Senator Woo: Thank you for the explanation. An expansion of an exemption is another word for a carve out, of course, but I appreciate that that’s what you’re looking for.

Your argument that increasing or preserving the margins of farmers so they can spend surpluses on innovative and less carbon-intensive technologies has a logic to it, but the point is that you need some kind of incentive for them to do that. There’s no guarantee that farmers will use the surpluses, fungible as they are, for that particular task.

Again, there are other tools by which we can incentivize farmers to use geothermal and solar and whatever else might appear, and this is through the means of direct incentives for those technologies.

Why are we not considering these other pathways that, on the one hand, are consistent with the universality of a carbon tax, recognizes the fluctuations, incomes and prices that farmers inevitably face, but also focus on incentives for specific carbon‑reducing technologies that may be available in the years ahead?

Senator Wells: Thank you for the question, Senator Woo. I’m sure those incentives are already there for migrating to alternative sources of fuel that have carbon neutrality, like geothermal, solar and wind, but we’re not there yet. We may be there in some small-scale operations, but we’re not there on an industrial scale.

Canada, among most countries, is a world leader in industrial farming. These are industrial-scale operations that don’t yet enjoy the benefit of geothermal and all the other things that may occur in the future through innovation, investments or other technologies, but this is what we have. The carbon tax is relatively new, and the industry has not caught up to it.

One day, it would be great if these industrial processes were carbon neutral. In regard to on-farm, I still push back on your claim that this is a carve-out because the system already exists where there are exemptions. This is just adding to those exemptions. We will agree to disagree.

This is further assistance for the ranchers, growers and farmers to reach where they need to be.

Hon. Yuen Pau Woo: Thank you, Senator Wells, for your speech. You make some important points about the unique nature of agriculture in relation to the use of fossil fuels. The value of a carbon tax is greatest when it has few exemptions. My question with respect to the issue of agriculture being price takers is that prices go up and they go down, of course. Sometimes world prices go up to a point where there are windfall profits for farms, and sometimes they go down to the point where farms are at jeopardy of going bankrupt.

The traditional remedy for these kinds of problems in economics is price and income support. Why don’t we look to that kind of protection, if I can put it that way, rather than fiddling with a carbon tax and creating a carve out that might distort incentives away from our combined and collective goal of reducing carbon emissions?

Senator Wells: Thank you for that question, Senator Woo — it’s a good one. I don’t look at this as a carve out. This is an expansion to the exemptions that were provided in an earlier act. I think there was an oversight and, in fact, the chair of the House Agriculture Committee noted that, that this was an oversight. In fact, he supported this bill in the House.

This is also part of a program for farmers. I don’t think they want subsidies. Perhaps they will take them, but I think they just want a business that works for them and, where eligible, expenses at times when there are alternative fuels or alternative processes, they will use those. Right now, there are no alternative fuels or processes besides natural gas and propane, which are both, as you know, considered transition fuels.

They want to get better, but that’s why there’s a sunset clause on this. It would have to be considered to be renewed; it’s not ongoing. It automatically cancels after eight years.

Canadian farmers, growers and ranchers want to get better. They’re part of the solution in the environmental debate. I think this exemption simply expands where an oversight occurred in the earlier legislation.