Farm Fuel Carbon Charge Exemption Expanded

Summary#

This bill changes the Greenhouse Gas Pollution Pricing Act to expand farm fuel charge exemptions. It adds marketable natural gas and propane to “qualifying farming fuel” and makes heating and cooling equipment count as “eligible farming machinery” for farm use (Clause 1). The goal is to remove the federal fuel charge (carbon price) from these fuels when used for farming.

• Adds marketable natural gas and propane to the list of qualifying farming fuels (Clause 1(3), s.3).
• Treats farm heating and cooling equipment as eligible farming machinery, by moving it from an exclusion to an inclusion (Clause 1(1)–(2), s.3).
• Leaves other parts of the Act (who qualifies as a farmer, record-keeping, administration) unchanged.
• Reduces fuel charge paid by farms that heat or cool buildings or use these fuels in eligible machinery.
• Lowers federal fuel charge revenues in provinces and territories where the federal system applies. Amount unknown.

What it means for you#

• Households

  • No direct change unless you operate a farm. The bill targets farm fuel use only (Clause 1).

• Farmers

  • You would not pay the federal fuel charge on marketable natural gas and propane when used in eligible farming machinery, including equipment that heats or cools a building or similar structure on the farm (Clause 1(1)–(3), s.3).
  • Typical affected uses include heating or cooling barns or similar structures and other eligible farm machinery that uses these fuels (Clause 1).
  • Timing depends on when the bill comes into force. Data unavailable.

• Fuel suppliers

  • You would need to apply the farm exemption to sales of marketable natural gas and propane used in eligible farm machinery or for heating/cooling farm structures, consistent with the Act’s existing farm exemption framework (Clause 1; s.3).

• Provincial/territorial governments

  • The change applies only in jurisdictions where the federal fuel charge is in effect. It does not alter provincial carbon pricing systems that meet federal benchmarks (Act context; Clause 1 modifies definitions only).

Expenses#

Estimated net cost: Data unavailable.

• No direct program spending or appropriations; the bill changes tax base definitions only (Clause 1).
• Federal revenue impact: Lower fuel charge revenues due to broader farm exemptions for natural gas and propane. Data unavailable.
• Administrative impacts for the federal system and fuel distributors to update forms and compliance processes. Data unavailable.

Proponents' View#

• Aligns treatment across fuels used on farms by adding marketable natural gas and propane to “qualifying farming fuel,” similar to gasoline and light fuel oil already relieved for farm use (Clause 1(3), s.3).
• Lowers operating costs for farmers who heat or cool farm buildings or run eligible machinery on these fuels, improving cash flow and competitiveness (Clause 1).
• Clarifies that heating and cooling equipment on farms is eligible machinery by moving it from an exclusion to a positive inclusion, reducing disputes about eligibility (Clause 1(1)–(2), s.3).
• Keeps administration simple because it uses the Act’s existing framework for farm fuel relief; only definitions change (Clause 1; s.3).

Opponents' View#

• Weakens the carbon price signal in agriculture by exempting more fossil fuels, which could slow adoption of efficiency upgrades or cleaner alternatives. Data unavailable.
• Reduces federal fuel charge proceeds that are returned to jurisdictions, potentially shifting the burden to other payers or lowering returns. Amount and distribution unknown. Data unavailable.
• Broad language covering “heating or cooling to a building or similar structure” may sweep in a wide range of on-farm structures, expanding the exemption beyond grain drying to many buildings (Clause 1(1)–(2), s.3).
• Compliance and enforcement risks increase as suppliers must verify exempt farm use for additional fuels, creating room for misclassification or misuse. Data unavailable.