Question Period Note: CLIMATE CHANGE MITIGATION

Q1 — How is the Government ensuring that the federal carbon pollution pricing system does not create an unreasonable burden on Canadian farmers? Q2 — What actions has the Government taken to reduce methane emissions from the agriculture sector? Q3 — What is the Government doing in response to nitrous oxide emissions from synthetic fertilizer application? Q4 — How will the Sustainable Agriculture Strategy help mitigate climate change?

R.1 - We understand the unique challenges faced by the agriculture sector and have designed the carbon pricing system to reflect these challenges.
Approximately 97 percent of greenhouse gas emissions from the agriculture sector are not subject to federal carbon pollution pricing, including any emissions from crop and livestock production. We also provide exemptions for gasoline and diesel used in eligible farming activities, and commercial greenhouse operators are eligible for 80% relief from the fuel charge on natural gas and propane.
A portion of the proceeds from the price on pollution is being returned directly to eligible farm operations in backstop jurisdictions through a refundable tax credit. In addition, the Canada Carbon Rebate for Small Businesses for eligible farm businesses and the Canada Carbon Rebate for eligible residents, including farm families, can help offset the cost of federal carbon pollution pricing. R.2 - 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. In support of the Global Methane Pledge, Environment and Climate Change Canada published Canada’s Methane Strategy in September 2022, which outlines existing and upcoming measures targeting methane emissions reductions from the three key emitting sectors, including the agriculture sector. We intend to continue working with the sector to determine the best path forward for reducing emissions.
Launched in November 2023, the Agricultural Methane Reduction Challenge will provide up to $12 million to advance innovative, low-cost, and scalable practices, processes, and technologies that reduce enteric methane emissions produced by cattle. In the summer of 2024, the 13 semi-finalist projects were announced as a part of the first stage of the challenge.
In December 2023, Environment and Climate Change Canada published a draft protocol "Reducing Enteric Methane Emissions from Beef Cattle federal offset" for a 60-day public comment period to seek public input to inform the preparation of the final protocol. An offset protocol for the Avoidance of Manure Methane Emissions through Anaerobic Digestion and Other Treatments is also currently in development.
AAFC will continue to work with key stakeholders and partners, including through the development of the Sustainable Agriculture Strategy, to better understand barriers and opportunities for reducing methane emissions in the agriculture sector.
Budget 2022 committed $100 million to the federal granting councils to support sustainable agriculture to fight climate change. Nearly all of this funding is being delivered through the Sustainable Agriculture Research Initiative by Innovation, Science and Economic Development Canada in collaboration with Agriculture and Agri-Food Canada. This initiative will support research on transformative solutions for a sustainable, resilient and profitable agriculture sector in a net-zero economy - including reducing methane emissions from beef and dairy cattle through improved management practices and technologies. R.3 - We have set a national target to reduce emissions from fertilizers by 30 percent below 2020 levels by 2030. The 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.
Through the Sustainable Agriculture Strategy Advisory Committee, a multi-stakeholder, expert-driven Fertilizer Emissions Reduction Working Group was created to provide advice and guidance on the development of an approach to reach the target. The Working Group met regularly throughout its one-year term, ending in May 2024, and held discussions focused on economic policy tools, innovation and research and development, beneficial management practice adoption and implementation, data and measurement, and extension and communication. In June 2024, The Working Group submitted its recommendations and advice to the Advisory Committee that will help guide the development of a collaborative approach for reducing emissions from fertilizer application in Canada’s agriculture sector.
We look forward to working with provinces and territories, industry partners, and Canadian farmers who are already taking action to reduce greenhouse gas emissions, sequester carbon and continuously improve their operations to ensure they remain sustainable, productive, and competitive. R.4 - The Government of Canada is developing a Sustainable Agriculture Strategy to support the agriculture sector’s actions on climate change and other environmental priorities towards 2030 and 2050. Climate change mitigation is one of five priority areas of the Strategy.
The Strategy will build on past and current successes, recognizing action already taken by producers to meet environmental objectives while growing production and supporting Canada’s role as a global food provider. As part of developing the Strategy, we have been working with the sector to identify pathways to lowering emissions that also result in economic and social benefits.

The sector has demonstrated a commitment to sustainable practices that help protect Canada’s soil, air, water, biodiversity and climate change. However, the sector accounts for 10 percent of Canada’s total greenhouse gas (GHG) emissions through crop production, animal production, and on-farm fuel use. Agricultural lands can also act as “carbon sinks” by storing (or sequestering) carbon in the soil, reducing the amount of carbon in the atmosphere.

The $3.5-billion, five-year Sustainable Canadian Agricultural Partnership aims to achieve a three-to-five megatonne reduction in greenhouse gas emissions and includes a $250-million federal, provincial, and territorial cost-shared Resilient Agricultural Landscape Program to help producers conserve and enhance the resiliency of agricultural landscapes.

Since 2021, the Government has invested over $1.5 billion into supporting farmers with new technologies and farming practices to reduce emissions and improve farm performance. This includes the $185-million Agricultural Climate Solutions—Living Labs, $704.1-million Agricultural Climate Solutions—On-Farm Climate Action Fund, and the $441.4-million Agricultural Clean Technology Program, including the $12-million Agricultural Methane Reduction Challenge.

The Government has also set a national target to reduce emissions from fertilizer application by 30 percent below 2020 levels by 2030 and is working with fertilizer manufacturers, farmers, provinces and territories to develop an approach to meet it. The target does not represent a ban or mandatory reduction in the amount of fertilizer that can be used on farms, but rather is intended to build on progress already made by Canadian farmers to reduce emissions and apply fertilizers more efficiently.

Sustainable Agriculture Strategy
The Government of Canada is developing a Sustainable Agriculture Strategy (SAS) as a means to support the agriculture sector’s actions on climate change and other environmental priorities towards 2030 and 2050. The Strategy is a coordinated federal plan to establish a long-term vision and strategic approach to agri-environmental issues, including climate adaptation and resilience, climate change mitigation, water, biodiversity, and soil health. The Strategy will build on past and current successes, recognizing action already taken by producers to meet environmental objectives while growing production and supporting Canada’s role as a global food provider.

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 rising to $170/tonne in 2030.

Private Member’s Bill C-234 seeks to amend the Greenhouse Gas Pollution Pricing Act to expand fuel charge relief for farmers with respect to the use of propane and natural gas. Bill C-234 passed the vote in the House of Commons on March 29, 2023, and was adopted in the Senate on December 12, 2023. It included amendments to remove the exemption for natural gas and propane used to heat or cool buildings as well as similar structures used for raising or housing livestock, growing crops, and restrict the sunset clause to three years from eight. Bill C-234 has now been sent back to the House of Commons for consideration of the amendments made by the Senate.

There are three distinct payments to help farmers offset the cost of federal pollution pricing: the Return of Fuel Charge Proceeds to Farmers Tax Credit, the Canada Carbon Rebate (CCR) for Small Businesses for eligible farm businesses, and the CCR for eligible residents, including farm families (i.e., families with one or more farm owners or operators).
The Return of Fuel Charge Proceeds to Farmers Tax Credit returns a portion of the fuel charge proceeds directly to farm operations in provinces where the fuel charge applies, which currently includes Ontario, Manitoba, Saskatchewan, Alberta, Newfoundland and Labrador, Nova Scotia, New Brunswick, Prince Edward Island, Yukon and Nunavut. 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 outlined in Budget 2024, some farming businesses may also be eligible to receive the Canada Carbon Rebate, which will return over $2.5 billion in proceeds from pollution pricing directly to small- and medium-sized businesses in backstop jurisdictions. To be eligible, farming businesses must be a Canadian-controlled private corporation and have fewer than 500 employees. The amount or payment rate of the refundable tax credit has not yet been specified, but it will be based on the number of employees that a business has in that year. The CCR for Small Businesses can help offset the cost of pollution pricing in addition to what farmers may also be eligible for under the Canada Carbon Rebate for individuals and families and the Return of Fuel Charge Proceeds to Farmers Tax Credit.
The CCR is available to all residents, including farm families, residing in provinces where the fuel charge applies, and consists of a basic amount (depending on the province of residence) and a supplement for residents of small and rural communities. The CCR is provided in quarterly tax-free payments starting in July 2022.
On October 26, 2023, the Prime Minister announced that the CCR supplement for residents of small and rural communities was increased from 10 to 20 percent of the baseline amount beginning in April 2024. The Prime Minister also announced that the Government is moving ahead with a temporary, three-year pause to the federal price on pollution on deliveries of heating oil in all jurisdictions where the federal fuel charge is in effect. In the meantime, the federal government is working with provinces to roll out heat pumps and phase out oil for heating over the longer term.

Canada’s Greenhouse Gas Offset Credit System
Canada’s Greenhouse Gas (GHG) Offset Credit System is designed to encourage cost-effective domestic GHG emissions reductions and removal 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.

The specific agriculture practices that can generate offset credits will be determined during the protocol development process. Protocols for Enhanced Soil Organic Carbon, Reducing Enteric Methane Emissions from Beef Cattle, and the Avoidance of Manure Methane Emissions through Anaerobic Digestion and Other Treatments are currently being developed for the agriculture sector. Technical expert teams have been established, which include scientists from Agriculture and Agri-Food Canada, to provide advice on the latest science. Members of the public will have an opportunity to comment on draft protocols as a part of the protocol development process.

In December 2023, a draft Reducing Enteric Methane Emissions from Beef Cattle federal offset protocol was published for a 60-day public comment period. The protocol is intended for use by a proponent undertaking a project to reduce enteric methane emissions in confined beef cattle feeding operations through improved management, diet reformulation, the use of feed additives, growth promoters, or other innovative strategies.

• 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 climate objectives and to avert the worst impacts of climate change.
• Since 2021, our government has announced $1.5 billion in initiatives for climate change mitigation and adaptation in the agriculture sector.
• The Sustainable Canadian Agricultural Partnership was launched in 2023, with a priority of addressing climate change and advancing environmental sustainability. It aims for a cumulative greenhouse gas emission reduction outcome of three to five megatonnes over five years.
• We are also developing a Sustainable Agriculture Strategy that will outline a shared vision for long-term action on climate change and other environmental priorities in the sector.