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B.C. Carbon Tax Doesn't Hurt Agricultural Sector: Study

07/23/2014 08:32 EDT | Updated 09/22/2014 05:59 EDT
PHILIPPE HUGUEN via Getty Images
A farmer drives a tractor to spray pesticides on his field, on June 11, 2013 in Godewaersvelde, northern France. AFP PHOTO / PHILIPPE HUGUEN (Photo credit should read PHILIPPE HUGUEN/AFP/Getty Images)

Despite industry claims to the contrary, British Columbia's carbon tax has not hurt the province's agricultural sector, a new Pacific Institute for Climate Solutions study concludes. Further, the study suggests that the more than $25 million worth of competitive "relief" that the provincial government has granted the industry in recent years may not have been necessary.

"When we look back at the first five years of the carbon tax, the claims were it was decimating agricultural producers, that they were unable to compete with Mexico and California," said Nicholas Rivers, from the University of Ottawa, a co-author of the paper with Western University's Brandon Schaufele.

"Well, we didn't see that at all."

For their research, the pair examined trade data from Statistics Canada, Industry Canada, and Environment Canada from 1990 to 2011 -- which covered the period before and after the policy's introduction -- and controlled for other factors that could influence trade, such as weather.

The result contradicts claims by the greenhouse sector that the revenue-neutral carbon tax, which reduces carbon pollution by taxing carbon emissions across the economy, had driven some growers out of business, and others out of the province.

"This tax is killing us," Linda Delli Santi, executive director of the Greenhouse Growers Association, said in a submission to the province's carbon tax review back in 2012.

The association has never been a fan of the province's revenue-neutral carbon tax.

That's because its members burn a great deal of propane and natural gas to grow hothouse tomatoes, cukes, flowers, and other food and agriculture products. As a result, compared with other less-carbon intensive sectors, its members pay a relatively high tax burden.

"We believe in a clean environment, but this is putting our livelihood and thousands of jobs in danger," Delli Santi stressed in 2012.

Government agreed, and in April of that year granted the sector $7.6 million in carbon tax relief. Just over a year later, the province extended and expanded the benefit, providing vegetable and flower growers and others in the agricultrual sector with $20 million over three years to ensure competitiveness. The province doesn't just offer greenhouse growers a break, it grants the entire agriculture sector an exemption on gasoline and diesel purchases.

The new Pacific Institute for Climate Solutions research suggests the relief isn't needed, because the carbon tax does not have a measurable impact on agricultural trade.

British Columbia has set a target to reduce greenhouse gas emissions 33 per cent below 1997 levels by the year 2020, and is on track to meet it. Polling released Tuesday by the Pembina Institute, Clean Energy Canada, and the Pacific Institute for Climate Solutions confirms that British Columbians want to see that leadership continue.

The carbon tax is a key tool in meeting the province's commitment, but only if its integrity remains intact. When one sector is granted a "free pass" -- as the agricultural sector has -- it not only removes the incentive to innovate, but Rivers said it places added pressure on other sectors to pick up the slack.

"If the cheapest emissions reduction is via carbon tax, then eliminating the tax on some sectors means we are eliminating the cheaper options and placing them somewhere else," he said.

"You don't want to hand out these exemptions willy-nilly," Rivers added. "There doesn't seem to be much quantitative evidence that the agricultural sector should be exempt from the carbon tax."

The new research, when considered collectively with a range of independent analyses on the British Columbia carbon tax, shows that carbon pricing doesn't compromise economic stability. The data shows that the province's per-capita fossil fuel combustion is dropping relative to the rest of Canada, while economic growth has not taken a hit.