Senator Yuen Pau Woo

Honourable senators, thank you for allowing the adjournment of this debate on Tuesday so that I can speak this evening. I was ready to speak last week, but the opportunity did not present itself. As it turns out, I’ve adjusted my intervention to take into account some of the excellent points made by our colleagues in the course of third reading debate, especially what I consider to be the two most compelling speeches in favour of the bill, which were delivered by my Independent Senators Group, or ISG, colleagues, Senator Arnot and Senator Cotter.

I offer my remarks not as a rebuttal to my colleagues, but more as thinking out loud about their key points. To be sure, I will land in a different place, but I want them and all of you to know that their speeches have forced me to think harder about Bill C-234.

Both Senator Arnot and Senator Cotter are committed to climate action. They believe in the importance of a carbon price and, further, believe that a carbon price would incentivize farmers to shift to lower emissions in the heating and cooling practices for barns and grain dryers. Nevertheless, they support the bill because they argue that the impact of excluding barns and grain dryers from the fuel charge will not make a big difference to Canada’s emissions reduction objectives, which, by the way, they support unequivocally. They also support the bill because of their belief in the necessity for small accommodations that can have large beneficial effects, especially in a fractious federation such as ours. Finally, they do not believe that Bill C-234 will contribute to any erosion of the greenhouse gas pollution pricing regime, and they are of the view that this bill should be considered specifically for what it purports to do and not for what it might lead to.

These are all reasonable and principled arguments that are worth our serious consideration. In some ways, I am comforted by their argument that the exemption of barns and grain dryers will not significantly affect Canadian greenhouse gas emissions. I suspect that many of you who are also concerned about climate change are similarly comforted. But should you be?

There are two difficulties with this argument: The first is that small differences add up, and the point about not bothering with such small differences is precisely the argument made by those who oppose any serious climate action by Canada because they say that we won’t make a huge difference to the reduction of global emissions. I have a hunch that this line of reasoning will gain traction if Bill C-234 is passed, and I personally do not want any part of it.

I respect the disciplined approach to the assessment of Bill C-234 proposed by Senator Arnot and Senator Cotter, which they believe should be taken strictly on its merits. That’s fair advice from our colleagues, and it reflects the precision and focus of the legal approach in which they are expert.

I come from a different tradition — that of political economy — where what you see is not always what you get, and where an understanding of the provenance of legislation and its second-order and third-order effects are as important as the text of the bill.

Hence, I cannot not think about whether Bill C-234 will lead to further erosion of the greenhouse gas, or GHG, pollution pricing regime. While it might have been possible to avert our eyes to the possibility that it was a Trojan Horse against carbon pricing when we began debating the bill some weeks ago, I believe it is now impossible to ignore the chorus of calls to eliminate the carbon tax as an adjunct to exempting barns and grain dryers from the fuel charge. Premier Scott Moe of Saskatchewan wrote to us a few weeks ago to ask that we rubber-stamp Bill C-234, and to underscore that the carbon tax should be removed on “. . . everything for everyone . . . .” He is not alone.

The idea that Bill C-234 was only ever about exempting grain dryers and barns was always a stretch. The sponsor of the bill in the other place has clearly expressed his opposition to carbon pricing, and his party is loudly and publicly calling to axe the carbon tax.

There’s nothing determinative about Bill C-234 leading to the further erosion of the GHG pollution pricing regime. I think that is the essence of Senator Cotter’s point about staying focused on the bill at hand, but here’s how I think about that point: Is it conceivable, even plausible, that the passing of Bill C-234 will lead to further erosion of carbon pricing in Canada? If it is, what weight should we give to this factor in our consideration of the bill?

When you consider the aggressive calls from federal and provincial politicians to axe the tax in the same breath as when they call on us to pass Bill C-234, I think the risk is real, high and something that should weigh heavily on us as we contemplate what to do with this bill.

In fact, I believe the other place has come to the same conclusion as I have, which is the reason why they voted to reject a motion — from the leader of the “axe the tax” party — calling on the Senate to rubber-stamp Bill C-234.

What about the point that this bill is a form of accommodation for a group of upstanding rural Canadians that will help preserve and protect the federation, and which supports regional fairness? This is an important consideration, and one that has special appeal when you combine it with the argument that the exemptions will not make much of a difference to GHG emissions anyway.

But we must be careful about the protection of the federation argument. If this bill is passed, the provinces campaigning in favour of it will not celebrate the strengthening of the federation, but will rather trumpet it as a victory for provincial powers. If you are in any doubt, just think about how some of these same provinces are acting, or threatening to act, in other domains that are actively undermining legitimate federal powers.

There’s another important dimension to the fairness argument that has been overlooked in our debate: It is that Bill C-234 would only apply to backstop provinces, and not to jurisdictions that have their own emissions reduction regime, namely, B.C., Quebec and the Northwest Territories.

The national rules that apply to backstop provinces were designed such that they are equivalent to those in B.C., Quebec and the N.W.T. through a concept known as stringency. Here is how Environment and Climate Change Canada puts it:

. . . any province or territory can design its own pricing system tailored to local needs, or can choose the federal pricing system. The federal government sets minimum national stringency standards . . . that all systems must meet to ensure they are comparable and effective in reducing greenhouse gas emissions. . . .

All the points made in this chamber about how Bill C-234 is good for Quebec, B.C. or the N.W.T. are not just irrelevant, but, in fact, they are the opposite of good for those provinces. In effect, relaxing the stringency of GHG pollution pricing in backstop provinces means they bear a lesser burden for the national emissions reduction effort than B.C., Quebec and the Northwest Territories. That is a form of unfairness that has not been touched upon in the debate so far. That kind of unequal treatment runs contrary to the idea of regional fairness that some advocates of the bill think it will foster.

I will return to the idea of stringency because it is a vital concept in the GHG pollution pricing regime that requires periodic monitoring and assessment. That concept is key to the determination of a sunset period for Bill C-234 because a misalignment in stringency for too long a period of time is, in effect, a perpetuation of unfair treatment — for some parts of the country — that undermines Canadian unity.

Before I return to that point, I want to touch upon another aspect of the idea that Bill C-234 is about accommodating the special needs of certain farmers. That view gives the false impression that no accommodations have been made, and that the federal GHG pollution pricing regime is an inflexible, mechanistic policy vice that is insensitive to special circumstances.

The fact is that barns and grain drying farmers are already accommodated by way of a rebate for the fuel charge that has been offered since 2021. Many senators have quoted the Parliamentary Budget Officer’s estimate that cumulative revenues from the fuel charge on natural gas and propane over the next eight years will be around $1 billion. That is a highly misleading figure because all those revenues will be returned to the farming sector in the form of a rebate. You might say that there is also no net cost if we exempt barns and grain dryers in the first place, but that defeats the purpose of a price signal.

It is true that farmers do not get back the exact amount that they spent on natural gas or propane, but those who do more in terms of energy efficiency will do better than those who have done less. Eliminating the rebate and having a blanket exemption will not only slow down the progress toward energy efficiency, but it will also be unfair to farmers who did respond to a carbon price signal.

Rather than exempting natural gas and propane, a better approach would be to see if the rebate can be better targeted at farms that rely on natural gas and propane while preserving the fuel charge. That was one of the recommendations in the Standing Senate Committee on Agriculture and Forestry report that this Senate rejected. I would have expected the Standing Senate Committee on National Finance to investigate this issue, as the chamber instructed, but that committee failed to hold even one hearing on the bill.

What a shame that the only way to dig deeper into this question is to send it back to the House of Commons. It was a missed opportunity for the upper house. Colleagues, tonight I have gone through what I consider to be some of the most compelling good faith arguments in favour of the bill — and why I do not agree with them. In previous speeches, I addressed what I consider to be fallacies in the proponents’ understanding of how a carbon price is supposed to work, and the false assertion that there is no scope for energy efficiency improvements based on current technologies.

There are other arguments that can be summed up by the phrase “We love farmers.” To this I say, “Amen,” but the points raised about farmers feeding the world or sequestering carbon through better farming practices, while true, are non sequiturs. As legislators who should be concerned about the national interest, we must love even more the pursuit of good public policy.

In my view, Bill C-234 is not good public policy. This is why I oppose it as much as I oppose the Liberal government’s exemption for home heating oil. Unfortunately, we have no ability to debate the home heating oil exemption. Hence, I think the best approach for us to take on Bill C-234 is to align its provisions with the home heating oil exemption, which will expire in three years. A three-year sunset clause will coincide with the mandated interim review of GHG pollution pricing in 2026, which will include consideration of interjurisdictional and international competitiveness issues and, crucially, the concept of stringency, which I referred to earlier. I had proposed such an amendment in committee, and it was defeated on a tied vote.

By aligning the sunset clauses of the home heating oil and Bill C-234 exemptions, we will have the benefit of a comprehensive review that brings to bear departmental resources and other expertise on the very questions that motivate this bill. If we pass the bill in this form, it will be a reasonable compromise to deal with the already dangerous slippage in our GHG pollution pricing regime.

More than that, an amended bill will give an opportunity to our colleagues — the House — to reconsider their support for the original Bill C-234, as we have already seen in the motion that failed in the House last week. That motion called on the Senate to rubber-stamp this bill without amendment. It was defeated by a combination of Liberal, Bloc Québécois and Green MPs voting against it. I think they are appealing to us to give them the opportunity to reconsider their earlier decision. Since we know a thing or two about sober second thought, we should give them that opportunity. A commonsense amendment to align the sunset periods of the home heating oil exemption and Bill C-234 would do that.

Motion in Amendment

Hon. Yuen Pau Woo: Therefore, honourable senators, in amendment, I move:

That Bill C-234, as amended, be not now read a third time, but that it be further amended, in clause 2 (as amended by the decision of the Senate on December 5, 2023):

(a)on page 2, by replacing line 23 with the following:

“into force on the day that is the third anniversary”;

(b)on page 3, by replacing line 6 with the following:

“third anniversary of the day on which this Act”.