Brian Zinchuk is editor and owner of Pipeline Online
Economic Impact Assessment Tribunal Chair Michael Milani on April 8. Photo by Brian Zinchuk
Editor’s Note: The proposed federal Clean Electricity Regulations are one of the largest policy moves in Canadian history, and will have a much greater impact on Saskatchewan than it will on provinces blessed with ample hydroelectric power. If implemented to their fullest extent, they will utterly alter our entire economy and way of life. The Saskatchewan Party government has reacted harshly and negatively to the CER and numerous other climate change initiatives spawned by the federal Liberal government, and created the Saskatchewan First Act as a result, providing it with the muscle to fight back. The Economic Impact Assessment Tribunal is a key part of that Act, and its first implementation was to look at the CER and its impact on Saskatchewan.
Without exaggeration, the Clean Electricity Regulations is one of the largest stories of our time, here in Canada.
There is a lot to unpack with its first report, issued on June 25. Pipeline Online will be digging deep into this file, with extensive reports, likely going several weeks, into this report. Why? Because if implemented, it will affect everyone, and everything, in this country. There will be stories from politicians, as well as verbatim reports from numerous submissions made to the tribunal. They include everything from a small junior oil company owned by one man in Kindersley, to some of the largest oil companies in the country, and Saskatchewan’s key Crown corporations.
First up: the report’s executive summary, verbatim, as well as the report’s description of why it was created:
The Economic Impact Assessment Tribunal (the “Tribunal”) was created by The Saskatchewan First Act. On August 19, 2022, the Government of Canada published the proposed Clean Electricity Regulations (previously defined in this Report as the “CER”) in the Canada Gazette, Part I, under the authority of the Canadian Environmental Protection Act, 1999.
The CER have been referred to the Tribunal. The Tribunal has been directed to assess the economic cost of the CER, in respect of projects, operations, activities, industries, businesses or residents in Saskatchewan. That assessment may include consideration of total investments, impacts on government revenue, expenditures and debt levels, capital and maintenance costs, net exports and imports, direct compliance costs, and technological readiness.
The CER are scheduled to come into force January 1, 2025. The overarching objective described in the CER is for Canada to have a national net-zero electricity sector by 2035, which in turn is to facilitate the creation of a national net-zero economy by 2050.
Executive Summary:
The Economic Impact Assessment Tribunal was directed to examine the estimated compliance cost of the draft federal Clean Electricity Regulations (the “CER”) as compared to Saskatchewan’s Affordability Plan (the “SAPP”), for the period from 2025 to 2035. The Tribunal was also tasked with examining the forecasted cumulative effect of the CER on the provincial economy to the end of 2035.
The Tribunal reviewed the CER, the regulatory impact analysis statement (and the published responses to it), and other information. The Tribunal commissioned Navius Research Inc., which does economic modelling for (amongst others) the Government of Canada, to provide modelling for Saskatchewan in respect of the CER and the SAPP. Additional information was obtained from Crown Investments Corporation of Saskatchewan and the Saskatchewan Ministry of Finance. The Tribunal solicited submissions from a broad range of governmental entities (including the Government of Canada), other organizations and entities who the Tribunal determined might have information that could assist the Tribunal in its examinations.
The Tribunal reached a number of conclusions, described more fully in this Report, including the following:
- The goal of achieving more environmentally-friendly electricity production is shared among diverse regulators, entities, and individuals.
- Due to regional differences, including sources of generation of electricity, population, climate, and geography, applying the CER without modification results in significantly greater costs to several Provinces, including Saskatchewan.
- The fluid nature of regulatory change creates challenges, thereby increasing risk, costs, and unintended consequences including undermining investor confidence.
- The CER compliance timeline (which is significantly shorter than under the SAPP) assumes that commercial scale technology (which does not presently exist) will be developed in time to allow implementation prior to prescribed deadlines.
- The timeline for compliance under the CER assumes that there will be sufficient labour resources available, in all areas of Canada, to create the required infrastructure.
- If the timeline for designing and implementing the necessary technology were longer, the opportunity for industry to succeed in achieving the desired environmental results increases markedly, and the investment of the required capital will be more probable.
- Existing infrastructure (including that paid for with tax dollars) will be abandoned, prior to its intended end-of-life, if the CER are applied without revision.
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- The costs of electricity to Saskatchewan families, business and industry will be greater, under the CER than under the SAPP, for the period from 2025 to 2035.
- Saskatchewan’s economic growth, as measured by GDP, will be at least $7.1 billion lower under the CER than under the SAPP, for the period from 2025 to 2035.
- There will be at least 4,200 fewer jobs under the CER than under the SAPP, for the period from 2025 to 2035.
- The greater increase in compliance obligations (under the CER) in the price of electricity may have associated negative economic consequences, including stalling of growth, the potential shift of production to jurisdictions with weaker environmental standards, and a decrease in royalties and taxes paid to government.
- Lower growth rates, and potential retraction in some industries that are subject to the CER, may reduce opportunities to partner with Indigenous entities, communities and individuals.
- With its resource and export-based economy (including in respect of natural resources and agricultural products), Saskatchewan and its industries are particularly vulnerable to the consequences of greater electricity costs.
- Deindustrialization may occur, as energy intensive industries fail to compete with exporters in countries with a less green approach to energy policy.
- Economic analyses provide guidance as to costs, but the appropriateness of underlying assumptions and the actual effect of costs are best described by those who directly participate in the generation of electricity and its use.
The Tribunal’s mandate was expanded to include an assessment and examination of the Clean Electricity Regulations: Public Update February 16, 2024. Many potential modifications to the CER are signaled, but without clarity as to actual changes it is not possible to measure the effect on the cost comparison and analysis that the Tribunal undertook in respect of the current version of the CER.
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- 0055 Smart Power Be Smart with your Power office0055 Smart Power Be Smart with your Power office
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- 0041 DEEP Since 2018 now we are going to build0041 DEEP Since 2018 now we are going to build
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