BREAKING: Saskatchewan to rebuild its coal fleet, despite federal regulations calling for its demise

Saskatchewan’s coal industry receives a stay of execution

REGINA, ESTEVAN, CORONACH – For years, the conventional coal-fired power industry in Saskatchewan has been living under a death sentence, one to be carried out in four years, six months and 12 days from now. Federal regulations proclaimed the end of coal-fired power generation in Canada by 2030 as a way of reducing Canada’s greenhouse gas emissions to combat anthropogenic (manmade) climate change.

On Wednesday, June 18, the Government of Saskatchewan issued a stay of execution, as it were. On that day, Minister of Crown Investments Corporation Minister and Minister Responsible for SaskPower Jeremy Harrison sent a letter to SaskPower workers, informing them that instead of shutting down its coal fleet, SaskPower would be rebuilding it, and operating it for years to come, as a bridge to nuclear power generation. That eventual nuclear adoption would lead to net zero emissions by 2050. That letter was also forwarded to Westmoreland Mining, which mines the lignite coal for Saskatchewan’s three coal-fired power stations.

The decision is one of the largest policy decisions the Saskatchewan government has made over the last decade. It will have one of the largest financial impacts on this province for years to come, no so much in how much it will cost, but in how much it will save.

The result will be a decades-long reprieve for both Coronach and Estevan, and the Poplar River, Boundary Dam and Shand Power Stations. Over 1000 direct jobs, between the coal mines and power plants, a large number of which pay over $100,000 per year, will be saved instead of eliminated in those four years, six months and 12 days from now. The spin-offs in each community, from crane outfits, machine shops, hydraulic suppliers, to grocery stores and hotels comprise enormous chunks of their local economies. In Coronach, it is for all intents and purposes almost the entire economy.

(If you click on the dragline above, Earthmovers Media did a video on the operations at Coronach, posted June 17 on Facebook)

 

For the last decade, the federal government has pushed Saskatchewan to build more wind and solar power generation. But Alberta over the last three years has doubled both its wind and solar capacity. Even with now 5,688 megawatts of wind capacity, as recently as Monday, June 16, wind output in Alberta dropped to 0.7 per cent of capacity. The previous week it had fallen to 0.1 per cent. And there have been days, including in the dead of winter when temperatures are frigid, that wind output drops to zero – a total flatline. As for solar, Alberta output in the winter is a fraction of full output capacity, and of course, the sun still goes down every night.

And through all of this, Saskatchewan had been committed to adding 3,000 megawatts of wind and solar power to its grid. In January of 2024, SaskPower saw seven days with periods of no appreciable wind power generation. Thus, the need for baseload power generation, not dependent on the vagaries of the weather, has been made clear.

Long road to coal decision

The road to this decision has not been a short one, and has everything to do with harsh realities that cannot be frittered away for ideological purposes. The simple reality is that on any given day, wind power can and does go to zero output in Saskatchewan, the sun goes down every night, most of our natural gas comes from Alberta and it will likely be rising in price, and we have a lot of coal. Cheap coal. Hundreds of years of it.

On any given day in recent years, up to 88 per cent of power generation in Saskatchewan comes from natural gas and coal. And the federal government’s Clean Electricity Regulations mean to do away with all of that, unless carbon capture is applied. But the federal standards for that carbon capture are higher than what has ever been achieved to date at the Boundary Dam Unit 3 Integrated Carbon Capture and Storage Project. Impossible standards left the government of Saskatchewan with an impossible choice – follow federal regulations and shut down the coal fleet, and eventually natural gas fleet, letting our people quite literally freeze in the dark; or go its own path, effectively telling the federal government “To hell with your regulations, we’re keeping the lights on.”

The Saskatchewan First Act, introduced by then-Minister of Justice and Attorney General Bronwyn Eyre in the fall of 2022, was the first move in that direction. It reasserted provincial jurisdiction over electrical energy generation, as stipulated in Section 92A of the Constitution.

The next stage of that was using the Saskatchewan First Act’s Economic Impact Assessment Tribunal to examine the impact of the Clean Electricity Regulations, that were brought in under then Minister of Environment and Climate Change Steven Guilbeault. The impact on the province, as found by that tribunal, would be nothing short of devastating. The tribunal released its findings in September, 2024, just prior to the fall provincial election.

Along the way, the federal carbon tax, introduced under the Justin Trudeau-led Liberal Government, climbed from an initial $20 per tonne CO2 equivalent (CO2e) to $50. And then it was revised to escalate another $15 per tonne CO2e per year, until it eventually hit $170. But federal ministers indicated it could go even higher. That carbon tax meant that SaskPower was burning more natural gas than coal not because it was cheaper, but because it incurred less carbon tax. Carbon tax bills via the “Output-Based Pricing System” totalled hundreds of millions of dollars per year.

The federal government pausing the carbon tax on home heating oil, largely to the benefit of Atlantic Canada (which overwhelmingly tends to vote Liberal). That gave Saskatchewan the justification to stop charging carbon tax on home heating that it could control, under SaskEnergy. And then in early 2025, Premier Scott Moe withdrew the carbon tax on industrial emitters, too. This was followed by newly-elected Prime Minister Mark Carney withdrawing the consumer, but not the industrial, carbon tax as his first act upon election.

 

Text of the announcement

So what is Saskatchewan actually going to do?

Here’s the key point in Harrison’s letter, sent to SaskPower workers as well as Westmoreland:

“Work will begin this year to restore Boundary Dam 4 to service and be re-certified. Further investments will be made in long-lead items as a part of the life extension project. In the years to come, all coal units at Boundary Dam, Poplar River and Shand will receive the work necessary to extend the life of those units.

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And here’s the letter in its entirety:

I am writing to inform you that the Government of Saskatchewan has made the decision that SaskPower’s coal-generating power assets will be life-extended as we bridge to nuclear baseload power generation. I know that the hard-working teams in these facilities have been subject to considerable uncertainty and earlier this year, I had committed to you that the Province would provide you with an answer prior to July 1, 2025. That commitment is being kept. You also deserve to know the detailed reasons why your government came to this decision.

SaskPower is projecting that power demand will massively increase over the next two decades. Our government has decided upon an all-of-the above approach to meeting this unprecedented demand growth. To that end, we have added hundreds of megawatts of new renewable power generation, new natural gas plants, and biomass. This is in addition to our already existing hydro and other assets.

We have also made the strategic decision that our priorities going forward will be reliable and affordable power generation along with energy security. This led to a fundamental reconsideration of the future role of coal in our system. Saskatchewan people own our coal resource, which we are blessed with in enormous quantities. We know that we will have access to it. The certainty and security of coal means that it will continue as a pillar of our electrical generation system as we bridge to a nuclear future powered by Saskatchewan uranium.

Owing to the generations of professionalism, care, and expertise of SaskPower employees – our coal plants are in remarkably viable condition given their age. Over the past eight years, the availability of our coal units has averaged between 78 per cent and 87 per cent. By way of comparison, on average, intermittent renewable generation assets typically produce energy to their full potential between 19 to 31 per cent of the time. Renewables play an important role in our grid, and they will continue to, but they are no substitute for baseload generation.

Some have argued that the federal government has the authority to mandate the shutdown of our coal plants. The Government of Saskatchewan has been very clear in this regard: the federal government has no standing in this discussion. The Constitution is explicitly clear with Section 92A giving exclusive authority to the province to make laws in relation to the development, conservation and management of sites and facilities for the generation and production of electrical energy. We have also been clear that we do not recognize the legitimacy of the federal Clean Electricity Regulations. In fact, the Saskatchewan First Act Tribunal estimated that compliance with the original Clean Electricity Regulations would cost the province $7.1 billion in economic growth, lead to the direct loss of at least 4,200 jobs, and there would be an $8.1 billion negative effect on Saskatchewan’s exports.

The Government of Saskatchewan remains committed to the goal of a net zero grid by 2050. But this must be done responsibly and be based on the deployment of nuclear generating assets fueled by uranium mined in our province. We have been working diligently on the options that exist in this space including partnering with the Governments of Ontario, Alberta, and New Brunswick on small modular reactor (SMR) development. We have also committed to examining the viability of large nuclear generation potential. We very much invite the federal government to be our partner as we move through this process.

Saskatchewan is demonstrating how economic growth and environmental responsibility go hand in hand. Our government has been deeply committed to the development of the most sustainable resource production in the world and SaskPower has played an important role in that. With cutting edge carbon capture, utilization, and storage (CCUS) technologies at Boundary Dam 3, we’ve already sequestered nearly seven million tonnes of CO2.

Combining CCUS with enhanced oil recovery results in 82 per cent fewer emissions than traditional oil and gas extraction. As suppliers of 37 per cent of the world’s potash in 2022, our underground potash mines produced only half the emissions of other jurisdictions. The province’s forest management practices are enhancing climate resilience, while innovative agricultural approaches are boosting yields and strengthening climate adaptation. By adhering to policies that serve our residents, industry and natural ecosystems, Saskatchewan is building towards a more sustainable world.

Context is also important. SaskPower will be life extending up to approximately 1500 MW of coal assets while also investigating the viability of additional carbon capture and storage. Other jurisdictions around the world are refurbishing coal plants that are many times that size. China alone approved approximately 70 GW of new coal capacity just last year.

The Government of Saskatchewan is going to be realistic in not compromising the reliability, affordability and security of the power grid when we are already making such significant contributions to environmental sustainability. Other announcements will be coming in due course as we chart our path based on the principles of reliability, affordability, and energy security. This will include grid enhancements, new generation projects, and significant investments in SaskPower’s future.  This decision will position Saskatchewan at the center of the North American energy grid with options for export and for the potential attraction of new investments that are large scale users of electricity.

Work will begin this year to restore Boundary Dam 4 to service and be re-certified. Further investments will be made in long-lead items as a part of the life extension project. In the years to come, all coal units at Boundary Dam, Poplar River and Shand will receive the work necessary to extend the life of those units.

I want to thank the municipal leadership in the Estevan and Coronach regions for their strong support and partnership as we have worked through this process. I also want to sincerely thank IBEW and the United Mine Workers for their direct input, engagement, support, and the technical expertise that they have provided to the government. I believe that this decision will ensure that our local communities remain vibrant regions to live, work and raise a family in for decades to come.

I want to genuinely thank you, the employees of SaskPower, for your service and commitment to powering our province. Having seen firsthand the work you do every day, I want to convey my deep respect and admiration. We have an amazing future in front of us and SaskPower will be an integral part of building that future!

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Analysis

The commitment to extend the lives of the coal fleet has numerous implications. For one, instead of just trying to get those units across the 2030 deadline, significant work needs to be done to extend their lives for decades to come. That, in turn, means substantially more coal will be mined over those years. In the Estevan area, that may mean opening up the “West Block” west of Boundary Dam Reservoir.

But there are knock-on implications as well. Will the extension of coal mean delaying the building of small modular reactors? If it does, does that mean SMRs will become less expensive as “nth of a kind” production means improved economies of scale? Or will delaying nuclear build-out result in escalating costs?

Keeping coal going could have a profound impact on the current site-selection process for the first proposed small modular reactor. That’s because a body of water can only handle so much heat going into it with regards to cooling. Boundary Dam Reservoir may be able to handle the current coal facility, but can it handle that and a nuclear facility on the same reservoir concurrently? If both are indeed going to operate concurrently, would it better to build the nuclear reactors on Rafferty Reservoir?

Adding carbon capture to Saskatchewan’s coal fleet could have the impact of adding up to 75,000 barrels of oil per day in production, according to a presentation by senior research geologist Gavin Jensen during May’s Williston Basin Petroleum Conference. That could add decades of additional production to largely depleted oilfields, as it has for the Weyburn and Midale Units. Doing so would have the effect of essentially adding four Weyburn Units, with all the activity that entails. And if that is done, would the province then want to run its coal fleet even further into the future, to maintain that incremental oil production? If it did, then the coal mines would need to stay open, as well as the power stations.

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And if carbon capture is added, then greenhouse gas emissions would be dramatically reduced, maybe not to the level envisioned by the Clean Electricity Regulations, but reduced nonetheless. And if that reduction did take place, would there be any need to truly stop coal-fired power generation? Could new plants, with carbon capture, eventually replace the old ones?

However, adding carbon capture also results in a parasitic loss of roughly a quarter to a third of the power produced, meaning that total output from the fleet would be correspondingly diminished.

Then there’s the fact the soon-to-be-built 100 megawatt Estevan solar facility is directly across the road from the aforementioned West Block, meaning presumably there’s coal under it, too. Would they need to eventually dig up that land, or would they have to mine around it?

As for federal-provincial relations, this will be an enormous test for new Prime Minister Mark Carney. To become an “energy superpower,” increased oil production by the way of CO2-Enhanced Oil Recovery” is pretty much a must. But getting there would mean running coal conventionally for years to come – long past the current federal 2030 drop dead date for conventional coal. And Saskatchewan is the only province west of the Maritimes that still burns coal for power. Can an exception be made?

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Also, continuing with conventional coal past 2030 will be in flagrant violation of federal regulations – ones Saskatchewan says has no standing. Will the federal government bend, or will they try to enforce the shutdown of coal, literally turning the lights off for Saskatchewan people?

And finally, will a change in government, federally or provincially, result in a change in course? Will the Saskatchewan NDP carry through, should they form government next time around? And if they don’t, what will their solution be? And would it be achievable before 2030? And if the Conservatives form federal government, will they throw out the 2030 rule, or enforce it?

Will the federal government provide financial support for the adoption of nuclear power in Saskatchewan, with an eye to “Net Zero by 2050?”

As noted above, this is one of the most significant policy decisions to be made by the Saskatchewan government for many years. How it plays out will be the big story for years to come.

Pipeline Online will be having an in-depth interview with Minister Harrison on the Pipeline Online Podcast on Friday, June 20 at 10 a.m. to discuss this announcement in detail. Watch live on X, Facebook or YouTube.

Facebook: https://www.facebook.com/pipelineonlineca

X: https://x.com/Pipeline_Online 

YouTube: https://www.youtube.com/@BrianZinchuk/streams

Over the coming days, Pipeline Online will publish verbatim letters of support from Westmoreland Mining, International Brotherhood of Electrical Workers, United Mine Workers of America, Town of Coronach, City of Estevan, RM of Hart Butte and RM of Estevan, all of which commend this decision.

Below is a short list of stories showing the path to this decision. There’s actually hundreds more, but these get to the heart of the matter. 

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