If it passes the Senate and becomes law, Bill C-234 will add natural gas and the propane used to dry grain and heat livestock barns to the list of exempted farm fuels, including diesel and gasoline.
Ostensibly, the governing Liberals are none too pleased by last week's outcome.
"It's disappointing to see the NDP, the Green Party and the Bloc — parties who claim to be progressive — vote alongside the Conservative Party to effectively weaken climate action in Canada," said Environment and Climate Change Minister Steven Guilbeault.
"Our government will always stand up for putting a price on pollution, which has long been recognized by people on both the right and the left as the best market-based approach to cutting greenhouse gasses and driving cleaner technologies."
If the bill fails, Guilbeault said his government would mitigate the costs of climate change caused by natural disasters like floods, storms and wildfires that walloped farmers.
Through an Access to Information request, a brief by the Canadian Security Intelligence Service (CSIS) said climate change "presents a complex, long-term threat to Canada's safety, security and prosperity outcomes."
"There will be no single moment where this threat will crystallize and reveal itself, for it is already underway and will incrementally build across decades to come," it reads, adding that climate change would create new scarcity and threaten global health and safety.
As sea levels rise, the federal spy agency anticipates "irretrievable loss" of infrastructure and entire coastline communities due to extreme weather events. They claimed their modelling demonstrates the potential loss of substantial parts of British Columbia and the Atlantic provinces.
Furthermore, three Liberal MPs voted in favour of the bill sponsored by Conservative MP Ben Lobb, including MPs Heath MacDonald, Robert Morrissey and Kody Blois.
The carbon tax is a "highly charged issue that matters in [Blois'] agrarian riding," which made it sensible for him to vote against his party, said Alex Marland, professor and head of the department of political science at Memorial University.
Associate Agriculture Shadow Minister Warren Steinley declared the passing of Bill C-234 a "big win" that will "put tens of thousands of dollars back in the pockets of Canadian farm families."
However, environmental groups like Environmental Defence warn the bill would erode the carbon tax's incentivization of low-carbon innovation to reduce Canada's carbon emissions.
Tim Gray, executive director at Environmental Defence, suggested Ottawa give farmers tax rebates to mitigate carbon tax costs. In a release, they acknowledged farmers "do not yet have a full suite of options to replace fossil-fuelled grain dryers and barn space heating."
"Exempting these high-emission activities from carbon pricing for farmers will only further encourage other sectors to demand similar treatment," he said, pointing to ongoing problems with this in other sectors, particularly the oil and gas industry.
The Canada Climate Institute estimates that emissions have declined below 2005 levels in all sectors except oil and gas, transport and buildings. According to the Parliamentary Budget Officer (PBO), the real GDP for oil and gas and transportation will fall under these targets by 10.8% and 16.2% by 2030, respectively.
According to a recent Institute report, Canada's emissions fell 2% per unit of GDP compared to 2020, despite overall 2021 emissions up at 691 megatonnes, owing to industry activity and oil and gas production levels.
Statistics Canada and Simon Fraser University's Canadian Energy and Emissions Data Centre data said Canada produced 738 megatonnes of emissions before the COVID pandemic.
Therefore, Environmental Defence urged the Senate to amend Bill C-234 to accelerate farmers' adoption of clean energy technologies.
In 2022, the Standing Committee on Agriculture and Agri-Food amended the bill to terminate the natural gas and propane exemption in eight years, with the ability for Parliament to extend the exemption if viable technologies are unavailable.
"[This means the industry will get] a little break right now, but it's not going to last forever," said NDP agriculture critic Alistair MacGregor in January. He admitted the carbon tax doesn't incentivize farmers to adopt greener technologies because commercially viable alternatives to propane-run grain dryers have yet to be created.
On March 29, Agriculture and Agri-Food Canada announced over $22.2 million in funding for 45 new projects to develop a more efficient grain-drying technology nationwide. Geerts Farms Ltd. received $2 million to purchase and install a new grain dryer and biomass boiler powered by locally sourced wood waste, eliminating propane from crops.
The federal agriculture department's Agricultural Clean Technology Program has supported 99-grain dryer projects nationwide.
Guilbeault said Ottawa invested over $1.5 billion in the past two years to help farmers reduce emissions, including the nearly half-billion-dollar Agricultural Clean Technology Program. He said it encourages farmers to purchase more eco-friendly, energy-efficient grain dryers and heating systems.