Brian Zinchuk is editor and owner of Pipeline Online
X/@PremierScottMoe
REGINA – Premier Scott Moe elaborated on the Saskatchewan Party government’s plan of getting rid of the industrial carbon tax in a press conference on March 27, but it was clear it’s not a done deal yet. The federal government still has a say, and could effectively overrule the announcement that had Moe grinning from ear-to-ear when he posted a video about it.
The reality is there are several forms of carbon pricing in place. The one most people are familiar with is the consumer carbon tax, notably paid on all fuels, be it gasoline or diesel at the pump, or natural gas (at least until Saskatchewan stopped collecting it for home heating). It is even charged on truckloads of coal used for shop or home heating, to the point where the carbon tax costs much more than the coal.
But that’s not the carbon tax Moe was speaking of, either at the press conference or in his social media post the day before announcing this initiative. This other carbon tax is the “Output-Based Performance Standards,” or OBPS. Sometimes its is referred to as “Output-Based Pricing System,” as seen on the federal government website.
The OBPS is basically a provincial carbon tax put in place such that the “federal backstop” is not implemented. If a province didn’t have an OBPS in place, carbon taxes paid by large emitters, like power plants or refineries, went to the federal government. The OBPS meant those revenues instead flowed to the respective provincial government. It was based on the same, ever-escalating carbon tax price. Until March 31, that price was set at $80 per tonne CO2 equivalent (CO2e), and it is supposed to rise to $95 per tonne CO2e on April 1.
The federal website about the OBPS explains:
Under the Greenhouse Gas Pollution Pricing Act, the federal carbon pollution pricing system has two parts:
- a regulatory charge on fuel (federal fuel charge)
- a regulatory trading system for industry – the federal Output-Based Pricing System (OBPS)
The federal OBPS is designed to ensure there is a price incentive for industrial emitters to reduce their greenhouse gas emissions and spur innovation while maintaining competitiveness and protecting against “carbon leakage” (i.e. the risk of industrial facilities moving from one region to another to avoid paying a price on carbon pollution).
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It took several years for Saskatchewan to get its OBPS in place. When it was put into place, the government announced it as an achievement. The dollars are significant. For the 2024-2025 fiscal year, the province is expected to have collected $353.3 million, according to last week’s budget. For 2025-26 fiscal year, that number was projected to grow to $431.5 million, in tune with the escalation of the federal carbon pricing scheme to $95 per tonne CO2e on April 1.
The vast majority of that money came from the electricity sector. The budget said last year the forecast was for $282.9 million, and for 2025-26 it was budgeted to be $346.6 million. That money didn’t just fall from the sky, but rather was paid by every SaskPower customer as part of their monthly bills. And since every business in Saskatchewan paid their power bills to remain in operation, that, in turn, meant the $282.9 million increased the cost of business for everyone. Those businesses, in turn, would have to account for that in their pricing, thus becoming a component of inflation.
The operative term in Moe’s announcement is “was.” That’s because, according to Moe, the province will no longer be collecting the OBPS, essentially “zero-rating” it. However, it was clear in Moe’s statements that the federal government could choose to step in and re-instate its own carbon pricing. That was the case before Saskatchewan’s OBPS was approved a few years ago. He asked that whatever party forms government, they not impose that backstop.
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Moe started out by saying, “Effective on April 1, 2025 Saskatchewan will now be a carbon tax free province, the first carbon tax free province in the nation of Canada.”
“As Canadians, we find ourselves in the midst of a federal election campaign, and given that the two major federal parties and their leaders have realized the very, very harmful impacts of the carbon tax, the harmful impact to families, to our investment environment, industrial investment environment, and ultimately, the harmful impact in reducing the number of jobs and opportunities that Canadians have, and more generally, the harmful impact that it has to our economic growth in not just this province, but across the nation of Canada.
“We see each of those leaders now announcing plans to eliminate at least some of the cost of the carbon taxation policy that we’ve been subjected to, which will be six years this April 1st.
“So in that light, and taking that cue from the federal leadership candidates, Saskatchewan is taking the lead in our nation by reducing the industrial carbon tax rate charged in our province to zero. The industrial carbon tax rate, or the OBPS, is the quiet carbon tax. It’s the carbon tax that we as Canadians don’t always see, but we certainly all pay.
“We’re in a very uncertain time, as well as Canadians. We are facing as Canadians, potential tariffs and some implemented tariffs in the steel and aluminum industry already, today from our largest trading partner, the United States of America.
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“We also, in this province and throughout the Midwest, the Prairie Provinces are facing today, the 100% tariff on canola and peas and pork and seafood in our Atlantic areas; the Chinese tariff that’s been imposed due to a policy decision in fairness by our federal liberal and supported by the NDP governments, a policy decision to protect the EV industry, the Canadian EV industry, which is at this point in time, not employing anywhere near the number of people that are being employed in the canola industry and the other aforementioned industry.
“So what we are doing as a province is we’re taking very decisive steps to ensure that our industries in Saskatchewan are more competitive and to protect the jobs today, in those industries, and protect the jobs that we want to attract in those industries into the future. And most importantly, protecting Saskatchewan families from inflationary costs and inflationary costs due to unnecessary taxation.
“The decision that we’re making today will foster an economic environment where industries can feel confident to make further investments into our province, and I would say, into our nation; to increase the production that they have to add value to the production, that they have to protect the jobs that are here today and to protect the very families that are creating income from those jobs and industries across Saskatchewan.
“As I mentioned earlier, Saskatchewan is producing the most sustainable products that you can find on Earth today. Those products are benefiting not only Saskatchewan families from an economic perspective, but by extension, very much are impacting Canadian families in a very positive way. And so we want to create an environment where we can create more of those sustainable jobs, more of those Canadian sustainable jobs, right here in Saskatchewan, making our province a carbon tax free province, will provide us with the opportunity to do just that.”
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The feds have a vote
And here’s where Moe noted that the province does not, in fact, have full control over implementation of the industrial carbon tax. He said, “So our ask, on behalf of, I would say, not only Saskatchewan residents, but largely on behalf of Canadians, is that all federal leaders running in this federal election would support the position that we have put forward: removing unnecessary taxes where you can, attracting investment and creating more Canadian jobs and more Canadian opportunity in areas like Saskatchewan, where we have the most sustainable food, fuel, food and fertilizer that you can find on Earth. And our ask of the federal governments is to allow provinces to regulate in this space, regulate in this area, without imposing their federal backstop.
“This will further strengthen, and I would say, provide us with the opportunity to further unite as Canadians by supporting the economic diversity that we have in various provinces and various regions of Canada. And will provide us, then collectively, with an opportunity to grow economically and to grow as Canadians. This is an opportunity that I would say that federal leadership candidates have to unite Canadians further to make life more affordable for each and every Canadian and each and every Canadian family.”
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Budget impacts
As noted above, the provincial budget released a week before listed $431.5 million on the revenue side from the OBPS. Overall, the budget has a $12 million surplus, but the opposition NDP have said removing this revenue will result in a large deficit. Asked about this action’s impact on the budget, Moe said, “So what we are doing here today is deferring the OBPS program, and we feel it would have an immaterial effect on the budget. But we will have a consultation process with industry on how we would be able to exit that program.
“We have always stood, I think from day one, against this tax. We don’t think it is in any way an environmental tax, but ultimately is, preventing, in many ways, investment and enhancing the inflationary costs that we are experiencing as Canadians. So we’ve always been against it in looking for ways, including taking it to the Supreme Court of Canada, supported by eight other provinces and one opposition party in our effort there.
“What we are doing here today is really taking our cue from federal leaders as we find ourselves in a national election campaign. You’ve seen the two main parties, both federal leaders, have come out and made decisions with respect to reducing the consumer carbon tax. And one party, the Conservative Party, has went further and said that they would also reduce the OBPS tax. Taking that cue, what we are asking all leaders to do is to be clear on what they would do with the OBPS tax, and ask them to put that in the provincial scope of regulatory, of regulations.
“That’s what we’ve always asked for. We in Saskatchewan said we would probably reduce that to zero. Other provinces may not. Other provinces may freeze it at a current amount or some select amount. Other provinces may actually have it escalate over time, depending on the industry and depending on the opportunities that they have.
He continued, “We’re not only diverse as people across Canada, but we’re diverse economically in how we generate our wealth. And I think that’s very obvious, right now, as we have tariff discussions from multiple countries. So really, we’ve always been against this particular tax, we think it’s ineffective. We think it’s in inflationary. However, we’re really taking our cues from federal leaders over the last number of days, as we see them starting to zero out this tax in different ways. This, what we’re talking about today, the consumer carbon tax, is, there’s decisions that have been made there by both leaders. The OBPS or the heavy emitter tax is, we need to be the leaders need to be clear on their position on that. This is the quiet carbon tax. This is one that you don’t always see, but we all pay.”
The program is not yet dead in Saskatchewan, per se, as Moe noted, “We’ll consult with industry on how we edit the program, and so some of those details would come out days and weeks into the future.”
He noted the impact would be seen on power bills. Moe pointed out that the carbon tax is visible on SaskPower bills, but that’s not the case in all areas of the country.
In response to another question about the budget, he said, “Listen, we have a balanced budget, or a $12 million surplus that’s introduced into the legislature, and as we have every intent on delivering that throughout the year.”
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Impact on power bills
Minister of Crown Investments Corporation Jeremy Harrison said, “This is the hidden carbon tax. This is the shadow carbon tax that, I think, has been advocated by some for it to continue to be higher.
“What we are doing and what people are going to see on their bills as of April 1st, Saskatchewan rate payers, SaskPower customers, are not going to be paying that carbon tax portion that had been broken out on their SaskPower bills. So that is for individuals, for households, for businesses.
“And this has a real impact. I mean, we’re talking hundreds of dollars per year depending on power use for either households or for companies.”
One of SaskPower’s largest customers is Regina-based EVRAZ, which uses an electric arc furnace to melt down scrap steel into new product. Massive electrodes essentially zap those chunks of steel until they’re a red-hot, flowing liquid.
Harrison continued, “EVRAZ is a great example of this, where we made an announcement about a week and a half ago, a company that is facing a 25 per cent tariff that, because of that tariff, there are literally hundreds of jobs in the City of Regina, directly at stake; thousands indirectly at stake, because of the importance of that industry – a 25 per cent tariff. This is going to save that company, for example, millions of dollars per year in compliance payments, which is going to put them in a position to continue employing the hundreds of people in Regina and the thousands that are in that associated industry.
“We’ve been working closely with the company on how we speed up purchases from the Crowns. We announced that a week and a half ago. Some of you were at that announcement and covered it. It was very well received, and I think you’re going to see later today, as we go forward, economic stakeholders talking about the impact of this for them, whether that be individual employers, whether that be households, whether that be other stakeholders in the government realm, organizations like SARM, for example. This has a direct impact on the ability of our rate payers, for SaskPower, our customers, to realize genuine savings. And it’s a position that we’ve taken for many years, and I think that that is probably going to be the most obvious indication initially people are going to see – that line on their house power bill, which is Federal carbon tax, is no longer going to be paid.”
Moe said the immediate material impact would be lower costs for families. Secondary benefits include improving the investment environment.
Editor’s note: The Pipeline Online Podcast will feature Andrew Scheer today, Monday, March 31 at 1 p.m. SK time. The carbon tax will surely be part of the discussion.
You can watch live here:
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Facebook: https://www.facebook.com/pipelineonlineca
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