Forest Sector Raises Questions Around Federal Carbon Revenue Sharing Plan

Sep 16, 2022 - 2 years ago

Canada’s forest sector was an early adopter of reducing greenhouse gas (GHG) emissions at its operations across the country. Not only do wood-based products store carbon and have the power to displace more fossil-fuel intensive ones, but since the early 1990s, Canadian forest sector innovation and investment have reduced greenhouse gas emissions at our mills by nearly 70%.

We have an opportunity to do even more while creating family-supporting jobs, bringing more wood and wood-based products to Canada and the world, and mitigating the risk of catastrophic fires that emit massive amounts of carbon dioxide into the atmosphere and are putting an increasing number of forested communities and residents in danger.

Key to our ability to do more will be a commitment from federal and provincial governments to enable the possible through smart regulation, effective carbon pricing and revenue recycling systems, and accessible innovation incentive programs.

The recent announcement of Environment and Climate Change Canada’s Output-Based Pricing System Proceeds Fund leaves the forest sector and its workers with some serious questions.

In August 2019, FPAC provided advice to Environment and Climate Change Canada on approaches that could help accelerate decarbonization projects and related investments at Canadian mills. In its submission, FPAC recommended two program options that would ensure fairness in application, address Canadian competitiveness issues, and keep forest sector workers working:

Follow the German model of developing a company-specific fund that would accrue carbon tax funds for up to 8 years – allowing the company paying those carbon taxes to access their own dollars for future decarbonization-related investments; or
Develop a sector-based fund to allow the industry to recoup the funds paid and reinvest them in the sector’s manufacturing operations.

“Yesterday’s announcement raises a number of red flags for us,” said FPAC President and CEO Derek Nighbor. “Under this plan, I am worried for a number of our facilities – especially those in rural and northern Canada that face intensely cold weather, are long distances from their customers, and are challenged to access a lower carbon fuel supply because of where they are located. It would be devastating and absolutely unfair to see them pay millions of dollars in carbon taxes and not receive back even a portion of the funds they’ve paid in,” he added.

In 2020, Canada’s forest sector paid $83 million in carbon taxes across the country and on top of that paid another $80 million in indirect carbon-related costs. These are expenses that our American competitors don’t have on their books.

“We in forestry have long been supportive of a carbon pricing system that advances climate action, strengthens Canadian competitiveness, and helps us to attract investment and create good-paying jobs,” Nighbor said. “Yesterday’s much-anticipated announcement fell pretty flat for us. We’re simply asking for transparency, clear consideration of rural and northern Canadian realities, and our fair share. We cannot afford to see our sector and its workers left behind,” he added.

Souce: FPAC