Federal carbon pollution pricing system
Saskatchewan is the only province that has not joined the national Pan-Canadian Framework on Clean Growth and Climate Change.
In August 2018, Saskatchewan released its plan to price carbon pollution, based on an output-based performance standards approach, which applies only to some of its large industrial facilities. Since Saskatchewan’s system only partially meets the federal benchmark stringency requirements, the federal carbon pollution pricing system applies to the emission sources not covered by the provincial system.
The federal carbon pollution pricing system, as applied in Saskatchewan under the federal Greenhouse Gas Pollution Pricing Act (the Act), has the following features:
- As of January 2019, the federal output-based pricing system applies to electricity generation and natural gas transmission pipelines. It covers facilities from sectors that emit 50,000 tonnes or more of carbon dioxide (CO2) equivalent annually.
- Smaller facilities that emit 10,000 tonnes or more of CO2 equivalent annually may voluntarily opt in to the system over time.
- As of April 2019, a charge applies to fossil fuels, generally paid by registered distributors (fuel producers and distributors).
In Reference re Greenhouse Gas Pollution Pricing Act, 2019 SKCA 40, Saskatchewan challenged the constitutionality of the Act. The province argued that the Act imposed taxes in contravention of the Constitution Act, 1867. It further argued that, by reason of the principle of federalism, Parliament did not have authority over the subject matter of the environment.
In a 3-2 decision, the majority of the Saskatchewan Court of Appeal (SKCA) upheld the constitutionality of the Act. It held that the levies imposed by the Act are regulatory charges, not taxes. The Act could fully accomplish its objectives of establishing minimum national standards of price stringency for greenhouse gas (GHG) emissions without raising any money. However, even if the levies were taxes, the majority held that the Act does not offend s. 53 [Appropriation and Tax Bills] of the Constitution Act, 1867.
Further, the majority of the SKCA held that Parliament has authority over the subject matter of the establishment of minimum national standards of price stringency for GHG emissions by virtue of the national concern doctrine of Parliament’s peace, order and good government power.
Saskatchewan has filed a notice of appeal to the Supreme Court of Canada.
Management and Reduction of Greenhouse Gases Act
Saskatchewan’s Management and Reduction of Greenhouse Gases Act (the Act) was partially proclaimed in January 2018 to provide authority for electricity and reporting regulations. An amended Act was proclaimed in full in December 2018, which provides the authorities for the output-based emissions management framework, including compliance options such as the technology fund.
Under the Act, facilities that emit more than 50,000 tonnes of GHG are regulated in order to reduce annual emissions to meet provincially established targets.
The following regulations have been enacted:
- The Management and Reduction of Greenhouse Gases (General and Electricity Producer) Regulations – This regulation came into force on January 4, 2018, and imposes reporting requirements and emissions limits for regulated emitters.
- The Management and Reduction of Greenhouse Gases (Reporting and General) Regulations – This regulation came into force on September 1, 2018, and adopts the Management and Reduction of Greenhouse Gases (Reporting) Standard, made pursuant to clause 7(2)(m) of the Act by the Minister of Environment on June 20, 2018.
- The Management and Reduction of Greenhouse Gases (Standards and Compliance) Regulations – This regulation came into effect on January 1, 2019, except for subsections 6(1) and (2), which came into force on February 14, 2019. It sets performance standards for emissions, as well as limits on emissions and compliance obligations. It also adopts The Management and Reduction of Greenhouse Gases (Baselines, Returns and Verification) Standard.
Oil and gas conservation and emissions
The Oil and Gas Emissions Management Regulations, which came into effect on January 1, 2019, regulate flared and vented methane emissions in the upstream oil and gas sector with the goal of achieving annual emission reductions of 40 to 45% by 2025.
On May 15, 2019, Bill 147 – The Oil and Gas Conservation Amendment Act received Royal Assent. It has not yet been proclaimed. Bill 147 amends The Oil and Gas Conservation Act to facilitate the regulation of emissions in the oil and gas sector.
Equivalency agreement on coal
The Government of Saskatchewan and the Government on Canada entered into a Canada-Saskatchewan equivalency agreement regarding GHG emissions from electricity producers (the Agreement). The Agreement will come into force on January 1, 2020, and will terminate on December 31, 2024. The Agreement may be renewed up to December 31, 2029.
The Agreement allows the Governor in Council to make an order declaring that the provisions of the Coal-fired Electricity Regulations do not apply in Saskatchewan. In exchange, Saskatchewan agrees to have at least 40% of its electricity generation capacity be from non-emitting energy sources by 2030. Saskatchewan agrees to meet this target with milestones for the range of percentages of its electricity generation capacity that is from non-emitting sources of a minimum of:
- 26 - 30% by December 31, 2021
- 30 - 34% by December 31, 2024
- 34 - 40% by December 31, 2027
- 40 - 50% by December 31, 2030
The Agreement is vital for Saskatchewan, given the province’s heavy reliance on coal to produce energy and the federal government’s recent announcement that it is seeking to completely eliminate coal power generation by 2030.
Prairie Resilience: A Made-in-Saskatchewan Climate Change Strategy
In December 2017, Saskatchewan released Prairie Resilience: A Made-in-Saskatchewan Climate Change Strategy (the Strategy). The Strategy was initially intended to address GHG emissions and adapt to climate change without introducing a carbon tax. It outlines commitments across five areas designed to make Saskatchewan more resilient to the climatic, economic and policy impacts of climate change.
The province has released new components of the Strategy since its initial publication, including a framework to measure and improve the province’s resilience, output-based performance standards to regulate industrial emissions intensity reduction, oil and gas emissions management regulations, and a Methane Action Plan. These actions are intended to reduce Saskatchewan’s GHG emissions by 12 million tonnes by 2030.