Federal investments in clean tech and sustainable practices in agriculture could drive down carbon emissions

The Canadian government is incentivizing clean technology and sustainability practices in agriculture, which industry experts say could help Canada meet its climate change objectives and make agriculture more efficient.

The government has made several investments to support cleantech technology in agriculture, which produces 10 percent of Canada’s greenhouse gases due to crop and livestock production.

Industry experts and analysts told Research Money that several of the recent investments could have a positive impact. One such investment is $200 million over two years for on-farm climate action under the Agricultural Climate Solutions program. This will target projects that help reduce emissions by improving nitrogen management, increasing adoption of cover cropping and rotational grazing.

The budget similarly provides $60 million over the next two years from the Nature Smart Climate Solutions Fund to protect existing wetlands and trees on farms, including through a reverse auction pilot program. The budget also allocates $50 million from the recently expanded Agricultural Clean Technology program for the purchase of more efficient grain dryers for farmers across Canada.

“The big thing for me was that the Canadian government is serious about meeting the commitments under the Paris Agreement,” Steve Slater, vice-president for product research and development at Terramera, told Research Money in a phone interview.

In 2015, Canada committed to achieving net-zero emissions by 2030 through the Paris Climate Accord. “I think this budget reflects that, and they're looking for ways to do that that will drive expansion of the economy,” Slater said.

How wetlands play a role in reducing carbon

The $60 million provision for protecting wetlands and trees will play an important role in managing carbon outputs on farms, Slater said.

Plants on land take CO2 out of the air and pump it back into the ground through their roots.

“That's a really efficient way to capture CO2,” Slater said. “That will make their farms better because it improves soil quality and leads to better profitability, but there's also lots of additional ecosystem services that come from these sorts of actions that provide wildlife with habitats and preserve wild areas.”

Murad Al-Katib, CEO of AGT Food and Ingredients, told Research Money in a phone interview that the government’s investments can make way for carbon capture programs, which capture emissions of carbon dioxide from fossil-fuelled power plants and industrial facilities before it is released into the atmosphere.

According to the Center for Climate and Energy Solutions, carbon capture can achieve 14 percent of the global greenhouse gas emissions reductions needed by 2050. The Center views carbon capture as the only practical way to achieve deep decarbonization in the industrial sector.

“If we continue to measure that carbon intensity, perhaps one day there will be carbon credits and things that will be worth a lot of money to producers and processors,” said Al-Katib.

With the government signalling that it wants to incentivize businesses to adopt cleantech practices — the government has proposed reducing the corporate and small business income tax rates by 50 percent for companies developing net-zero emission technologies between 2022 and 2032 —  Al-Katib said these programs incentivize businesses to build and grow within Canada.

“This is a major incentive to come here, that we have an environment that can foster the adoption of clean tech. And by the way, we're going to give you a very good, tax-advantaged jurisdiction to do it,” says Al-Katib.

Building trade infrastructure

Al-Katib is part of Canada’s Economic Strategy Table for Agri-food, an initiative established in 2017 to inform Canada’s economic strategies in key industries. He’s happy to see that the government seemed to take a November 2020 report from Canada’s Economic Strategy Tables into account by funding initiatives that encourage the agriculture sector to adopt clean energy practices.

“We identified renewable fuels and sustainable aviation fuels made from canola as a major opportunity for Canada, where agriculture would play a role in decarbonizing the transportation industry and [encourage] the decarbonization of the new green economy,” Al-Katib says.

The Economic Strategy Tables report said it was critical to address “infrastructure gaps” to help businesses get their product to market, including modes of transportation. Budget 2021 proposes $1.9 billion over four years to the National Trade Corridors Fund, a fund meant to encourage public and private investment in enhancements to road, rail and shipping routes.

Al-Katib says this could be an important investment in the future as Canada aims to increase its exports to $20 billion by 2025.

Tracking outcomes and setting targets will be key

For Vic Adamowicz, professor and vice dean for the faculty of agricultural, life and environmental science at the University of Alberta, the “devil is in the details” in terms of measuring how effective these programs will be.

“These could be really interesting mechanisms of avoiding emissions increases, and the focus on grazing and crop covers are really interesting,” Adamowicz said of the $60 million for the Nature Smart Climate Solutions Fund and the $200 million Agricultural Climate Solutions program. Cover crops, which are planted to cover soil rather than being harvested, can act as carbon sinks and manage soil erosion.

It will be important to track outcomes, especially for new programs like the reverse auction pilot program, which are not common in Canada. In agriculture, reverse auctions involve auctioneers, which can be corporations or NGOs, posting requests for bids from landowners—the sellers—to provide land for restoration. The auction is reversed because there is one buyer and many sellers rather than one seller and many buyers, per the Smart Prosperity Institute.

In one report from the Smart Prosperity Institute, a national research network and policy think tank based at the University of Ottawa, the few reverse auctions that have been conducted resulted in low participation and intensive costs. It noted that more data will be needed to assess the actual environmental impact.

The Smart Prosperity Institute notes that incentive schemes are not a one-size fits all tool, and that a “critical mass” of incentive schemes for nature conservation should be implemented that clearly specify what would have happened in the absence of the project or program.

“That tension in all of these programs is how effective they will be at actually achieving some kind of targets,” says Adamowicz. “Do they have targets that they're trying to achieve? Will they be translated in terms that producers and landowners can actually implement?”

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