces of proposed legislation for the Liberals: the bill for implementing the federal budget (C-30), a bill to require national targets for reducing greenhouse-gas emissions (C-12), the controversial changes to the Broadcasting Act (C-10), and the bill designed to restrict the practice of conversion therapy (C-6).

It remains to be seen whether C-206 will receive any attention from senators amidst the higher-profile Liberal bills, but it received first reading in the Senate on Wednesday. According to the Senate’s Order Paper, it’s up for second reading on Monday. While there is still a chance, the realistic odds of it moving through the committee stage and third reading in the Red Chamber within the next two sitting days are low, according to multiple sources in Ottawa.

If, against the odds, Lawrence’s bill were to make it to third reading and be approved by the Senate this coming week, it would then receive Royal Assent. However, if left unapproved, it would remain on the order paper for senators to deal with in fall, but it would be erased if an election is called before then.

Diesel and gasoline, when marked for farm use, are already exempt from the federal carbon tax in provinces that do not have their own carbon pricing systems. C-206 would expand the exemption to include natural gas and propane, which are commonly used for drying grain, heating barns, and in irrigation systems.

“This bill is a good first step in securing Canadian food production from an unreasonable burden,” noted Brendan Byrne, chair of Grain Farmers of Ontario, in a statement following MPs approval of the bill on Wednesday. “Currently there are no alternatives for drying grain to fuel-based processes. Adding carbon tax to the fuel used to dry grains was causing farmers hardship and those costs were going to increase every year with no way for a farmer to recoup their losses.”

GFO has estimated the carbon tax on grain drying fuel, if left in place, will cost an average farm an additional $29 to $46 per acre by 2030.

The Parliamentary Budget Officer (PBO) released updated estimates on the impact of Bill C-206 earlier this week. The PBO says an exemption on natural gas and propane used on farms would reduce carbon tax revenues for the government by an estimated $42 million in 2021-22, rising with the carbon tax to $101 million by 2025-26.

The new figures are significantly higher than previous PBO estimates published in December 2020, reflecting the Trudeau government’s subsequent announcement that it plans to raise the carbon price to $170/tonne by 2030.

The Liberals, meanwhile, as part of the federal budget in March, pledged to issue $100 million in rebates for carbon levies on grain drying. As of earlier this month, Agriculture Minister Marie-Claude Bibeau said she is still working with Environment and Climate Change Minister Jonathan Wilkinson on the details of how the rebates would work and when those details would be announced.


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