Railways anticipating $1 billion annual carbon tax bill by 2022

Canada’s freight railways say they anticipate paying over a billion dollars per year by 2022 under carbon pricing policies proposed and planned by the federal and provincial governments.

“It’s difficult to get a precise figure, but we’ve tried to run some estimates based on the existing pricing structures and fiscal instruments, as well as the price on the market. In 2015 we estimate our carbon costs were around $55 million…and by 2022, we’re north of a billion dollars,” explains Michael Gullo, director of policy, economic and environmental affairs for the Railway Association of Canada (RAC), in the interview below.

While those costs will inevitably be passed on in higher rates charged to customers, carbon taxes will theoretically drive more business to railways, with rail maintaining a fuel efficiency advantage over trucking.

“Rail is generally four times more fuel efficient than truck,” he says. “Under these carbon pricing structures, they’re intended to incent shifts to the lowest carbon intensive mode of transportation, in this case.”

Gullo and the RAC suggest there’s a role for government to accelerate the shift to modes of transportation with lower carbon emissions, citing a program offered provincially in Quebec.

Gullo discussed the impact of carbon pricing on Canadian railways, the innovation railways have undertaken to become more fuel efficient, the competitive advantage it will theoretically give rail, and more. Listen to our conversation here:

Related: Carbon Tax Misses the Mark in Agriculture

Wake up with RealAgriculture

Subscribe to our daily newsletters to keep you up-to-date with our latest coverage every morning.

Wake up with RealAgriculture