Saskatchewan fights back against Ottawa climate measures that stifle its resource and farming industries

In a White Paper, the province seeks more autonomy within Confederation, similar to Quebec’s, to develop and market its resources without federal interference. The alternative is staggering costs for the province’s industries, farmers, and citizens

Federalism has been far from perfect in addressing challenges faced by Saskatchewan in fulfilling the province’s destiny and reaching its fullest economic potential. This prompted Premier Scott Moe to proclaim that “Saskatchewan needs to be a nation within a nation,” similar to how the Province of Quebec operates with broader powers within Confederation.

In light of recent federal commitments and actions, the Government of Saskatchewan is exploring all options to fully assert our existing powers, rights and privileges under the Constitution. Our objective is to protect our economic future now and into the future such that we may:

  • Continue to responsibly extract and develop our natural resources
  • Expand trade corridors to provide the world with what it needs, especially in a time of crisis: food, fuel, and fertilizer
  • Protect our residents and businesses from harmful federal policies.

Despite the entrenchment of provincial natural resource rights in the Constitution, the production, use and marketing or export of resource products remains an issue between federal and provincial governments. The debate, though, has shifted from the resource itself to federal regulation and control over the byproducts thereof, namely emissions from the resources, and how the resources get to market.

Over the past 15 years, Saskatchewan has grown in population as well as economic activity, in part thanks to unleashing the potential and wealth found in our resource sectors. The struggle, however, over our natural resources and production continues, including how much oil we can produce, how we generate electricity, or how we get product to market. The revival of that debate has the Government of Saskatchewan considering how we maintain and assert our rights under the Constitution to take our rightful and prosperous place within Canada.

Federal environmental regulations target Western Canada

A defining feature of the current federal government is the creation of many new forms of environmentally laden standards and regulations. While the names sound well-meaning and well-intentioned, the effects disproportionately target western Canadian and Saskatchewan specific business, industries and people. Saskatchewan has always been about producing and exporting food, fuel and fertilizer to the world. Yet new policies seem to target all three of those Saskatchewan mainstays.

Saskatchewan has always been about producing and exporting food, fuel and fertilizer to the world. Yet new policies seem to target all three of those Saskatchewan mainstays.

Currently, the federal government has incoming and proposed standards and caps for fuel,  fertilizer, oil and gas emissions, and electricity. This is in addition to the carbon-pricing regime, also known as the Output Based Pricing System.

Prime Minister Justin Trudeau promised a national price on carbon in his 2015 election campaign. The national price on carbon essentially evolved to become a part of a complex array of policies that outline various mechanisms to place a cost on emissions from emitters, meaning various industrial sectors, from oil and gas facilities such as refineries to mines and manufacturing plants. When the plan was announced in 2018, without any consultation with the provinces, the Government of Saskatchewan began exploring various legal and policy options to mitigate and avoid negative impacts on the province’s economy.

The federal proposal mandating the oil and gas industry to cap emissions, to achieve Net Zero by 2030, is a policy that suggests the energy sector must curb its environmental impact, but in practice will impede the production of the actual resource.

Cutting the production and putting up further barriers to investment or to bringing more oil onto production will materially impact Saskatchewan. Saskatchewan produced 444,000 barrels per day of oil in 2021 and the sector accounts for approximately 15 per cent of provincial GDP, while employing over 30,000 people.

In the earlier years of considering carbon taxes, the main targets of emissions reductions for the federal government seemed to be focused on heavy industry and sectors, such as oil and gas and mining operations. Recently though, the agriculture sector is also being closely evaluated through a Fertilizer Emission Reduction Target.

The target seeks to reduce Canada’s absolute emissions from fertilizer 30 per cent below 2020 levels by 2030. In practical terms, this target amounts to an outright reduction in fertilizer use by farmers, the effects of which translate into lower crop yields and lower profitability for farmers.

Reduction in fertilizer use by farmers will translate into lower crop yields and lower profitability for farmers—a $4.6-billion loss by 2030

Early analysis by accounting firm MNP estimates that the federal fertilizer-emission-reduction policy would mean Canada exports 14 million metric tonnes fewer of canola and spring wheat by 2030. The cost by 2030 will be $10.4-billion in the value of lost production for Canadian farmers. Broken down further, that means a $4.61-billion loss in those crops for Saskatchewan at its highest estimate.

Ottawa also mandates more expensive electricity generation

As the province attempts to navigate and pursue net zero targets by 2050 through using new technologies like Small Modular Reactors (SMRs) and carbon-capture utilization and storage (CCUS), the affordability, reliability and sustainability of Saskatchewan’s electrical Crown corporation and electricity grid remain at stake. Despite the availability of clean, local and reliable resources for power, Ottawa’s Clean Electricity Standard (CES) would mandate less affordable approaches to our own power generation.

All of the above policy streams from the Government of Canada seemingly rely on environmental regulation or standards to make sweeping changes and impose stringent requirements on emissions; however, the end result undermines the development and production of natural resources, be it grain for food, or oil for gasoline, or even natural gas for electricity.

Internal costing analysis by the Saskatchewan Ministry of Finance reveals even more shocking figures. Every new regulation bears a cost in order to meet the minimum requirements imposed. The Ministry of Finance reviewed nine different federal environmental regulations. The various regulations and mandates are expected to cost Saskatchewan households $24-billion from 2023 to 2035. In total, the nine federal climate change policies are estimated to have a cumulative direct compliance cost to Saskatchewan households and industries of $111-billion between 2023 and 2035.

In total, nine federal climate-change policies are estimated to cost to Saskatchewan households and industries $111-billion between 2023 and 2035, or roughly $11,000 per resident.

In 2035, the cost to comply with federal policies will be $16-billion, equivalent to about 14 per cent of Saskatchewan’s Gross Domestic Product — this represents a cost of roughly $11,000 per resident.

Until now, much of the province’s policy-making has been reactive to federal mandates and decisions. However, there may now exist opportunities to be more active than reactive when producing policy to defend and retain rightful control over natural resources, our lands and electricity-generating capacity.

Saskatchewan must be more like Quebec in asserting provincial rights

This would not be different in some respects to how the Province of Quebec operates. It would mean taking action without asking permission and unapologetically asserting ourselves where Saskatchewan has jurisdiction, including unilaterally modifying part of the Constitution, as Quebec can.

Much of our shared prosperity is owed to the abundance of Saskatchewan’s natural resources: our oil and gas, our mines and our agricultural lands. The new federal mandates are slowly encroaching on provincial autonomy and threaten to erode Saskatchewan’s rights to develop and manage our resources. To be a nation within a nation and to enjoy more autonomy within Confederation, more action is required if we are to be a strong Saskatchewan within a strong Canada.

The new federal mandates are slowly encroaching on provincial autonomy and threaten to erode Saskatchewan’s rights to develop and manage our resources.

In light of the discussion, below are some next steps and ways in which the province could conceivably defend and act to assert greater autonomy in Confederation:

  • Provincial legislation to clarify and protect constitutional rights belonging to the province;
  • Pursue greater autonomy over immigration policy to ensure Saskatchewan has the people it needs;
  • Better recognize Saskatchewan industry contributions to sustainable growth – for example, develop a carbon credit market to support our natural resource industries;
  • Prepare to take legal actions, legislative or otherwise, to maintain control of electricity, fertilizer emission/use targets and oil and gas emissions/production.

It’s time to draw the line by affirming and advancing Saskatchewan’s constitutional authority and autonomy within Canada.

This is an abridged version of Saskatchewan’s White Paper. For the full version, click here.

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