Agriculture sectors dependence on fossil fuel use (both direct and indirect) has increased dramatically over the past decades. Productivity increases have been achieved using technological improvements which use considerable amounts of energy inputs. Concerns about global environmental quality resulted in several countries signing the Kyoto protocol, which came into effect internationally, on February 16, 2005. Canada has made a commitment to the international community to stabilize CO2 emissions at 6 percent below 1990 levels. The target is supposed to be reached by 2008 and maintained through 2012. This paper estimates the CO2 emissions from input use in Central Canadian agriculture. Using elasticity estimates, the amount of price increase needed to achieve Kyoto targets is estimated. A 6 percent reduction from 1990 levels implies that CO2 emissions should be stabilized at 1,424,562 tonnes of carbon. The removal of current provincial farm fuel tax exemption programs will lead to a decrease of only 3.36 percent reduction in CO2 emissions and is estimated to be at 1,726,356 tonnes of carbon. Fuel prices will have to increase almost 85 percent in order to achieve the target reductions under the Kyoto agreement.
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