Farm Natural Gas, Propane Exempt from Carbon Price

Summary#

This bill changes the Greenhouse Gas Pollution Pricing Act so that “qualifying farming fuel” includes marketable natural gas and propane. Today, the farm exemption mainly covers gasoline and light fuel oil (diesel). The change would let eligible farm operations avoid the federal fuel charge (carbon price) on natural gas and propane they use for farming (Bill s.1; amending GGPPA s.3).

• Expands the farm fuel exemption to marketable natural gas and propane (Bill s.1).
• Lowers energy costs for farm activities like grain drying and heating barns, where used.
• Applies only to eligible farming activities and mainly in provinces where the federal fuel charge applies.
• Reduces federal fuel charge revenue collected from these fuels when used by farms.
• Shifts administration to fuel suppliers and farms to identify qualifying use.

What it means for you#

• Households

  • No direct change to household fuel charges. Any impact on federal climate payments or other proceeds distributions is uncertain and would depend on future government decisions. Data unavailable.

• Farmers and farm operators

  • If you use marketable natural gas (pipeline-quality gas) or propane for eligible farming activities, you would not pay the federal fuel charge on those fuels once the bill takes effect (Bill s.1; amending GGPPA s.3).
  • Typical eligible uses include on-farm grain drying and heating or powering farm buildings for livestock or crops. Personal or household use (e.g., heating a farmhouse) would not qualify under the Act’s existing rules. Data unavailable for any new definitions in this bill beyond fuel types.
  • You would need to follow the Act’s existing process to claim the farm exemption when buying these fuels (e.g., providing the required information to your fuel supplier). Data unavailable on any new forms or procedures in this bill.

• Fuel distributors and retailers

  • You would need to update billing systems to apply the farm exemption to sales of marketable natural gas and propane to eligible farms and keep records to show qualifying sales. Implementation date and guidance: Data unavailable.

• Agri-food businesses that are not farms

  • No change. Commercial greenhouses or processors that are not covered by the farm exemption would continue to pay the fuel charge unless already relieved under other parts of the Act. Data unavailable.

• Provincial, territorial, and local governments

  • No direct change to their own fuel charges or programs. Federal proceeds collected from the fuel charge could decline to the extent farm use is exempted; how this affects proceeds returned in each jurisdiction is not specified. Data unavailable.

Expenses#

Estimated net cost: Data unavailable.

• No appropriation is included; the bill changes a definition that determines when the federal fuel charge applies (Bill s.1; amending GGPPA s.3).
• Effect on federal revenues: Would decrease fuel charge revenues collected on marketable natural gas and propane when sold for qualifying farming use. Magnitude depends on farm fuel volumes and carbon price levels. Data unavailable.
• Administrative costs for the Canada Revenue Agency and fuel suppliers to update systems and compliance processes: Data unavailable.
• No official fiscal note identified. Data unavailable.

Proponents' View#

• Aligns treatment of fuels used on farms by adding natural gas and propane to the same exemption that already covers gasoline and light fuel oil for farming (Bill s.1; amending GGPPA s.3).
• Reduces operating costs for grain drying and barn or greenhouse heating where there are limited short‑term fuel substitutes, helping cash flow and farm viability. Quantified savings depend on fuel use and carbon price. Data unavailable.
• Simplifies administration by using the Act’s existing farm fuel exemption framework rather than creating a new rebate program. Data unavailable.
• May limit pass‑through of energy cost increases to food prices, especially in crop years with heavy grain drying needs. Evidence on price effects: Data unavailable.

Opponents' View#

• Shrinks carbon price coverage for combustion emissions on farms, weakening the price signal to conserve energy or adopt efficiency upgrades (e.g., high‑efficiency dryers, improved insulation). Emissions impact not quantified. Data unavailable.
• Reduces fuel charge proceeds; unless offset elsewhere, this could lower amounts available for existing household or small business returns in backstop provinces. The bill does not specify how any shortfall would be handled. Data unavailable.
• Creates enforcement and fairness risks: distinguishing qualifying farm use from non‑qualifying household or commercial use of the same fuels can be complex for suppliers and auditors. Error or misuse risk not quantified. Data unavailable.
• Benefits are uneven, favoring farms with high natural gas or propane use over farms that already invested in lower‑emitting equipment or fuels, and over other sectors that continue to pay the charge. Distributional effects: Data unavailable.