A Noble but Costly Initiative

Most of the scientific community is of the opinion that global warming is the result of human activity. We need and should react, but the lack of consistency in our actions produces prejudicial gaps in competitiveness, which means that the Quebec economy will suffer.
Disillusionment followed the failure of post-Kyoto negotiations where, in 2007, several American states and Canadian provinces adhered to the Western Climate Initiative. However, every party has since exited or backed out when faced with the implementation of coercive measures; all parties except California and Quebec. Starting January 1st, 2015, any and all fossil fuels sold in Quebec will feel the effects of the new Carbon Exchange that those in the know refer to as a the "cap and trade system" (C & T).

The impact of C & T on the price of gas, diesel and propane will depend on how much greenhouse gas emission rights are worth on the Carbon exchange. The basic hypothesis is that the price increase ranges from 2 to 3¢/litre. If emission rights rise higher, the effect will be greater (see chart). As a consumer of petroleum products, agricultural producers will be directly impacted by this initiative. Transporting dairy and feed will be more expensive, operating farm machinery will cost more, and drying corn will also cost more. The agrifood industry as a whole will ultimately be subjected to the consequences, primarily through an increase in transportation costs (see page 44 of agricultural economist David Tougas' article).

If all of North America were submitted to such a policy, the effects on the economy wouldn't be so vicious – they might even be positive. However, the fact that neither Ontario nor America's north-eastern states are ready to comply will simply widen the competitive gaps that already exist in our economies. The impact will be even more prejudicial for Quebec businesses that are active in the export market. In fact, it will be hard to recover these additional costs in the sale price of internationally negotiated products. The hog industry is an obvious example.

Increase According to Fossil Fuels
Emission rights
( $/t CO2e)
Gas
(cents/L)
Diesel
(cents/L)
Gas
(cents/L)
10 2,3 2,7 1,5
50 11,4 13,7 7,5
100 22,9 27,3 15,0
150 34,3 41,0 22,5
200 45,8 54,6 30,0
Source: Jean Dumont, Le marché du carbone du Québec (SPEDE): Analyse et enjeux, May 2013
The Commission on Energy Issues in Quebec had good reason to recommend the suspension of its implementation in Quebec, at least until its closest neighbours agree to comply. The Beacon Hill Institute maintains that this kind of system will result in a drop in employment, investments, personal incomes as well as available income. Quebec consumers, whose wallets are far from bulging with cash, will devote a much larger portion of their revenue to buying petroleum products and paying a surcharge for all of their consumer goods. This does not help reassure the retail industry, which is already experiencing difficult times. The headline of one of Quebec's leading daily newspapers read: "Carbon Trading: Overpriced leadership?" Good question. La Coop network is proactive in environmental issues, such as its biomass initiative and, of note, the fact that it is the founding partner of COOPcarbone. Faced with such challenges, no one can afford to go it alone.

I would like to extend a heartfelt thank you to ACRA for honouring me with the Moïse-Cossette Award for my article titled "À quand une année de l'agriculture entrepreneuriale?", published in this magazine in March 2014. The related grant will be donated, in its entirety, to the Grand défi Pierre Lavoie, 2015 edition.
 
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