Keystone Agricultural Producers of Manitoba Carbon pricing: Making it work for Manitoba farmers Presented by: James Battershill, General Manager Sean Goertzen, Climate Project Coordinator October 2016

Keystone Agricultural Producers of Manitoba Climate Change

Keystone Agricultural Producers of Manitoba Climate Change The climate is changing On the Prairies: more floods, droughts, extreme heat, … Caused by greenhouse gas emissions from human activity Carbon pricing could help reduce emissions

Keystone Agricultural Producers of Manitoba Why this Matters to Manitoba Farmers

Keystone Agricultural Producers of Manitoba Why this Matters to Manitoba Farmers Adapting will be a major challenge Canada is putting a price on carbon Let’s push for a design that will work for farmers

Keystone Agricultural Producers of Manitoba Emissions

Keystone Agricultural Producers of Manitoba Emissions Ag is 40% of Manitoba’s emissions Sources: Fertilizer Livestock Fuels

Keystone Agricultural Producers of Manitoba Sequestration

Keystone Agricultural Producers of Manitoba Sequestration Crop and pasture lands sequester carbon and nitrogen, preventing emissions Certain practices boost sequestration Zero tillage, rotational grazing, … Ag can be part of the solution A carbon price could help pay for it

Keystone Agricultural Producers of Manitoba Carbon Pricing

Keystone Agricultural Producers of Manitoba Carbon Pricing A tool to fight climate change People and businesses pay for their emissions Let’s them decide how to reduce

Keystone Agricultural Producers of Manitoba Risks & Opportunities

Keystone Agricultural Producers of Manitoba Risks Could cover fertilizer, fuel, and other inputs Impact on farmers depends on: Coverage Price Costs passed along

Keystone Agricultural Producers of Manitoba Opportunities The impact also depends on options available to: Reduce emissions (avoid the carbon price) Get paid to sequester carbon These actions can: Help farmers’ bottom line Slow climate change Strengthen social license

Keystone Agricultural Producers of Manitoba BC’s Carbon Tax

Keystone Agricultural Producers of Manitoba BC’s Carbon Tax $30 per tonne of emissions Applied to fuels, including: Gas6.67 cents per litre Diesel7.67 cents per litre Propane4.62 cents per litre Natural gas5.70 cents per cubic metre Simple design

Keystone Agricultural Producers of Manitoba Revenue Neutral Government must cut other taxes BC has cut: Personal income tax Corporate income tax Small business income tax School tax on farmland by half

Keystone Agricultural Producers of Manitoba Farmers’ Experiences Greenhouse growers and other high energy users hit harder Small impact on most farms at $30 In 2014, BC introduced: 80% rebate for greenhouse growers Full exemption for farm gas and diesel

Keystone Agricultural Producers of Manitoba Alberta’s Hybrid

Keystone Agricultural Producers of Manitoba Alberta’s Hybrid Covers power plants and industry, including fertilizer manufacturing Facilities must reduce their emissions or pay the carbon price: Buy credits from facilities that beat their target Pay into tech fund Buy offset credits

Keystone Agricultural Producers of Manitoba Alberta’s Offset Market Farmers can reduce emissions, earn offset credits, and sell them to industry Projects include managing tillage, fertilizer, manure, grazing, feed, biomass,... Strict rules Farmers work with project developers Could get “early action” credits until 2012

Keystone Agricultural Producers of Manitoba Farmers’ Experiences Early action credits were popular; new projects less so It’s new revenue, but prices need to exceed the high costs Project developers take a large share Prices could rise soon

Keystone Agricultural Producers of Manitoba Alberta’s New Carbon Tax

Keystone Agricultural Producers of Manitoba Alberta’s Carbon Tax $20 per tonne in 2017, $30 in 2018 Covers fuels Farm gas and diesel exempt

Keystone Agricultural Producers of Manitoba Cap and Trade

Keystone Agricultural Producers of Manitoba Cap and Trade Cap set on total emissions Businesses buy allowances High emitters buy extra allowances from low emitters Cap and trade, carbon tax, hybrid: all ways to put a price on carbon

Keystone Agricultural Producers of Manitoba Cap and Trade: Where it’s Used EU, California, Quebec, and soon Ontario California & Quebec cover power plants, industry, & fuel distributors Costs passed on to farmers, like any carbon price Not a large impact for most farms at $16 per tonne Linked market

Keystone Agricultural Producers of Manitoba Revenue Recycling

Keystone Agricultural Producers of Manitoba Revenue Recycling How government uses the money BC cuts other taxes California, Quebec, Ontario use it to further reduce emissions e.g. retrofit grain dryers, protect soil health, … Reduce emissions = avoid carbon price

Keystone Agricultural Producers of Manitoba Manitoba Coal Tax & Ban

Keystone Agricultural Producers of Manitoba Manitoba Coal Tax & Ban Our coal tax is a narrow carbon price Placed on power plants and industry in 2012 Coal ban on space and water heating in 2014 Recycled tax revenue to help businesses deal with the ban

Keystone Agricultural Producers of Manitoba Government Plans

Keystone Agricultural Producers of Manitoba Government Plans Feds: $10 in 2018, $50 by 2022 Provinces design their own systems Manitoba: carbon tax or hybrid ALUS could help farmers sequester carbon

Keystone Agricultural Producers of Manitoba What could work for Manitoba farmers?

Keystone Agricultural Producers of Manitoba Should agricultural inputs be exempt from Manitoba’s carbon price? Which ones (if any) and why?

Keystone Agricultural Producers of Manitoba Are you concerned that a carbon price will increase the cost of your inputs?

Keystone Agricultural Producers of Manitoba What’s more important to you, having new funding to improve your operations and reduce emissions, or a carbon price that is as simple as possible?

Keystone Agricultural Producers of Manitoba Consider the idea of a “climate friendly” label for products from farms that are reducing emissions and improving sequestration. Could this help farmers strengthen their social license with consumers? Could it add a competitive advantage to our products globally? What challenges might this approach face?

Keystone Agricultural Producers of Manitoba Thank you!