Are carbon taxes a threat to our food supply chain?
By Lethbridge Herald on November 8, 2023.
Sylvain Charlebois
DALHOUSIE UNIVERSITY
Political desperation can be a powerful thing, as we witnessed last week in Ottawa. The Trudeau government not only put a hold on the carbon tax applied to heating oil for three years, but it also announced a doubling of the rural supplement in the carbon tax rebate program.
In mere minutes, Ottawa not only transformed the carbon tax into a negotiable political lightning rod but also lent credence to those who have voiced doubts about the narratives surrounding carbon pricing.
For starters, the government’s decision to increase rural supplements in the carbon tax rebate program implicitly acknowledges the argument that suggested the rebate might not have been sufficient to cover the associated costs.
It is clear that carbon tax proponents in academic circles are now receiving less attention from Ottawa.
As the cost of living becomes a matter of survival for many Canadians, Ottawa is beginning to heed the concerns of the broader population, not just environmental activists.
Carbon pricing undeniably carries significant weight in Canada, serving as a critical policy to address climate change concerns. In particular, the agri-food sector faces an arguably substantial threat from climate change, leaving inaction as an undesirable option. Decarbonizing the economy is rapidly becoming a global priority, and Canada must play its part. Despite the unpopularity of carbon pricing in some quarters, it stands out as a relatively lesser evil for the economy. However, when it comes to food, the stakes are notably higher.
Since the Trudeau government has paused the carbon tax for heating oil, a compelling case can be made for examining the impact on our entire food supply.
It is imperative that we conduct a rigorous evaluation of how carbon pricing affects food affordability for Canadians and the long-term competitiveness of our industries.
Unfortunately, comprehensive analyses in this regard have been conspicuously lacking, with much of what we’ve encountered appearing to be influenced by biased narratives, particularly from organizations like the one-sided Smart Prosperity Institute and Climate Change Centre, which often rely on a limited pool of intellectual activists.
Nevertheless, our research team at Dalhousie University, comprised of several researchers, has begun shedding light on the scarcity of research in this critical area.
What needs to be underscored is how the public discourse surrounding carbon pricing and food affordability has been misdirected. Rather than asking whether the carbon tax is an easy scapegoat for high food prices, the more pertinent question is whether the carbon tax negatively impacts the competitiveness of our food industry.
Quantifying the direct and straightforward impact of carbon pricing on retail food prices is challenging, if not impossible, given the many factors influencing prices, including consumer behaviour and weather.
Suggesting that carbon pricing has a direct, linear effect on retail food prices would be misleading. Prices fluctuate for various reasons, so our primary focus should be on industrial and wholesale prices.
Our research has revealed a significant contrast between industrial and wholesale prices. Industrial prices are notably more susceptible to cost fluctuations, which unquestionably encompass the influence of carbon pricing. These cost increases within the supply chain are far more quantifiable and trackable.
In recent years, the Industrial Product Pricing Index related to food has outpaced the Consumer Price Index for food prices, a trend that has been largely overlooked.
Carbon pricing has led many to become passive when assessing environmental politics, failing to critically question the figures presented. For example, the Bank of Canada recently made claims about carbon pricing that went unchallenged.
It estimated that only 0.15 percent of inflation could be attributed to carbon pricing, but this calculation considered only the direct impact of the carbon tax on three products included in the consumer price index: gasoline, heating oil, and natural gas. It did not account for second-round or pass-through effects.
What was concerning is that not a single reporter questioned how the Bank arrived at this conclusion until Dalhousie University sought this information. It’s as if everyone was sleepwalking.
While the outright elimination of the carbon tax is not advisable, a temporary pause on any carbon pricing policies affecting our food supply chain should be considered until we gain a clearer understanding of their impact.
Such a measure would be a responsible course of action at this time.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
The opinions expressed by our columnists and contributors are theirs alone and do not inherently or expressly reflect the views of our publication.
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I hope ‘environmental activists’ are paying attention.
Carbon taxes – the brainchild of neoliberal market fundamentalists to send ‘corrected’ market signals – is grudgingly accepted by the environmental community as the only game in town advanced by politicians and their advisors.
Carbon taxes largely fail to reduce emissions. The mess is blamed on environmentalists, who mainly had a lukewarm interest in them to begin with.
Its time for everyone to deal with reducing emissions directly. Hard caps in high-emission industries, lowering in time. Increased taxes on high-emission products and services. Redistributed wealth (as the majority of emissions are caused by the 1%). Monitor impacts for measures of equality and fairness, as the Opinion limply articulates.
You said: Redistributed wealth (as the majority of emissions are caused by the 1%)
With this strategy you will also be redistributing the emissions to go along with the redistributed wealth. Anyone who has an increase in wealth concurrently emits more. Why wouldn’t they?
The concept of a carbon tax makes sense: Raise the price of a good, people should use less of it. The problem is, there is no other choice at a reasonable cost. Its hydrocarbons or nothing for our livelihood.
It s a wonderous and beautiful energy source that cannot be easily replaced.
Thanks for the comments. Your point about redistribution is a good one. The thinking however is that at a certain wealth threshold people begin to super-consume: yaughts, mansions, private jets, helicopter transit, etc. The other aspect of great wealth is that economic power translates into political power, and they choose to use this power to maintain and expand their economic power. Climate policy becomes a barrier to them.
https://www.iea.org/commentaries/the-world-s-top-1-of-emitters-produce-over-1000-times-more-co2-than-the-bottom-1
And I agree that the carbon tax should change behaviour, but might be limited by a lack of alternatives. On the other hand, for all the people squealing about home heating, I wonder how many turn down the thermostat when they are out.
Fossil fuels are marvelous. Until its continued use makes much of the planet uninhabitable.
True, power follows money.
There is no evidence the earth will become uninhabitable though. That’s the problem with these outlandish claims. Yes, emissions are a problem, but the IPCC’s own reports don’t support an end to life.
And in any event, the problem wont be solved in Canada. Asia, Africa and South America hold the say. They are pursuing the wealth and lifestyle we enjoy here. Climate be damned.
The latest IPCC report is unequivocal about the risks of climate change under a business-as-usual scenario – the path that we are on.
‘The report lists mounting dangers to people, plants, animals, ecosystems and economies, with people at risk in the millions and billions and potential damages in the trillions of dollars. The report highlights people being displaced from homes, places becoming uninhabitable, the number of species dwindling, coral disappearing, ice shrinking and rising and increasingly oxygen-depleted and acidic oceans.’
When I stated uninhabitable, I meant for human populations (and many nonhuman species as well). Sea level rise, frequent and intense weather events, and heat waves for most of the human population will make it uninhabitable. The rest will be taken care of with the collapse of organized civilization, drought, food and water scarcity, concomitant with war over the remaining resources.
Each human is responsible to reduce emissions. Canadians live high on the energy hog and have much to account for.
The business-as usual-scenario is based on their RCP 8.5 scenario which they do not not predict (expect for Antonio Guterrez who embellishes beyond reason). Even in the mid-case scenarios, they have “low confidence” in weather event s occurring, in many of the models’ predictions.
Canadians live “high on the energy hog” because we live in a big, cold country and we have wealth.
I make no apology for my energy use and I don’t expectant any other Canadian to feel shame. Because there is no other choice. There is no other way to live without going backwards.
The fed government is bringing in 1 million more Canadians over the next three years. They come for our opportunity and to share in our wealth. I doubt they are here to live off of solar panels and drive a Tesla.
Energy is life. Cheap energy is a better life.
You make good points, and I appreciate the civil dialogue.
I wonder about the immigrants. I would hope they would adopt the values expressed in international agreements around reducing ghg emissions. This would be even more relevant as Canada accepts its share of hundreds of millions of climate refugees over the next four or five decades.
And I would hope ‘shame’ is not something anyone would feel – maybe ‘responsibility’? One of the critical problems with emissions is that the people accepting the ‘risk’ (as you note in the IPCC analysis) are not the people who will bear the repercussions of the decision – a form of moral hazard.
Also, as you say, cheap energy is a better life. But, as above, I would say that a better life in the future may be compromised.
Regards, S.
Might as well keep this going!
I believe the predictions of climate refugees is predicated, in part, on there being no effort put into adaptation. So rather than spend trillions on reducing emissions to change the temperature by 1 or 2 degrees, why not spend money on infrastructure to accommodate possible climate change effects? Remembering of course, most of the supposed refugees would be leaving countries which do not have the financial resources (partly because they do not have cheap and abundant energy i.e. Africa).
On a global basis, I believe Canada is very responsible in doing its part. We use already use zero-emitting or low-emitting sources of energy – nuclear, hydro, solar and wind (ugh) and nat gas. Our building codes require energy efficient materials, we use LED lights etc.
Its difficult to move the needle much more without harming individuals or the economy.
Canada’s share is 1.5% of global emissions, if we went to zero (which is impossible), we’d have no affect whatsoever.
Which brings us full circle to carbon taxes. Why would any sane government punish its own citizens, businesses and economy for zero incremental benefit to what is now being achieved? Cheers
Love this part
“Quantifying the direct and straightforward impact of carbon pricing on retail food prices is challenging, if not impossible, given the many factors influencing prices, including consumer behaviour and weather. ”
I have a wonderous idea for a way of avoiding strenuous academic work for your meagher six figure salary
Lower Diesel prices by a dollar a litre for trucks that deliver food at any level!
Problem solved. didn’t require higher math, or academia to go into a cone of silence for a year to develop a paper! Its called “common sense”! Something highly lacking in this new era.
I see nothing challenging to this issue. A Diesel truck leaves Mexico for Vancouver with banana’s. Even an ape could figure it out!
As electric semi’s are made available pair back the subsidy on the diesel fuel.
We have become so focused on the forest, we do not see the trees. I am not against “saving the planet” but I am not quite sure if the intent of present day stupidity is to save it, by starving part of the population to death? Is Climate Activism approaching Genocide? Fewer people, less consumption, more for those managing to stay alive!