Impact of Carbon Pricing on Food Affordability Needs Closer Scrutiny: Study

A Metro truck pulls out of the food distribution centre in Ottawa on June 24, 2022. Sean Kilpatrick/The Canadian Press

As food affordability remains a key concern in Canada, a newly released study says the impact of carbon taxes on food prices needs more scrutiny.

The issue of whether the federal carbon tax, or fuel charge, is impacting Canadians’ pockets has been hotly debated by politicians in Ottawa.

The new study, primarily conducted by Dalhousie University researchers, involved reviewing the literature about the impact of carbon pricing policies on both the agri-food sector and food prices.

While the study mentions that carbon taxes “reduce disposable income and raise food prices,” it also notes there has been limited research on the topic in Canada.

“Frankly, what we discovered is that we just don’t know much about it,” the study’s lead author Sylvain Charlebois told The Epoch Times in an interview.

“And so we can only come to the conclusion that the Trudeau government implemented this policy without really understanding how it would impact Canada’s food affordability situation,” said Charlebois, who is senior director of the Agri-Food Analytics Lab at Dalhousie.

The Epoch Times contacted Environment Canada for comment but didn’t immediately hear back.

Charlebois said the carbon tax is a powerful tool that can impact the market, but not measuring that impact could affect the competitiveness of an entire agri-food industry.

“We do postulate that this actually could be the case, that we’ve implemented this policy without understanding how it has undermined our agri-food sector’s ability to compete, not only with the rest of the world, but also domestically,” said Charlebois.

The study says that while carbon pricing schemes are “crucial” to reduce greenhouse gas emissions, they can drive food prices up and hurt low-income households.

Researchers note the potential effects of carbon pricing on food production come through higher fuel prices to run farm machinery or transport products, as well as increased costs to make fertilizers and pesticides.

“Future research and policy refinement should focus on optimizing carbon pricing mechanisms to effectively reduce emissions while safeguarding food security and affordability for all income levels,” concludes the study.

Charlebois said a follow-up study that delves deeper into the effects of the carbon tax on food prices will be published in the coming days.

The issue of the federal carbon tax, or fuel charge, has been a major bone of contention between the Liberal government and the Conservative Opposition.

Liberals say the carbon tax is revenue-neutral and that eight out of 10 Canadian households get more back in carbon rebates than they pay in carbon tax.

The fuel charge currently adds more than 17 cents to a litre of gasoline in impacted provinces. Ottawa plans to raise it to more than 37 cents a litre by 2030.

Conservatives say the carbon tax is negatively impacting the Canadian economy and making things more expensive.

The Parliamentary Budget Office released its updated analysis on the carbon tax in October. It says the average household will see a net gain from the carbon tax and associated rebate in 2030-2031, if only weighing the fiscal impacts. If counting both the fiscal and economic impacts, the average household will see a net loss in 2030-2031.

“Given that the fuel charge lowers employment and investment income, which makes up a larger share of total income for higher income households, their net cost is higher,” the budget office says.