Brian Zinchuk is editor and owner of Pipeline Online
Premier Scott Moe, conducting a town hall at Arcola on Aug. 4. Photo by Spencer Zinchuk
NORTH BATTLEFORD – Saskatchewan is feeling the noose of federal climate change policies and programs tightening around its neck, to the point where, if they are all implemented, the bill to this province could be $111 billion by 2035.
That’s according to a white paper released by Premier Scott Moe in North Battleford on Oct. 11. He spoke to the Battlefords Chamber of Commerce about the white paper entitled Drawing the Line: “Defending Saskatchewan’s Economic Autonomy.” The costing can be found here.
The white paper came about after extensive consultations. Moe conducted town halls across the province over the summer. Focus groups were done by Minister of Autonomy Lyle Stewart and former MLA Allan Kerpan. The consultations took place in both urban and rural communities, beginning in Estevan and visiting: Saskatoon, Paradise Hill, Kindersley, Moose Jaw, Shaunavon, Yorkton, Weyburn and Carlyle.
Pipeline Online spoke to Moe by cellphone at length while he was on his way back to Regina that afternoon. Here’s the interview, verbatim:
Pipeline Online:
The overall gist of the white paper and the costing accompanying it is that in order to meet climate change goals, Saskatchewan’s economy will be strangled. And we’re not going to allow that to happen.
Scott Moe:
Correct. And what we’ve heard through MLAs, through my being around, and not only this summer, but over the course of the past year, as well as there’s some consultation that Lyle Stewart and Allan Kerpan did is what people are really looking for is for us to really unlock Saskatchewan’s potential opportunity that lies before us, and to be proactive in leading on initiatives, as opposed to being reactive and reacting to, initiatives that might come up from other levels of government. So we’re on the cusp of something great in the way of investment and growth and opportunity for Saskatchewan people. And we want to ensure that we’re doing everything that we can to ensure that we actually achieve that potential and unlock that potential.
Pipeline Online:
The report mentions $8.8 billion per year as an average, but really, that’s going to be weighted much more heavily on the latter years, especially when it comes to the federal carbon tax and clean fuel regulations. It could be crushingly so in those later years, but it also assumes the federal carbon tax will increase from 2030 to 2035 to $245 a tonne. Is that really what you expect?
Scott Moe:
Well, that’s what has been put out by these policies. And that’s the numbers that our Ministry of Finance has come back with. And I would say that those estimates are on today’s production levels. And when you look at what’s happening in the potash industry, for instance, or even potentially what could be happening in the energy industry, there could be additional investments, additional production. Our plan for 2030 is targeting additional production in all of our industries. So the mitigated opportunity is even is even larger than that, because we have been fully intend to grow our footprint, grow what we’re doing, for good reason.
One, to provide opportunities for Saskatchewan people that are here. Two, to provide opportunities for Saskatchewan people that may choose to live here. But three is really, we believe that a stronger Saskatchewan most certainly will contribute to a stronger nation of Canada, a stronger federation.
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Harvest near Estevan, in 2016. Photo by Brian Zinchuk
And last, but not least, we are producing some of the most sustainable energy available anywhere on Earth. The most sustainable potash in the world is produced right here. And some of the most sustainable agrifood products, the food products that we eat, are also produced here. And it’s due to innovation and investment by Saskatchewan-based companies and companies that are doing business here. And we feel that if there’s to be further investment, it should be in an area like Saskatchewan, where we are pioneering innovation and producing some of the most sustainable food, fuel and fertilizer that’s available anywhere on Earth. Most certainly, it’s a win for the environment, for the global climate change discussion as well.
Voluntary carbon credit market
Pipeline Online:
Is there a level of carbon tax or carbon pricing Saskatchewan will establish? And how will that jive with the federal initiatives and regulations?
Scott Moe:
So in the consumer side, there’s simply shouldn’t be any type of a carbon tax.
On the production side, for example, our oil industry, what we’re seeing, and it really is a question of whether you want to incentivize companies to make investments, or whether you want to use the stick approach, the carrot or the stick approach, as to whether you want to actually disincentivize those companies from doing business here.
So what we believe, and what we have been working on, is we should be incentivizing companies to make those investments. That’s why we’re going to move forward with a large entry into the voluntary carbon credit market, to provide our customers around the world and across Canada, across America with the opportunity to make a decision on, not only price and quality of the product as a purchasing, but make a decision on the carbon content of that product that they are purchasing. In Saskatchewan’s case, we often if not always, would have a lower carbon content.
And so, as we look ahead, Saskatchewan is poised to be on a path to expanding our already sustainable industries. And I would put forward that that is a positive for not only our province, it’s a positive for Canada, and a positive for North America. In particular, when it comes to any discussions around energy security, which I think are paramount to be part of any discussion at all, whether it be at the federal level of governments provincial level, federal government or whether it be at any international conversations that we have. We’re seeing on full display for the world to view today, in particular, in the European Union, what happens when a country or a group of countries do not prioritize or priority energy security in their policy development.
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All stick, no carrot
Pipeline Online:
Federal policy seems to be all stick and no carrot. The size of that stick here is that the estimated average amount of $8.8 billion a year. And that’s more than half the current provincial budget. And that exceeds ’22-’23 health budget of $6.8 billion by $2 billion per year. How can we have schools and hospitals and highways, if we’re going to have such a huge drain on the economy?
Scott Moe:
To put it in perspective, that is what the cost of these nine policies is to the economy in Saskatchewan. It is equivalent to everything we spend on health and what we spend operationally on our K 12 education system. So it’s a tremendously large cost.
You’re right. It is all stick, very little to no carrot. And despite that, we’ve seen in the energy sector tremendous investments in lowering their emissions. We have lowered our methane emissions by 60 per cent, relative to 2015. We have the only net-zero oil company operating using enhanced oil recovery technology in the Weyburn-Midale field, The only net-zero oil company in Canada, and to my knowledge across North America, as well. And so companies are doing the right thing, they can do more of the right thing as well, and relative to their competitors and other areas of the world.
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And let’s call it what it is: we’re all going to use oil for a period of time. So we should make choices to use the most sustainable product available. Relative to our counterparts, and competitors around the world, we’re doing a remarkably good job on lowering our carbon intensity on the products that we’re producing. And that’s true for food. It’s true for mine products like potash and uranium, and it most certainly is true for energy products like oil and natural gas.
Pipeline Online:
With regards to this enormous amount of money, where does this $8.8 billion come from?
Scott Moe:
It comes from comes from Saskatchewan companies that will then have to make a choice about hiring less Saskatchewan people, not expanding, where we feel they could be expanding and hiring more Saskatchewan people. But they ultimately will hire less Saskatchewan people. And that will mean that we have less people working in our communities, less people who are moving into our community. So ultimately, where the money comes from, is the people of Saskatchewan.
And so what we have put forward in this document is that we are going to utilize every tool to our avail, to ensure that we are leading on policy initiatives and leading with policies that are pro-growth of the most sustainable industries in the world, and are going to ensure that Saskatchewan is going to be able to achieve all of the potential that we have, unlock this Saskatchewan potential so to speak. And at times, we’re going to have to defend and protect our provincial jurisdiction our opportunity to achieve what we know we can.
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Energy security on display in Europe
Pipeline Online:
The list of regulations and costs seems to read like an all-encompassing list of ways to strangle Saskatchewan economy from oil and gas to fertilizer for farmers. Is that your government’s conclusion? If we can’t do all these things, what sort of economy does the federal government feel they will allow us to have?
Scott Moe:
I don’t know. You know, I won’t comment on whether even the federal government has thought that far ahead.
This is the challenge that we’re faced with. When you make policy decisions in isolation of bringing to the table and discussion around does this enhance or risk our energy security? Does this enhance or risk our food security as a nation? And I would say we need to start considering that conversation at a continental level.
If we aren’t going to have a very serious discussion about energy and food security in North America, who on earth do you think is going to have that discussion for us? So this is, these are policies that are developed without the discussion around are we energy secure? And as I said earlier, the end of the road for those types of policies is on full display for the world to view.
We have the European Union that has taken policy initiatives to push emissions out of their country, or out of their grouping of countries, but they still need the energy, they still need the natural gas. In some cases, they still need the oil, coal. This winter, Germany is going to be more but as they refire their plants. They still need the oil. And so, they’ve been purchasing that for Russia, essentially making the European Union area of this world very, very unstable when it comes to the energy security conversation.
So what I would suggest is we in Saskatchewan, in Canada, and even North America, should be very careful about making ideological environmental policy decisions that do not consider whether or not we are able to preserve our energy security, do not consider purchasing these energy products that are more sustainable in many cases from other places in the world. And that’s what we were putting forward here today. And over the course of the next number of weeks and months, we’ll be putting forward some specific initiatives to ensure that we are unlocking Saskatchewan potential, unlike these policies, which are attempting to actually lock up the potential that we have for growth, for opportunity to provide North America and the world with some of the most sustainable fuel and fertilizer available today.
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No lights for you, Saskatchewan
Pipeline Online:
So the white paper says quote, “According to SaskPower, that means the federal standard, if implemented, will affect we turn off 65 per cent of Saskatchewan’s electrical supply.”
Now, it’s actually much worse than that, because that is our nameplate capacity. But when you look at operations, on October 9, 82 per cent, of Saskatchewan total generation was coal and natural gas. Three per cent was wind, 11 per cent was hydro, solar was negligible and four per cent was “other.” And SaskPower, just a couple of weeks ago, started putting that information out, delayed a couple of days. And it’s quite revealing that for the last week, almost every single day 82 per cent of power was from coal or natural gas.
Scott Moe:
And that’s the conversation around baseload. And there is a place for renewables to incorporate into any power grid system that you have. But at the end of the day, they did not they did not provide baseload power. I agree with you, and you highlighted my thoughts exactly. Sixty-five per cent of fossil fuel power generation in Saskatchewan today is nameplate. It’s ties higher than that, virtually on a day-to-day basis. And I’d encourage people to watch it through the winter as our power usage does traditionally increase.
So, herein lies the challenge as we do transition to either cleaning up our resources that we have in any way that we can, or replacing them with something like a SMR (small modular reactor) facility down in the Estevan area or somewhere in Saskatchewan.
The real challenge, as we as we move forward is we cannot simply agree to, enact, or even entertain a policy that is going to ban fossil fuel generation of electricity in this province. There’s other provinces in the same situation. It’s not a policy that is even possible. Nevermind the economic costs. It’s not even possible from the perspective of acquiring and accessing to enough power to keep the lights on and in all of the communities in our province at all. So it simply can’t, can’t be entertained.
The Queen Elizabeth Power Station in Saskatoon, it’s about a 600 megawatt facility, roughly. If it’s to turn off because of federal regulation, it’s going to be a pretty cold winter in Saskatoon. The same in North Battleford where I was today with the North Battleford Power Station. It’s going to be a pretty cold winter in North Battleford if the federal government requires us to turn off our natural gas facility. So it simply can’t happen.
Carbon capture and storage
Pipeline Online:
I asked Minister Morgan about this a couple of weeks ago, and it was kind of the most forthright answer I was able to get on the future of carbon capture. What is going to happen here? Because right now, those numbers SaskPower has been putting out, last week, coal is averaging 41 per cent of our power. So what are we going to do post-2030? Is there any future for carbon capture?
Scott Moe:
So if this policy is put in place, as we know, unabated coal is to be finished by 2030 and 2035, under this policy, all fossil fuel electrical generation would be gone by the wayside. We’re saying that just simply isn’t possible in Saskatchewan.
And so, there are options for us to work towards. And I think you’re seeing us work towards that in a conversation around small modular reactors, quite likely located in that Estevan area, if we were to not move forward with a CCS (carbon capture and storage) facility.
There is a holistic conversation around CCS. However, with the uncertainty that’s being provided…
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Let me go back to that. For the CCS conversation is, it does enhance the oil production opportunities that we have by using that carbon in the enhanced oil recovery process, which has been proven and is profitable in Saskatchewan and is producing more oil with a lower carbon footprint.
And yet again, as we move forward towards whatever policy the federal government might be inflicting, the first is the economic cost of that policy, and there are significant economic costs.
Boundary Dam Power Station. Photo by Brian Zinchuk
The second is whether or not it’s even possible. And in our case, we have a number of coal-fired facilities that are end-of-life in and around, or just prior to the 2030 date. And so, we have some decisions to make in the very near future on what those facilities would look like. It would be irresponsible to move forward with a coal and CCS facility in 2027-2028, only to have that phased out in 2035 through the electricity standard.
Secondarily, we have on that policy, we have a natural gas facility that’s under construction as we speak at Moose Jaw, which, under this, this policy would be threatened to be phased out, as well.
But we do have one plant, the Shand plant, that does have an end of life that extends beyond 2030. I believe it’s 2042. And I think it’s time for a very realistic discussion about how, and if, we’d be able to run that plant in some way, shape or form, to the end of its of its actual life cycle. Not strand the asset, but to actually utilize the full life of that asset, keeping the cost of power as affordable as possible for Saskatchewan people. And that is what we do need to start talking about, when we talk about energy security, is what are we doing to ensure that not only do we have access to energy by not putting in place ideological, not-possible policies, but ensuring that we’re doing everything we can to keep that energy affordable.
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I talked to, anecdotally, a fellow from Europe earlier this week, who said they were looking at a price increase of their energy between four and eight times. I haven’t looked into whether or not that is factual. It’s purely anecdotal. But it’s extreme, if even a four-times increase in your energy rates is where they learn. That is extreme by any stretch.
What can we do?
Pipeline Online:
To reference to back to the white paper here, when you talk about provincial legislation, what can that accomplish? Does that mean Saskatchewan will simply opt out of all these federal programs, these nine that you listed? Can the federal government find some way of enforcing them?
Scott Moe:
Yeah, there’s a number of things that I think we can consider. And I won’t discuss details of any legislation, obviously, until it’s introduced in the House.
But we do have a constitution in this nation, and a constitution that clearly states that there’s areas of shared jurisdiction. For example, environment is an area where provinces and the federal government share jurisdiction. There’s areas that are purely federal in jurisdiction; transportation of our of our products example, for example, rail transportation, and pipeline approvals are purely in the federal realm of jurisdiction.
We would put forward that the white paper that we’ve released discusses how the current federal government has used that area of shared jurisdiction, environmental policy, and sole jurisdiction, pipeline approvals, for example, to really hinder the opportunity to grow some of the most sustainable assets, production facilities for energy, at least, and also for mining, and other industries. But for energy specifically, it’s used those two areas to hinder that investment over the course of the last few years.
There are also then areas that are purely provincial jurisdiction, and one of those would be the ability to expand, to produce our natural resources within our provincial boundaries. What we would be looking at, with a piece of legislation, is how can we quantify and clarify what the provincial jurisdiction is to provide as much certainty as possible to those investors that are looking to invest, for example, in the oil industry in Saskatchewan.
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And so, as I said, I can’t discuss the details of what that legislation might look like until it’s obviously introduced in the House. But anything that we would do would be to clarify what is provincial jurisdiction, and what process would entail should another level of government infringe in that area provincial jurisdiction, hoping that it would provide certainty to those that are investing in our province, and really helping us to attract that investment and unlock the opportunity that we know lies before us.
We’ve got it covered, thanks
Pipeline Online:
So will Saskatchewan implement the same level of stringent emission reduction regulation? Just of its own making? Or say forget it, we’re not going to do anything to that extent?
Scott Moe:
Well, we already have it, in the heavy emitter program that we have in Saskatchewan, Alberta has a similar program, Ontario, New Brunswick also mirrored their programs after what we did here in Saskatchewan. So, we already have legislation in that space. And I would say that it’s been far more productive legislation with the industries that are operating here than any federal any federal backstop in that space would or could, or should ever be.
Potash. Photo by Steve Halabura
And so we already have that legislation. And we’re not looking at additional legislation in that space. Unless there was a way for us to work with a maybe a future federal government on how we could use that carrot as opposed to the stick to increase our production of our products. And we firmly believe we should be increasing the production of all of the products we produce in Saskatchewan, because we do it at a lower carbon intensity than virtually any else anywhere else in the world. This is where we should be expanding our production, and doing right by Saskatchewan and Canadian residents, but also doing right by the global environment by producing the same amount of product with a lower carbon intensity than what we’re seeing in places like Russia. And an example of this is potash. We do so for every tonne of potash, we use 50 per cent, or emit 50 per cent less greenhouse gas emissions than they do in Belarus or Russia. That is a positive for the environment.
Pipeline Online:
Looking at the white paper here, and that Clean Electrical Standard, it made me think of the Cory potash mine. We get something like 200 megawatts of electrical generation out of that, because it’s natural gas generated as a cogeneration plant. So, if the Clean Electrical standard says, “Thou shalt not use carbon fuel by 2035,” wouldn’t that shut down that, and many of the other potash mines who rely on carbon fuel?
Scott Moe:
We’re trying to find out the details of what this this policy this initiative would entail. And you know, herein lies the challenges of coming up with a policy before you consult with the industries, before you consult with provincial governments that are much closer to the various industries in their respective jurisdiction. And so, what we would ask for is for these policies to be consulted on, long in advance so that they can actually be crafted with some degree of operability or potential ability to actually function, as opposed to coming out with a notional policy and then realizing that it isn’t actually possible unless you want to entirely crater not only the Saskatchewan economy, but the but the entire Canadian economy.
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Pipeline Online:
And now, I guess, to kind of sum up here, in reading the white paper that is the theme that I gathered. If we follow all these policies, we’re going to, I use the term ‘strangle,’ the Saskatchewan economy in many aspects and some of our largest industries. Like Twisted Sister saying, “We’re not going to take it,” is Drawing the Line Saskatchewan saying the same thing? The line must be drawn here, no further?
Scott Moe:
Yeah, in a way,
What I would say is, this is about the opportunity that we (unintelligible), and what can we do as a province to ensure that opportunity? The federal government has brought out these nine policies and there’s many more. I didn’t mention Bill C 69, the Impact Assessment bill, which has been ruled and deemed unconstitutional and the Alberta Court of Appeal.
And so what, what this this paper really entails is, is putting forward is one a little bit of a historical view of the relationship between Saskatchewan and the federal government. In 1930 was the Natural Resource Transfer Act. 1982 is the Constitution. And the challenges that Saskatchewan has had with the federal government over natural resources, the ability to expand and grow our natural resource economy here in Saskatchewan, and that continues up to an including today.
And so, as we look ahead, we have a great opportunity to attract investment in all of the industries that are creating wealth in our province. And I would say, many of them are either directly or indirectly creating wealth in other provinces and across Canada.
So yes, if you move forward with these policies, without asking yourself, what is the economic impact to my province or my nation? What is ultimately the impact on whether or not, or are they even possible, in enacting? And those are questions that should have been answered long before the policies go out the door, and they haven’t been.
So what we’re doing here today is really closing the loop on a question that my predecessor, former Premier, Brad Wall had asked when the carbon tax was introduced. “Has anyone done an economic analysis of what these policies actually cost?”
We’ve done that here now. And we have put forward the fact that we in this province are going to draw the line. And we’re going to defend that line on unlocking Saskatchewan’s opportunity.
Pipeline Online provides the in-depth energy coverage in Saskatchewan that no one else does. Watch for future series of stories on nuclear power, lithium development. Follow on LinkedIn, Facebook, or Twitter. (Hint: LinkedIn is the best)
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