Saskatchewan’s climate change strategy could seriously reduce GHG emissions – if a carbon price was added to fill the gaps.
Saskatchewan’s new climate change strategy, called Prairie Resilience, doesn’t include a carbon price — and that’s no surprise. The province has maintained its strident opposition to carbon pricing since the federal government announced its Pan-Canadian Framework on Clean Growth and Climate Change. This framework calls for a carbon price to be implemented in each province by 2018. A carbon price is one of several measures that will help Canada achieve its greenhouse gas (GHG) emissions reduction target of 30 percent below 2005 levels by 2030.
Saskatchewan Environment Minister Dustin Duncan claims the plan “is broader and bolder than a single policy such as a carbon tax and will achieve better and more meaningful outcomes over the long term.”
In one sense, the Saskatchewan plan is broader than a carbon price since it speaks not only to reducing emissions but also to adapting to climate change. But a carbon price is designed to mitigate climate change. How does Prairie Resilience stack up against a carbon price from a GHG emissions reduction perspective? Does it offer a substitute for a steadily increasing carbon price? Or is a carbon price still necessary in Saskatchewan?
By my count the plan outlines 23 mitigation commitments. Eight of these commitments relate to the government reducing emissions in its own operations. The Saskatchewan government plans to improve the energy efficiency of its buildings and invest in a more fuel-efficient vehicle fleet. Those efforts should be commended, but of course they are only a small piece of the Saskatchewan emissions pie.
Does Prairie Resilience offer a substitute for a steadily increasing carbon price? Or is a carbon price still necessary in Saskatchewan?
In the transportation sector, Saskatchewan commits to developing a freight strategy, encouraging the use of short-haul rail and expanding a program that allows freight trucks to carry heavier loads (and achieve greater fuel efficiency). To stack up against carbon pricing, the plan would need to provide an ongoing incentive to encourage fuel efficiency for both commercial and personal transportation. It does not. A carbon price applied to diesel and gasoline would.
Saskatchewan says it should earn 9 megatonnes (Mt) per year of carbon credits from zero-tillage farming practices and 3.5 Mt/year from the forestry sector. The question when it comes to carbon credits is always whether they should be counted as an emissions reduction effort that goes beyond business as usual. For the past 25 years, farmers in Saskatchewan have been adopting zero-tillage practices because they reduce input costs and improve soil moisture levels. Should captured carbon from these practices be subtracted from Saskatchewan’s emissions total or are they merely hot air?
The strongest elements of Saskatchewan’s Prairie Resilience strategy are regulatory measures proposed in four sectors:
- Electricity: Saskatchewan will regulate electricity sector emissions and meet its commitment that up to 50 percent of electricity capacity in the province will be derived from renewable energy by 2030. Reduction: 6 Mt.
- Oil and gas: Saskatchewan will regulate oil and gas sector GHG emissions. Included in these commitments are plans to support the capture and use of methane to reduce flaring and venting. This is important since fugitive emissions from oil and natural gas accounted for 12.7 Mt, or 17 percent of Saskatchewan GHG emissions, in 2015. Reduction: 4 to 4.5 Mt.
- Large industrial emitters: The province will assign emissions intensity performance standards for large industrial firms emitting more than 25,000 tonnes of carbon dioxide equivalent per year. If firms do not meet the standard, they will need to take a “flexible compliance action.” This regulatory approach is not unlike the federal government’s output-based allocation system for large emitters, but whether it will be equivalent to it will depend on details like how stringent the performance standards will be, and whether industry will pay for emissions above this target at the federal carbon pricing rate of $10/tonne in 2018, rising to $50/tonne in 2022. Reduction: ? Mt.
- Buildings: Saskatchewan will adopt the 2015 National Building Code and 2015 National Energy Code for Buildings. These regulations will create an energy efficiency standard for new residential and commercial buildings. Reduction: ? Mt.
Are these GHG emissions reductions an adequate contribution to the federal target of a 30 percent reduction by 2030? The stated reductions total 23 Mt, which would bring Saskatchewan’s GHG emissions down to 52 Mt. That comes close to 30 percent below Saskatchewan’s 2005 emissions. Add in some reductions from the industrial emitters program and the target may be achieved. But over half of the stated reductions, 12.5 Mt, comes from carbon credits. Whether the plan is equivalent in effect to the federal carbon pricing plan will hinge on whether those carbon credits can or should be subtracted from Saskatchewan’s total GHG emissions. It is not yet clear how this question will be decided.
If the carbon credits are not counted, Saskatchewan will have to find an additional 12.5 Mt of GHG emissions reductions. A carbon price could help fill the gap. The new Saskatchewan building codes will improve the energy efficiency of new buildings, but not old buildings; a carbon price would create an incentive to retrofit older structures. The Saskatchewan standards for large industrial emitters will require firms that release 25,000 tonnes of carbon dioxide equivalent to reduce their emissions intensity, but not firms that release 24,999 tonnes; an economy-wide carbon price could create incentives for reductions in small and medium-sized industrial enterprises. The Saskatchewan plan will lead to cleaner electricity, but it will not pass along the price signals that tell electricity customers to consume less electricity; a carbon price would send those signals to conserve. Saskatchewan’s Prairie Resilience strategy is less a substitute for the federal carbon pricing plan and more a robust complement to it.
It is unlikely that Saskatchewan will voluntarily introduce a carbon price. But the federal government has a carbon pricing backstop plan that it can impose upon the province. This plan would put a rising carbon price on gasoline, diesel, natural gas and electricity and would fill in the gaps in the Saskatchewan plan. The combination of the Prairie Resilience plan and the Pan-Canadian Framework would deliver the broad, economy-wide signals needed to make serious GHG reductions in Saskatchewan. With their two halves, the federal and provincial governments could make a whole.
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