As governments continue to make climate policy one after another, some farmers are calling it a bigger threat than the ongoing weather ups and downs that they’ve historically managed to adapt to. Potential policy risk associated with climate mitigation isn’t limited to the resource sector but has significant financial implications as well.
“Climate change policy may be the biggest threat to Canadian agriculture…,” tweeted Alberta sugar beet farmer Cory Vanden Elzen on May 27.
He was responding to a CTV interview with professor Sylvain Charlebois, senior director of the Agri-Food Analytics Lab at Dalhousie University. Speaking on how food inflation is limiting grocery options for Canadians, Charlebois also touched on the impact of climate on farmers.
Another response came from Glengarry County, Ontario, cash crop and cattle farmer Keith Wells who tweeted on the same day: “I fear climate change policy the most. Farmers have always had to deal with the weather. Sometimes it’s with us and sometimes it’s against us. That hasn’t changed since man planted his first seed. We will adapt.”
The most impactful policy issue is the carbon tax, but aside from that, other policies include the clean fuel standard, the progressive banning of gasoline-powered vehicles, and compliance with environmental, social, and governance (ESG) standards.
“It’s a bit disingenuous to actually believe that Ottawa is in a better position to tell farmers what to do,” Charlebois told The Epoch Times on May 30.
The agriculture industry has long said farmers are stewards of the land, and their livelihoods depend on the environment being conducive to farming.
“It’s kind of discouraging to see that many of our policies that we have, we’re not even sure if any changes that we’re hoping to see are measurable. And so that’s really I think, where farmers are coming from here,” Charlebois said.
Improving Policy-Making
The Canadian Federation of Independent Business (CFIB) published a report in May on “developing environmental policy with small business in mind.”
The first of 10 principles in the report states, “Environmental policies should support the principle that it is possible to grow the economy and protect the environment at the same time.”
The report was based on a survey of CFIB members which showed that the policy eliciting the strongest opposition (85 percent) was the carbon tax rising from $50 to $170 per tonne of carbon dioxide emissions by 2030.
Proposed legislation Bill C-234 would eliminate the carbon tax on barn heating and grain drying. One of its proponents, Senator Rob Black, told parliamentarians on May 9 that it offers relief to farmers without compromising environmental goals.
Black said the carbon tax added an estimated 22 percent to the cost of drying grain.
“Farmers are price-takers not price-makers,” Black said. “They are subject to the impacts of the market, the same as everyone else.”
In its recommendation on the carbon tax and climate policy writ large, the Canadian Federation of Agriculture (CFA) said, “No climate policy should have the effect of directly or indirectly negatively impacting food security” and “governments must strive to achieve greater consistency in climate change policies in order to reduce impacts on agricultural producers.”
The CFA is in support of Bill C-234, which would add natural gas and propane to the list of fuels exempt from the carbon tax.
Regarding other climate policies, Taylor Brown, one of the co-authors of the CFIB report, told The Epoch Times on May 30 that she believes “the banning of the sale of new gas-powered vehicles will impact farmers a lot more than the clean fuel standard.”
Other assertions that elicited strong conviction were that agri-businesses (86 percent) want governments to provide rebates, grants, and other support to help them adapt to environmental policy changes, and that agri-businesses (80 percent) don’t think environmental policy-makers understand their realities.
Investors, Financial System
Climate policy is not just problematic for the resource sector, but investors see it as one of their top risks when investing in clean energy. This takeaway emerged from a survey conducted by the ARC Energy Research Institute in late 2022.
“Every time we go talk to investors about clean energy, we get questions about policy right away,” said Jackie Forrest, executive director of the ARC Energy Research Institute, during a May 16 ARC Energy Ideas podcast.
Peter Tertzakian, managing director of ARC Financial, noted during the podcast that policy could change depending on who is in power.
“There’s so much policy coming so quickly. … Financial analysts are having a lot of difficulty trying to figure out what does this policy mean? How does it handicap the risk-return mindset that I’ve had for a century?” he said.
Tertzakian said that transitions historically didn’t require a lot of policy. He gave the example of when electrification first emerged in the 19th century, where there were no policies forcing people to abandon kerosene lighting.
“Today, to try and get people off of the established incumbents [fossil fuels], if we’re trying to force that as a society under the broad umbrella of climate policy, we’re trying to force a very fast transition by historical standards,” he said.
Climate policy is the real threat to the financial system and not climate-related risks, according to Steve Ambler, a monetary policy expert and economics professor who recently retired from Université du Québec à Montréal.
“Seems to me that they [the Bank of Canada and Office of the Superintendent of Financial Institutions] don’t really clearly distinguish between these, but I think a lot of the costs of the climate transition—so-called—are coming from the policies, rather than the climate risk itself,” he told The Epoch Times in 2022.
Ambler was speaking about how Canada’s financial authorities have been examining the risks of transitioning to a green economy and the risks from extreme weather events. He said he was skeptical that quasi-governmental institutions are capable of evaluating the risks faced by private companies.
Experts have said that the green transition is an inflationary phenomenon.
Food inflation is still running very high in Canada. Year over year in April, it’s up 9.1 percent compared to overall inflation, which is up 4.4 percent.
“I think everyone understands that we need to do something,” Charlebois said. “Doing nothing is not an option. At the same time, we need to know exactly what we’re doing.”
