Alberta Canola provided carbon policy updates through 2021 in a series of articles called “Temperature Check”. With this article, the Temperature Check author shares highlights on existing programs and provides an update on the upcoming Federal Greenhouse Gas Offset System.

Temperature check on carbon policies

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Alberta Canola closely follows both provincial and federal carbon policies. Throughout the 2021 summer months, opportunities for engagement allowed our policy staff to amplify the voice of canola producers. We reported back to our producers through a series of articles called “Temperature Check”, which you can find at albertacanola.com.

Detailed federal policy objectives were described in the document A Healthy Environment and a Healthy Economy, released in 2020. These objectives are based on commitments made in the Speech from the Throne and build upon the Pan-Canadian Framework on Clean Growth and Climate Change, released in 2016. (Search for both of these documents at canada.ca.)

The Pan-Canadian Framework describes climate impacts such as increasing cases of heat waves, floods, and droughts. According to the federal government, Canadian citizens pay for their environmental impacts when they must rebuild homes and businesses after a flood or a wildfire, or when paying higher insurance premiums and paying more for food and emergency services. The government’s response was to create a carbon tax, pricing carbon and contributing to the carbon market to encourage investment in carbon emissions reductions.

In 2018, The Greenhouse Gas Pollution Pricing Act (the Act) received royal assent. This legislation outlines the federal government’s carbon pricing system. Part one of the Act implements the carbon tax, which has been upheld by the Supreme Court of Canada. Part two established an output-based pricing system (OBPS), which created a monetary incentive specifically for industrial emitters to lower carbon emissions.

The Act provides a federal backstop for provincial carbon emissions regulation. The federal carbon tax started at $20 per tonne of carbon dioxide equivalent (CO2e) in 2019. The tax will increase at a rate of $10 per tonne annually, to $50 per tonne in 2022. As of April this year, the carbon tax is at $40 per tonne. For reference, according to the United States Environmental Protection Agency, a “typical passenger vehicle emits about 4.6 tonnes of carbon dioxide per year.” (Find this at epa.gov/greenvehicles.) It follows that the average amount spent on the carbon tax for a family with one vehicle would be $184 in 2021 and $230 in 2022. This cost is greater for farm families whose input costs are generally increasing.

Profit margins for family farms are shrinking. Farmers benefit from exemptions like those outlined in Bill C-206, which extends exemptions on farm fuels. Other industries also feel the pressure from the carbon tax. Transportation industries, such as shipping and trucking, must pay the carbon tax on their input fuels. The airline industry also feels the strain of the tax “since air travel accounts for between three and five percent of global CO2 emissions – and those emissions are escalating,” according to a CBC report.

Funds from the carbon tax are meant to encourage the use of green energy and investment in green technologies.  A federal offset system would supply industries with a way to reduce emissions even further.

A federal carbon offset system

The federal government is working on an offset system for trading carbon credits. These types of policies make room for carbon-reliant industries to achieve “net-zero” or even “net-negativity”, meaning emissions are balanced out by carbon sequestration or when companies pay for carbon sequestration beyond what they emit. While writing this, the federal government had gone into “caretaker mode” around the September 2021 federal election. Development of the offset system is still underway.

Basis for the program comes from the Pan-Canadian GHG Offsets Framework, which the Canadian Council of Ministers on the Environment agreed upon in November 2018. Since then, the framework has undergone further deliberation. A comment period was established for the Carbon Pollution Pricing: Options for a Federal Greenhouse Gas Offset System paper in June 2019 and again this summer. These were opportunities for stakeholders to offer considerations for the federal system. Agricultural stakeholders agree that a strong Federal-Provincial-Territorial (FPT) agreement is essential to the development of effective and appropriate agricultural policy. This includes the development of a federal offset system. An effective offset system would allow for the trading of carbon credits across provincial borders.

Offset credit systems are essential to emissions reductions. They have the potential to “incentivize activities leading to reductions in GHG emissions or increases in GHG removals from the atmosphere by carbon sinks,” as written in a policy impact statement posted March 6, 2021 in the Canada Gazette at canada.ca. Regulations are necessary for the creation of a federal GHG offset credit system and to authorize the Minister of the Environment to issue offset credits. The cancelation of the Conservation Cropping Protocol in Alberta was an unfortunate development in emissions reduction policy. This left a hole that must be filled to continue to support and recognize the environmental stewardship producers consistently carry out.

Volunteer offset systems are available for carbon credit trading, but because these systems are not regulated, they may not be consistent. Nevin Rosaasen, sustainability and government relations lead with Alberta Pulse Growers, says it is essential that producers thoroughly examine their contracts in these voluntary systems to ensure they are fully aware of the obligations and incentives.

Biological Carbon Canada (BCC) states that a regulated market trades government certificates, which indicate regulatory compliance. BCC explains that these certified credits, “based on an approved voluntary protocol”, are traded between “non-regulated emitters and non-regulated suppliers” in a voluntary market. Standardization of regulations should be based on good science, whether regulated or voluntary.

Rosaasen also asserts that carbon sequestration is increasing annually, instead of plateauing as was previously thought. He talked about discoveries in soil carbon sequestration science that clarify the agricultural capabilities. Studies in soil organic carbon (SOC) provide important measurement contributions for the establishment of regulated offset systems. Brian McConkey, with Viresco Solutions, created a report on the Prairie Soil Carbon Balance Project, released in June 2019. McConkey’s report states that “SOC was increasing at deeper depths than expected”.

There is more to learn about carbon sequestration, and this knowledge – which will require more research – would make regulated offset systems increasingly effective.

Commissions like Alberta Canola are hopeful about the prospects of the Agricultural Climate Solutions program and eagerly await the next steps.