Question Period Note: Climate Change Mitigation

What is the Government doing to ensure the agriculture and agri-food sector is contributing to climate change mitigation targets?

RESPONSE
1. Canadian producers have long been responsible stewards of the land and are already adopting sustainable practices. However, we recognize that additional support is needed to reach Canada’s ambitious climate objectives.
2. Over 2021 and 2022, our government has announced $1.5 billion in initiatives for the agriculture sector, which could yield up to 13 megatonnes of greenhouse gas emission reductions by 2030.
3. This funding will incentivize producers to adopt practices and technologies that will reduce greenhouse gas emissions and sequester carbon in soils.
4. We are also developing a Green Agriculture Plan for Canada to help coordinate and support further action on climate change and other environmental priorities.

1. Agriculture ministers have signed on to the Sustainable Canadian Agricultural Partnership, which prioritizes tackling climate change and supporting sustainable agriculture and economic growth. It targets a reduction of 3 to 5 megatonnes of greenhouse gas emissions.

RESPONSIVE ON CARBON POLLUTION PRICING
1. We understand the unique challenges faced by the agriculture sector and have designed the carbon pricing system to reflect these challenges.

1. Greenhouse gas emissions from livestock and crop production are not included in the pollution pricing system.

2. A portion of the proceeds from the price on pollution is being returned directly to farmers in backstop jurisdictions, which began in 2021, through a refundable tax credit. It is estimated that farmers would receive $100 million in the first year.

3. Further, the Government is committed to supporting farmers affected by supply chain issues and rising input costs. We are increasing the interest-free portion of the Advance Payments Program from $100,000 to $250,000 for the 2022 and 2023 program years. Participating producers will save an average of $7,700 in interests costs over the two years.

RESPONSIVE ON C-234 (EXPANDED EXEMPTIONS FROM CARBON PRICING)

1. We recognize that grain drying, irrigation, and heating costs have increased for farmers.

2. As announced in Budget 2021, we are returning a portion of the proceeds from the price on pollution directly to farmers in backstop jurisdictions, beginning in 2021-22. We estimate eligible farmers could receive up to $100-million in the first year.

3. We have also made grain drying a priority under the $165 million Agricultural Clean Technology Program. This program has prioritized $50-million for the purchase of more efficient grain dryers for farmers across Canada.

4. We are also committed to tripling the funding for clean-technology on farms, including for renewable energy, precision agriculture, and energy efficiency. This will provide an opportunity for the agriculture sector to increase adoption of clean technology on the farm, resulting in improved operational efficiency and decreased greenhouse gas emissions.

RESPONSIVE ON METHANE EMISSIONS REDUCTIONS
1. In October 2021, we confirmed our support for the Global Methane Pledge, which aims to reduce global methane emissions from all sources by 30 percent below 2020 levels by 2030.
2. Methane emissions from the agriculture sector are primarily a result of biological processes from livestock, making them challenging to measure and address.
3. While livestock are a source of methane emissions, they also contribute to environmental objectives such as biodiversity, soil and water health.
4. Canada’s Methane Strategy emphasizes the importance of building on the successes of livestock producers, many of whom are world leaders in environmental sustainability.
5. The Methane Strategy does not include any specific emissions reduction targets for the agriculture sector. We intend to continue working with the sector to determine the best path forward for reducing emissions.
RESPONSIVE ON FERTILIZER EMISSIONS REDUCTION TARGET
1. We have also set a national target to reduce emissions from fertilizers of 30 percent below 2020 levels by 2030.
2. The fertilizer target is focused solely on reducing emissions and does not represent a mandatory reduction in the amount of fertilizer used on the farm. The goal is to reduce emissions while maintaining or enhancing yields and profitability.
3. We look forward to working with provinces and territories, industry partners, and Canadian farmers who are already taking action to reduce greenhouse gas emissions, sequestering carbon and continuously improving operations to ensure they remain sustainable, productive, and competitive.

RESPONSIVE ON NATIONAL INVENTORY REPORT (NIR) 2022 REPORT
1. I am pleased that we are continuing to improve greenhouse gas emissions measurements and better recognize the efforts of the sector to reduce those emissions.

1. Agriculture and Agri-Food Canada scientists work in close collaboration with Environment and Climate Change Canada colleagues to continually improve greenhouse gas measurements. The 2022 NIR contains improved estimates for cropland soil carbon sequestration and nitrous oxide emissions.

2. The updated agriculture greenhouse gas accounting methodology is another step forward in Agriculture and Agri-Food Canada’s commitment to develop the most accurate soil carbon estimates, as it makes it even clearer that practices employed by Canadian farmers can have significant positive impacts on greenhouse gas emissions.

3. These improved estimates do not change the importance of continued actions and contributions by the sector to mitigate climate change.

BACKGROUND:

The sector has demonstrated a commitment to sustainable practices that help protect Canada’s soil, air, water, biodiversity and climate change, but it accounts for 10% of Canada’s total greenhouse gas (GHG) emissions, mainly through animal production, on-farm fuel use, and fertilizer application. Total emissions from the sector have increased since 2005 by 4.5% to 69 megatonnes in 2020. Agricultural lands can also act as “carbon sinks” by storing (or sequestering) carbon in the soil, reducing the amount of carbon in the atmosphere. For over 20 years, Canadian farmers, particularly in the Prairies, have increasingly substituted conventional tillage with no-till or conservation tillage seeding techniques. These practices, combined with a major reduction in summer fallow (i.e., cropland purposefully kept out of production) have resulted in agricultural soils in Canada being a significant carbon sink since 2000.

Through the Canadian Agricultural Partnership, up to $438 million is available for cost-shared programs between the federal and provincial/territorial governments that are designed to raise producers’ awareness of environmental risks, and accelerate the adoption of on-farm technologies and practices including those that reduce GHG emissions (e.g., manure and fertilizer storage, livestock nutrition, precision farming, and use of cover crops).

Federal, provincial and territorial (FPT) Ministers reached an agreement in principle for the Sustainable Canadian Agricultural Partnership in July 2022. The new Sustainable Canadian Agricultural Partnership program will start in April 2023 and replace the current Canadian Agricultural Partnership that ends March 2023. The agreement includes a target of 3-5MT greenhouse gas emissions reductions and an agreement in principle for a $250 million Resilient Agricultural Landscape Program to support ecological goods and services provided by the agriculture sector. Ministers also agreed to conduct a one-year review on how to integrate climate risk and readiness in BRM programs.

In 2021, the Government launched a number of new programs and initiatives aimed at fighting climate change and improving the resilience of the sector. This included:
- $185 million over 10 years for the Agricultural Climate Solutions Living Laboratories program;
- $165.7 million over 7 years for the Agricultural Clean Technology Program with priorities including $50 million for the purchase of more efficient grain dryers for farmers across Canada and $10 million over the next two years toward powering farms with clean energy and moving off diesel;
- $200 million for the On-Farm Climate Action Fund under the Agricultural Climate Solutions Program to support improved nitrogen management, increased cover cropping and rotational grazing; and
- Setting a national emission reduction target of 30% below 2020 levels from fertilizers and working with fertilizer manufacturers, farmers, provinces and territories to develop an approach to meet it.

On October 11, 2021, Canada confirmed its support for the Global Methane Pledge, which aims to reduce global methane emissions by 30 percent below 2020 levels by 2030. In support of The Pledge, which was officially launched at the UN Climate Change Conference of the Parties (COP26) in Glasgow, Canada committed to taking comprehensive domestic actions to reduce methane emissions across the broader Canadian economy. While the majority of reductions are expected to come from the oil and gas sector, methane emissions reductions will also be sought from landfills and agriculture. Agriculture represents 30% of Canada’s total methane emissions, mainly biological emissions from livestock production. Canada’s agricultural methane emissions have already decreased by 20% since 2005, mainly due to a reduction in size of Canada’s beef and dairy herds. AAFC will continue working to assess the potential of the Canadian agriculture sector to contribute to methane reductions and will assess how current programming (e.g., Agricultural Clean Technology Program, On-Farm Climate Action Fund) could help achieve this target.

The Emissions Reduction Plan (tabled March 29, 2022) and Budget 2022 (tabled April 7, 2022) included additional investments to support the agriculture sector in reducing GHG emissions, including:
- $470 million to the Agricultural Climate Solutions: On-Farm Climate Action Fund. This funding will allow the program to top-up funding for some current successful applicants, broaden support to additional key climate mitigation practices, extend the program past its current end date of 2023/24, and support adoption of practices that contribute to the fertilizer emissions target and Global Methane Pledge;
- $150 million for a resilient agricultural landscapes program to support carbon sequestration, adaptation and address other environmental co-benefits;
- $330 million to triple funding for the Agricultural Clean Technology program by broadening and expanding the scope of the program; and
- $100 million to the federal granting councils to support post-secondary research to prepare the sector for net-zero emission agriculture. This funding will support fundamental and applied research supporting a path to net zero emissions, knowledge transfer, and developing metrics.

Carbon Pollution Pricing
Establishing a national price on carbon pollution is a key federal commitment under the Pan-Canadian Framework on Clean Growth and Climate Change. The Federal Government has implemented a carbon pollution pricing legislation (backstop) effective January 1, 2019, in provinces and territories that choose to adopt it or that do not have a carbon pollution pricing system that meets the federal benchmark stringency requirements and carbon price benchmark of $40/tonne in 2021 rising to $50/tonne in 2022.

Currently, carbon pollution pricing systems are in place in British Columbia, Northwest Territories, Quebec, New Brunswick, Nova Scotia, and Newfoundland and Labrador. The federal carbon pollution pricing system applies fully in Ontario, Manitoba, Nunavut, and Yukon; it applies in part in Alberta, Saskatchewan, and Prince Edward Island.

Recognizing that many farmers use natural gas and propane in their operations, and consistent with the Budget 2021 commitment, the government outlined in its Fall Economic and Fiscal Update that it would return fuel charge proceeds directly to farming businesses in backstop jurisdictions via a refundable tax credit, starting for the 2021-22 fuel charge year. It is estimated that $100 million will be available as rebates in the first year, with $121 million the following year.

The credit amount available to farmers will be equal to the eligible farming expenses in the calendar year when the fuel charge year starts, multiplied by a payment rate, as determined by the Minister of Finance. The payment rates for 2021 and 2022 calendar years have been set at $1.47 and $1.73 per $1,000 in eligible farming expenses, respectively.

Canada’s Greenhouse Gas Offset Credit System
Environment and Climate Change Canada has launched Canada’s Greenhouse Gas (GHG) Offset Credit System under the authority of the Greenhouse Gas Pollution Pricing Act. The Federal GHG Offset Credit System will encourage cost-effective domestic GHG emissions reductions and removals from activities that go beyond business-as-usual, are not required by regulation and are not already incentivized by carbon pollution pricing, with a focus on activities in the forestry, agriculture and waste sectors.

Federal GHG offset credits can be used by facilities regulated under the Output-Based Pricing System to compensate for excess emissions. In this way, an offset credit is a substitute for a direct emission reduction and can help reduce the overall cost of compliance.

The specific agriculture practices that can generate offset credits will be determined during the protocol development process. There are two protocols that are being developed for the agriculture sector on Enhanced Soil Organic Carbon and Livestock Feed Management, with others proposed for development including Livestock Manure Management and Anaerobic Digestion. Technical expert teams have been established, which include scientists from Agriculture and Agri-Food Canada, to provide advice on the latest science and members of the public will have an opportunity to comment on draft protocols as a part of the protocol development process.

National Inventory Report and Changes to GHG Accounting Methodology
The National Inventory Report (NIR) is Canada’s official report on GHG emissions and removals, submitted annually to the United Nations Framework Convention on Climate Change (UNFCCC). The NIR 2022 includes estimates for GHG emissions and removals from 1990 to 2020.

In the NIR, emissions from the agriculture sector capture a number of items including emissions from animal and crop production, and other on-farm related emissions such as those related to fuel use. The report also takes soil carbon into account – changes to that can be a result of changes in land management such as reduced tillage or change in crop types. In accordance with United Nations requirements to update methods based on current knowledge, improvements are regularly made to Canada’s official GHG accounting methodology, reflecting ongoing improvement of scientific understanding, data sources, etc. Similar improvements occur across all sectors, including agriculture.

AAFC and ECCC scientists have developed GHG accounting improvements that affect estimates for both Soil Carbon and Crop Production, that were applied by ECCC in Canada’s 2022 National Inventory Report (NIR). The changes affect estimates for both cropland soil carbon sequestration and nitrous oxide emissions. The new accounting methodology shows Canadian croplands emit less nitrous oxide and sequester more carbon than previously accounted for. Nitrous oxide emissions are on average one quarter lower than previously reported and carbon sequestration in agricultural soils is on average three times larger than previously reported, but more variable year to year (mainly explained by the inclusion of crop yield).

For example, in the NIR, 2021 nitrous oxide from cropland for the year 2019 was reported as 24 Mt CO2e in the NIR 2021, and as 19 Mt CO2e in the NIR 2022. This difference is due to the use of updated emission factors from Canadian cropland, derived from more recent scientific studies. In the NIR 2021 carbon sequestration in agricultural soils for the year 2019 was reported as 7.8 Mt CO2e while it was reported as 17 Mt CO2e in the NIR 2022. This difference is due to the inclusion in the improved methodology of two factors previously not accounted for: changes in carbon sequestration linked to crop yield and addition of soil carbon from manure application. However, the differences in estimates in any given year are highly variable, and these examples are merely data from the most recent comparable year. The magnitude of these differences will not be the same year to year.

The effect on reductions needed to meet GHG emissions targets is minimal, given that targets are set relative to baseline years, and the baseline estimates were also adjusted retroactively using the new methodology.

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