Federal Environment and Climate Change Minister Catherine McKenna tactfully welcomed Saskatchewan’s climate change plan, “Prairie Resilience: A Made-in-Saskatchewan Climate Change Strategy”, released December 4, 2017. Saskatchewan’s plan doesn’t set greenhouse gas reduction targets or propose a price on carbon. Instead, it promises a range of regulatory measures, the use of offsets, and various measures to adapt to a changing climate.
McKenna believes Saskatchewan, the lone provincial holdout on carbon pricing, is taking a step in that direction with this plan. The plan calls for the development of “sector-specific output-based performance standards on facilities emitting more than 25,000 tonnes of CO2e per year.” Facilities that fail to meet these standards will have several compliance options, which include purchasing credits from better performers or paying into a technology fund.
There are exemptions, explains Brendan Frank, analyst with Canada’s Ecofiscal Commission. Coverage will be minimal, but compliance with the standards could take the form of carbon pricing.
“It’s probably not enough to satisfy the requirements of the Pan-Canadian Framework [on Clean Growth and Climate Change] and therefore likely not enough for Saskatchewan to avoid the federal backstop,” Frank tells EcoLog News.
The plan isn’t a complete bust, says Frank. It acknowledges the importance of adaptation, for instance, with proposals around community preparedness, transportation and infrastructure. It addresses emissions from agriculture, an important source of emissions, particularly in Saskatchewan, and one that is largely insulated from the impacts of carbon pricing. The province will develop and implement an offset system that will create more incentives in the agricultural and forestry sectors for carbon sequestration and reduced emissions.
Saskatchewan’s plan is also the first one in Canada to acknowledge “internationally transferred mitigation outcomes” (ITMOs — the term coined in the Paris Agreement for internationally traded offsets and allowances) as a compliance mechanism for large emitters, says Frank.
But the absence of a broad-based carbon price, as called for in the Pan-Canadian Framework, may prove to be its fatal flaw. McKenna suggests as much in her statement:
“Based on what’s in today’s plan, Saskatchewan’s price likely wouldn’t hit our standard, because it applies only to heavy industry instead of being economy-wide,” she said. “Of course, we hope that will change as Saskatchewan’s government turns its plan into action.”
Frank labels it a missed opportunity. Regulatory measures are likely to come at a higher cost to the economy than a carbon price. And the revenue from a carbon price can readily be recycled into the Saskatchewan economy to achieve any number of worthwhile goals.
With a carbon tax at $20 per tonne, Frank says Saskatchewan could probably raise $800 million. That would be enough to eliminate the corporate income tax, he says, or pay a quarterly dividend of $175 to every Saskatchewan resident.
“A carbon tax doesn’t necessarily mean paying more tax,” he says. “It just means changing the way taxes are paid.”