Saskatchewan Premier Brad Wall has repeatedly argued that putting a price on carbon would be bad for the economy — but experts say Wall’s own climate change strategy will end up costing the province more per tonne than the federal government’s plan, while failing to be nearly as fair or effective as a carbon tax.
Much of Saskatchewan’s climate strategy centres around the SaskPower Boundary Dam carbon capture and storage (CCS) project, which cost $1.5 billion to build (funded mostly by SaskPower ratepayers and a $240 million investment from the federal government).
“When we think about how we can reduce emissions most cost-effectively, [Boundary Dam] probably stands out as an example of how not to do it,” says Dan Woynillowicz, policy director at Clean Energy Canada.
Choosing a preferential technology and using public dollars to subsidize it is “quite inconsistent with the approach that most conservative politicians and economists would take,” Woynillowicz added.
Indeed, even as oil companies and conservative politicians — such as Preston Manning, Jean Charest and Jim Dinning — have spoken in favour of putting a price on carbon, Wall has worked hard to establish himself as the major voice of opposition to a federal carbon tax.
Enter Saskatchewan’s 53-page “Climate Change White Paper,” released on October 18. Carbon nerds eagerly jumped into the paper head first, anxious to learn how Canada’s highest greenhouse gas emitter per capita planned to help Canada meet its climate commitments.
Disappointingly, the paper essentially packaged up the policy actions Saskatchewan has already taken to date.
Carbon Capture and Storage Far More Expensive Than Carbon Tax
The Boundary Dam CCS project is intended to reduce emissions from SaskPower’s largest coal-fired power plant by capturing smokestack emissions (in the range of one million tonnes of carbon per year).
However, because one-third of those captured emissions will be sold for use in oil extraction at Cenovus’ Weyburn site, the current estimate is that Boundary Dam will remove more like 600,000 tonnes per year from the atmosphere — if it can even manage that.
With that level of emissions recovery, the cost of CCS works out to about $100 or $110 per tonne, according to Trevor Tombe, assistant professor of economics at the University of Calgary.
Grist’s David Roberts has dubbed the Boundary Dam project a “backdoor subsidy to oil producers” due to the $1.8 billion that Cenovus will make from continued enhanced oil recovery over the next 30 years. During that same time, the CCS facility is projected to lose $1 billion in operating costs.
Since its construction, Boundary Dam has failed to live up to its carbon capture promises, a fact SaskPower worked to hide from the public.
The project has also been marked by a massive leaking storage tank, cost overruns and a strained relationship with SNC-Lavalin, a company facing bribery and corruption charges in Quebec and blacklisted by the World Bank.
Only four days prior to the release of Saskatchewan's plan, on the same day as Wall argued in the Globe and Mail that “carbon-capture technology works,” a report in Science concluded that negative-emission technologies such as carbon capture storage are an “unjust and high-stakes gamble” that “should not form the basis of the mitigation agenda.”
One of the reasons carbon pricing has attracted support from across the political spectrum is because it doesn’t pick winners and losers. It puts a price on pollution and then lets the market determine the best ways to reduce carbon emissions. The bizarre thing is that Saskatchewan’s gamble on CCS is the exact opposite of that.
Woynillowicz adds there’s little evidence that SaskPower has developed any plans for monetizing their experience and technology to sell it to other jurisdictions, or securing investments from the federal government for future projects.
The One New Thing In Saskatchewan’s Climate White Paper
The only major new announcement in those riveting 53 pages was the call to redeploy $2.65 billion in foreign aid to technology subsidies within Canada.
Tombe says that recommendation mixes two separate conversations —there’s no need to tie a case for additional government investment in research with foreign aid funding.
Experts Suggest Carbon Tax Required to Spark Investments in Renewables
A more consistent approach would be the establishment of a broad-based carbon price.
Such a mechanism — which will take the form of either a $50/tonne carbon tax or cap-and-trade system by 2022 due to the recent federal decision — would address the “market failure” of unpriced pollution, something that Tombe pointed out isn’t solved by providing subsidies for R&D.
It would also incentivize investments in renewable power sources, energy efficiency measures and perhaps even carbon capture and storage (although given the current price tag of the technology — between $75 and $100/tonne just for the “capture” part of it — such a carbon price would have to be significantly higher than currently proposed to justify it).
Yet Wall completely rules out the role of taxation: he argues British Columbia’s emissions are rising despite having a carbon tax, even though many acknowledge emissions are rising precisely because Premier Christy Clark has put a freeze on the tax, preventing its increase from $30/tonne since 2012.
In the White Paper, Wall strangely suggested that “we should be focusing our efforts on innovation and adaptation” and that “a carbon tax will harm Saskatchewan.”
But Woynillowicz says suggested innovations like “new crop varieties that are better able to withstand climate change and that effectively fix GHGs to the soil” would be incentivized in part via a price on carbon.
“You need either dollars to do that if it’s going to be the government making those strategic investments in R&D, or you need to send a price signal that creates the incentive for private sector actors to invest in R&D,” Woynillowicz says.
“You can do that through a price on carbon pollution.”
Climate Plan Quietly Recommits to Carbon Tax on Large Emitters Despite Premier’s Apparent Opposition
Even odder is the fact that Saskatchewan’s White Paper includes a commitment to “[move] ahead with plans for a fund supported by a levy on large emitters, with the fund’s expenditures limited to new technologies and innovation to reduce GHGs and not for general revenue” when the resource economy rebounds.
Tombe says that whether or not Wall likes to admit it, the notion of a “levy on large emitters” is indeed a tax, similar to what Alberta implemented with the Specified Gas Emitters Regulation (SGER) in 2007.
“Roughly speaking, that places that Saskatchewan carbon tax on about 50 per cent of what could be subject to a carbon tax,” he says. “It’s roughly the equivalent of half the coverage of Alberta and B.C.”
Carbon pricing can be designed in many different ways; Alberta’s Climate Leadership Plan offers up a recent example of how to insulate low-income residents and “energy-intensive, trade-exposed” sectors from the economically damaging byproducts of a tax.
“That’s more what I’m disappointed with: that [Wall] sets up straw men and then knocks them down on the carbon tax front,” Tombe says.
“It’s fine: if he wants to have more costly action through the CCS or through the large-emitter levy and leave a lot of low-hanging fruit unpicked, that’s something that will be up to the Saskatchewan people to decide.”
Saskatchewan Has ‘Excellent Renewable Resources’
Woynillowicz says the one bright spot of the White Paper was the re-commitment to double SaskPower’s generation capacity of renewables by 2030, although that announcement was already made in November 2015.
However, he emphasizes it’s a pledge for 50 per cent generation capacity, not actual generation, meaning it’s more in line with Alberta’s target of 30 per cent renewable generation by 2030 (for contrast, Iowa generated 31 per cent of its electricity from wind power in 2015).
Saskatchewan has “really excellent renewable resources,” Woynillowicz says.
As part of its plan, SaskPower intends to develop 1,600 megawatts of power between 2019 and 2030. But as mentioned, such a transition would be greatly accelerated by a commitment to a broad-based carbon price.
“Really, I’m just left scratching my head, wondering why Premier Wall has made this decision to oppose [carbon pricing] so vocally and aggressively,” Woynillowicz concludes.