Carbon price carve-out for heating oil muddied waters in Senate on other bill, senator says

A Conservative private member's bill to exempt more fuel used by farmers from the carbon price is stirring up intense lobbying efforts in the Senate, and leaving the Liberals on the verge of being forced to carve up their signature climate policy even more.

Alberta Sen. Paula Simons said efforts by both sides of the debate to pressure senators over this bill have been extreme.

She said she's concerned that rhetoric is outpacing reality in every direction.

"I've never been lobbied like this on private member's bill," Simons told The Canadian Press. "This bill has become symbolic and it's being used as a wedge issue."

Conservative Leader Pierre Poilievre, who has already made eliminating the carbon price the centrepiece of his political messaging ahead of the next federal election, has launched a full-on campaign to get the bill passed. That campaignincludes new ads launched on Wednesday.

The premiers of Alberta, Saskatchewan and Ontario all wrote letters to senators asking them to vote in favour of the bill.

Environment Minister Steven Guilbeault has reached out to some senators himself, seeking to push the government's reasons for not wanting the legislation to pass.

Simons said senators are receiving hundreds, if not thousands, of emails about the legislation, most of them sent by bots.

Bill C-234 was introduced by Ontario Conservative MP Ben Lobb in February 2022, and passed the House of Commons last March with the support of all parties except the Liberals.

The bill seeks to take the carbon price off natural gas and propane used by farmers for heating their buildings or running their grain dryers.

Gas, diesel already exempt

Farmers are already exempt from the price on pollution for gasoline and diesel to run their farm vehicles and machinery, but they have said the carbon price is costing them thousands of dollars for heating barns and drying their crops.

Dave Carey, co-chair of the Agriculture Carbon Alliance, told the Senate agriculture committee in September that there are "no viable alternatives" for heating and cooling livestock barns and greenhouses, or for grain drying.

He said the carbon price isn't an incentive to changebut rather is a "significant financial burden on producers who don't have other viable options."

Tom Green, senior climate adviser at the David Suzuki Foundation, told the committee there are things farmers can do to lower their fossil-fuel use for both barns and grain dryers.He pointed to poultry farms that have installed solar roofs or thick insulation that reducestheir energy consumption.

He also noted that the government has grant programs to help them transition to lower-emitting options, and offsets farmers' carbon costs with a tax credit.

That tax credit came into being after Bill C-234 was first introduced. It is not connected to the actual carbon price that is paid or the amount of fuel that is used, but is instead calculated based on a farm's income.

Greenhouse operators can also get 80 per cent of the carbon price taken off when they buy fuel for their greenhouse operations.

"Bill C-234 sets Canada on a slippery slope of considering sector-by-sector, special-interest-by-special-interest exemptions," Green said. "Every sector can come up with their own reasons for why they deserve relief."

Liberals pause tax on heating oil

A month after that meeting, the Liberals suddenly announced they would be exempting home heating oil from the carbon price for three years to allow people more time and money to replace oil furnaces with electric heat pumps.

Critics panned the move as a political manoeuvre to save Liberal votes in Atlantic Canada, where home heating oil is used by about one in three homes.

Simons said shewas livid. She had just voted in favour of a version of Bill C-234 that was amended in committee so that the exemption would only apply to grain drying not to heat for farm buildings.

And now the government was unilaterally carving out the carbon price in another sector that heavily benefited the Atlantic region.

When the legislation was brought back to the full Senate, senators struck down the committee's amended version of the bill, which would have left heating out.

Simons abstained from that vote.

"I couldn't look Alberta farmers in the face and vote in favour of it, given what had happened in Atlantic Canada," she said.

Forty-two senators voted against the amended bill, 28 voted in favour of it and three, including Simons, abstained.

The version of the bill that doesn't contain the amendment is still on the table and is awaiting a final vote before it either dies or passes and becomes law.

Simons said there are solid arguments from many camps in the debate about what senators should do. She dismissed the claim by premiers and Poilievre that the bill will lower grocery bills, however, because food prices are affected by a lot more than a carbon price on grain dryers.

"This is not going to dramatically drop the price of bread," she said.

The costs for farmers could also change because the tax credit that is meant to offset farmers' carbon costs may disappear if the bill passes. While some farmers have said the credit wasn't enough to offset their carbon price bills, other say it is.

Guilbeault said the government will have to wait and see what happens before deciding how to proceed.

Simons said she thinks the bill may still pass.

But the Senate, which is mostly represented by independent members without direct ties to any political party, is less predictable than it used to be so at the moment, it's not clear what will happen.

The bill is expected to resume debate when the Senate reconvenes next week.