New farming carveout could pass despite Liberal pledge of no more carbon price exemptions

A bill to create more carbon price exemptions for farmers is in the home stretch in the Senate as the federal government faces sustained criticism for its decision to exempt home heating oil from the federal carbon pricing system.

Prime Minister Justin Trudeau and his cabinet ministers said there will be no more carbon price carveouts, but a Conservative-sponsored bill could do just that if it clears the Senate as expected. The bill passed third reading in the House of Commons in March with support from the Conservatives, NDP, Bloc Québécois and Green Party. Three Liberal MPs broke rank and voted in favour of the bill: Nova Scotia MP Kody Blois and P.E.I. MPs Heath MacDonald and Robert Morrissey.

The Senate’s third reading of Bill C-234 came after two weeks of constant criticism from the federal Conservatives, NDP and many premiers who said the home heating oil exemption should be extended to all types of home heating before winter hits.

Sponsored by Conservative MP Ben Lobb, Bill C-234 would amend the federal Greenhouse Gas Pollution Pricing Act to add natural gas and propane used to dry grain and heat livestock barns to the list of farm fuels — including gasoline and diesel — already exempt from the federal price on pollution.

If the bill clears the Senate with no changes, it will then receive royal assent and become law. If the Senate makes an amendment, it goes back to the House of Commons for review.

Federal Conservative Leader Pierre Poilievre “launched a campaign” on Monday to pass the bill in a video posted to X, the social media platform formerly known as Twitter. In it, he urges Canadians to phone their Liberal MPs and ask them to pass the bill and pledged to “mount a massive pressure campaign” to “take this tax off.”

Federal Environment Minister Steven Guilbeault responded to Poilievre’s statements at a virtual press conference on the morning of Nov. 14.

“If Pierre Poilievre had any sense of moral decency, he would admit that we've already excluded 97 per cent of fuels used on farms,” Guilbeault said at the press conference.

“The price on pollution in the agricultural sector only applies to three per cent of fuels that are being used where … alternative technologies are available,” said Guilbeault, pointing to the federal government's $495.7-million Agricultural Clean Technology Program, which helps farmers purchase more energy-efficient grain dryers and heating systems and install other equipment that reduces planet-warming greenhouse gas emissions.

When Poilievre launched his campaign to pass Bill C-234, he said Trudeau’s top ministers have been “frantically calling senators, begging them to block this bill.”

Guilbeault said he has spoken to roughly half a dozen senators about C-234 over the last two weeks to explain why the Liberals don’t support the bill.

“The only person who tells senators what to do and how to vote is Pierre Poilievre. We don't do that,” said Guilbeault.

Poilievre recently said Guilbeault would have to resign if the bill becomes law, citing Guilbeault’s statement that there will be no more exemptions to carbon pricing as long as he is environment minister.

The Standing Senate Committee on Agriculture and Forestry studied the bill and added an amendment to limit its scope to grain drying, but senators voted to reject the committee’s report.

Last Thursday, when the bill was read for the third time in the Senate, Ontario Sen. Lucie Moncion tabled an amendment that would remove the option for Parliament to extend the carbon price exemption beyond eight years. This refers to a sunset clause that will end the natural gas and propane exemption eight years after the bill comes into force.

“We should not incentivize inaction,” said Moncion, part of the Independent Senators Group. “I don’t think we heard evidence that this justifies the inclusion of this uncommon, low-bar approach to extending the effective life of this carveout,” she said, adding that if in eight years an exemption is still needed, parliamentarians can introduce new legislation.

Conservative Sen. Denise Batters pointed out Moncion’s amendment was similar to one that was proposed and defeated during the agriculture committee’s study of the bill. Soon after, Sen. Bernadette Clement moved to adjourn debate on the bill until Nov. 21.

Conservative Sen. David Wells accused members of the Independent Senators Group and Senate Speaker Raymonde Gagné of shutting down the debate on C-234 in a post on X.

Clement said she moved to adjourn “to ensure everyone has a chance to speak" in a statement to CBC News last week. Clement did not respond to a request for comment from Canada’s National Observer by deadline.

The federal government has been fielding criticism ever since it announced a three-year exemption for oil used to heat homes from the carbon price, although that was just one of several measures announced on Oct. 26. Trudeau also upped the rebate top-up given to Canadians in rural regions from 10 per cent to 20 per cent to help tackle affordability. There are also new measures to offset the cost of installing a heat pump for households that heat with oil, including an upfront payment of $250 for low- to median-income households and increasing federal grants for homeowners from $10,000 to $15,000.

The federal government said the enhanced oil to heat pump supports are being piloted in Atlantic Canada with P.E.I., Nova Scotia and Newfoundland and Labrador, but there is the option for more provinces to sign up and co-deliver the programs.

The heat pump supports have received less attention than the carbon price carveout, despite there being a clear need for a national program that makes heat pumps affordable to all Canadians, regardless of what fuel they use to heat their homes, said Brendan Haley, a policy director with Efficiency Canada, in a recent interview with Canada’s National Observer.

Last Friday, five premiers — Ontario’s Doug Ford, Saskatchewan’s Scott Moe, Alberta’s Danielle Smith, New Brunswick’s Blaine Higgs and Nova Scotia’s Tim Houston — requested a meeting with Trudeau to ask for more home heating exemptions. Federal Finance Minister Chrystia Freeland did not respond to a request for comment by deadline.

Poilievre used the home heating oil carveout to bolster his “axe the tax” argument and is turning his attention to Bill C-234. The federal Conservative leader has yet to present a detailed climate plan and has not said clearly whether he will commit to Canada achieving its promised emissions targets under the Paris Agreement: a legally binding international treaty on climate change.

His common refrain is “technology, not taxes” and has previously referred to nuclear power, small modular nuclear reactors and carbon capture and storage. The government needs to get out of the way so projects like these, as well as hydroelectric dams, tidal power, “other emissions-free energy” and new mines, can be greenlit, he told reporters on Nov. 6 on Parliament Hill. At a Nov. 13 press conference, Poilievre said a Conservative government would bring down emissions by quickly greenlighting projects like this.

For the last two weeks, Conservative MPs on the federal Standing Committee on Natural Resources have been blocking discussion on two bills. The Sustainable Jobs Act, which would give workers a permanent voice in the transition to a low-carbon economy and Bill C-49, which would establish a unified regulatory framework to develop and regulate offshore renewable energy projects in Newfoundland and Labrador and Nova Scotia.

— With files from The Canadian Press

Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer