By Nick Martin
Published in the Leader-Post
December 28, 2017
Saskatchewan’s recently released climate change strategy leaves a lot of questions unanswered. But rather than a negative, this provides an opportunity for the province’s future leadership to demonstrate smart policy-making.
Premier Brad Wall is set to retire, and the province’s governing party will pick a new leader at the end of January. While Saskatchewan has been slow to deploy effective climate policies that lead to meaningful emission reductions, the new plan is a chance for the province’s new leadership — whoever they may be — to build on it and implement smart policy.
As expected, Premier Wall’s plan does not include an explicit, economy-wide price on carbon such as a carbon tax. Every candidate for the Saskatchewan Party leadership opposes a carbon tax as well.
While a carbon price is the most efficient and flexible mechanism to reduce emissions, opposition to the idea is understandable from a political standpoint. No one likes taxes, and an explicit carbon price puts the cost of reducing emissions up front and centre — a political challenge in Saskatchewan right now.
But let’s be clear — avoiding a price on carbon does not avoid the cost of reducing emissions.
For example, Saskatchewan has made significant investments in carbon capture and storage at its Boundary Dam facility to reduce emissions from the coal-fired power plant. From a technical standpoint, Boundary Dam has been a success for the province. It is one of only a couple of commercially operating carbon capture facilities in North America, and it has sequestered more than 1.75 million tonnes of carbon.
Yet these investments are very expensive. The initiative has cost more than $1.5 billion, and a report from Canada’s Parliamentary Budget Office pegged the implicit emission reduction cost at roughly $60 per tonne – much higher than the carbon price the federal government wants to impose.
To be mindful in its desire to be responsible to taxpayers, Saskatchewan’s future leadership should ensure that its climate policies employ the lowest-cost options available.
As the price of other electricity sources like natural gas, wind turbines, and solar panels have come down, the cost-effectiveness of capturing coal emissions becomes less attractive. Policies should guide the province to the most cost-effective option, whichever one that may be.
If the province is dead set on avoiding a carbon tax and is successful in dodging the federal mandate, then Saskatchewan’s alternative policies should be flexible and effective ones that avoid having the government pick winners and losers.
Saskatchewan’s plan already includes an excellent example. It suggests establishing emission performance regulations for large industrial emitters. Facilities that do not meet the standard can buy offsets or pay into a provincial technology fund, among other options. Although it avoids the word “tax,” the policy sounds suspiciously like Alberta’s carbon levy mechanism on industrial facilities. Either way, it is a smart policy that will incentivize flexible and cost-effective emission reductions much like a price on carbon.
The large emitter regulation excludes the electricity and oil and gas industries, which will have separate regulations — but Saskatchewan would be smart to make these equally as flexible.
As for vehicle drivers, there is no mention to move to more fuel-efficient or alternative fuels. Yes, many drivers face occasional long distance drives, but there are also plenty of kilometres driven in town. Carbon prices work extremely well in encouraging drivers to make decisions that are best for them and can be designed thoughtfully to accommodate rural and remote drivers.
The Saskatchewan government is committed to emission reductions, but it has eliminated the mechanism favoured by economists as efficient and effective, relying on more expensive regulations, offsets and subsidies to achieve these goals. These can all be effective, but costly too. Make no mistake — users, customers, and taxpayers will pay one way or another.
In this plan, Saskatchewan’s future leadership has an opportunity to put together flexible and cost-effective emission reduction policies that contribute to Canada’s climate goals and keep the costs low. Let’s hope they seize it.
– Nick Martin is a policy analyst at the Canada West Foundation