Greenhouse gas controls affect input prices

Saturday, June 11, 2011

by SUSAN MANN

Farmers will feel the effects of regulations the federal government is implementing to help it meet greenhouse gas emissions targets, says Don McCabe, Ontario Federation of Agriculture vice president.

The federal government’s current approach to addressing climate change is to implement regulations for each sector, such as fertilizer manufacturing, natural gas, cement and metal manufacturers, he says. The regulations are being designed to help the federal government meet its commitment to reducing greenhouse gas emissions.

Growers will have to pay additional costs for products they use if the regulations end up costing the manufacturers more money. “Even though it’s called a regulation it is a form of a carbon tax,” says McCabe.

Farm leaders are promoting the concept of an offset market, which will given farmers an opportunity to voluntarily “be proactive in providing credits from actions we do on our farms to ensure we can offset the costs that are going to come on other industries,” he explains.

In a recently released report, called A Climate Change Plan for the Purposes of the Kyoto Protocol Implementation Act, 2011, it says Canada’s greenhouse gas emissions were 732 megatonnes in 2008 and 690 Mt in 2009. These numbers are from the latest National Greenhouse Gas Inventory.

The 2009 level dropped 42 Mt or six per cent from the 2008 level. It was the second year in a row that emissions decreased caused in part by the global recession and reduced use of coal for electricity generation, it says in the Climate Change Plan report. McCabe says he hasn’t seen the report.

Energy activities produced the majority of Canada’s greenhouse gas emissions in 2009 – 82 per cent or 566 Mt of the total. The remaining 18 per cent of the total Canadian emission was generated by other activities, including agriculture (8.11 per cent), industrial processes (6.7 per cent), waste (3.19 per cent) and solvent and other product uses (0.04 per cent).

Canada’s allowable emissions under the Kyoto Protocol for the 2008-2012 period are 2,792 Mt, it says in the Climate Change Plan report.

The report lists projected estimates for greenhouse gas emissions for the 2008-2012 period. The projected emissions growth is highly dependent on forecasting assumptions, such as the pace of economic growth and the world oil price.

Higher world oil and natural gas prices generally have the effect of increasing energy efficiency and thereby reducing emissions, it says in the report. Higher energy costs tend to increase the cost of production thereby lowering manufacturing activity and resulting in lower emission from these sectors of the economy.

But higher world oil prices will also stimulate increased oil and gas production activity in Canada and therefore increase emissions from that part of the economy, it says in the report. BF