Saskatchewan and pollution pricing

Protecting the environment and growing the economy go together. In 2016, the federal government worked with provinces, territories, and with input from Indigenous Peoples, on Canada’s first comprehensive climate action plan, which includes a stringent, fair and efficient price on carbon pollution.

As part of Canada’s plan, provinces and territories had the flexibility to maintain or develop a carbon pollution pricing system that works for their circumstances, provided it meets the federal standard. The Government of Canada worked on this with provinces and territories for over two years.

Saskatchewan remains the only jurisdiction that has not joined the national plan - the Pan-Canadian Framework on Clean Growth and Climate Change.

On August 29, 2018, the Government of Saskatchewan released its plan to price carbon pollution, based on an output-based performance standards approach, which will be applied only to some of its large industrial facilities.

Saskatchewan’s proposed system is on track to only partially meet the benchmark stringency requirements. Therefore, the federal carbon pollution pricing system will apply to the emission sources not covered by Saskatchewan’s system.

Please contact the Province of Saskatchewan for further details on its carbon pricing system and programs.

Saskatchewan system highlights

• Saskatchewan plans to implement its output-based performance standards system on January 1, 2019.
• It will apply to large industrial facilities that emit 25,000 tonnes or more of carbon dioxide equivalent (CO2e) per year, with the exception of electricity generation and natural gas transmission pipelines. Saskatchewan estimates it will cover approximately 11 percent of the province’s emissions.

Federal system highlights

The federal carbon pollution pricing system will be implemented, in part, in Saskatchewan under the federal Greenhouse Gas Pollution Pricing Act with the following features:

• The federal output-based pricing system will apply to electricity generation and natural gas transmission pipelines, beginning in January 2019. This will cover facilities from those sectors that emit 50,000 tonnes of carbon dioxide equivalent (CO2e) per year or more, with the ability for smaller facilities that emit 10,000 tonnes of CO2e per year or more to voluntarily opt-in to the system over time.
• A charge applied to fossil fuels, generally paid by registered distributors (fuel producers and distributors), as set out in the Greenhouse Gas Pollution Pricing Act, Part 1, will start applying in April 2019. Information on targeted relief for rural and remote residents, farmers and fishers is available from Finance Canada.

Use of proceeds

The Government of Canada has committed to return all direct proceeds collected in Saskatchewan under the federal pollution pricing backstop system through direct payments to families and investments to reduce emissions, save money and create jobs. In Saskatchewan, we will return the direct proceeds as follows:

• Climate Action Incentive payments: Under the proposed approach, most of the proceeds the federal government collects from Saskatchewan through the fuel charge will be returned directly to Saskatchewan individuals and families through Climate Action Incentive payments^{Footnote 1} .
• Support for particularly affected sectors: The remainder of fuel charge proceeds will be used to provide support to the province’s  schools, hospitals, small and medium-sized businesses, colleges and universities, municipalities, not for profit organisations and Indigenous communities, which will help save money and create good jobs. In Saskatchewan, this amount is estimated at $445 million over the next five fiscal years.
• Direct proceeds from industrial facilities under the federal output-based pricing system will be directed to supporting reductions in greenhouse gas emissions in Saskatchewan.

How Climate Action Incentive payments will be calculated – a Saskatchewan family of four will receive $609 in 2019

Under the proposed approach, individuals in Saskatchewan will receive a tax-free Climate Action Incentive payment after filing their 2018 tax return starting in early 2019. Climate Action Incentive payments in Saskatchewan will be calculated as follows for 2019:

• $305 for a single adult or the first adult in a couple.
• $152 for the second adult in a couple. Single parents will receive this amount for their first child.
• $76 for each child in the family (starting with the second child for single parents). Under this proposal, a Saskatchewan family of four will receive $609 in 2019. The average household in Saskatchewan will receive $598, taking into account the various family sizes and circumstances.

Supplement for residents of small and rural communities

To further support small and rural community residents in Saskatchewan, the Government proposes to provide a supplementary Climate Action Incentive amount for people who live in small and rural communities, in recognition of their increased energy needs and reduced access to energy-efficient transportation options. This supplement will be an additional 10 per cent of the payment amount to which they are entitled. Small and rural communities will be defined as anywhere outside of a census metropolitan area (CMA), as defined by Statistics Canada ^{Footnote 2} .

Delivery of payments

Under the proposal, individuals will claim the Climate Action Incentive payment on their tax return. This will involve filling out a short schedule identifying the number of adults and children in the family unit for which payments would be claimed. There will be one claim per family.

The provision of Climate Action Incentive payments through the Canada Revenue Agency will ensure timely, accurate, and cost-efficient delivery.

Impact on individuals and families

Climate Action Incentive payments enable the Government to encourage lower greenhouse gas (GHG) emissions without imposing a financial burden on households. The federal backstop system helps the environment and the economy because it puts a price on pollution and supports cleaner alternatives. Most households in Saskatchewan will receive more in Climate Action Incentive payments than they incur in total costs resulting from pollution pricing.  As the pollution price itself encourages fewer GHG emissions, it will both protect the environment and promote green innovation.

Payment amounts in subsequent years

Climate Action Incentive payments will increase annually to reflect increases in the price on pollution under the federal backstop system, until at least 2022. The federal Minister of Finance will make annual announcements of Climate Action Incentive payment amounts, reflecting the increasing price on pollution and updated levels of direct proceeds.

Based on current projections, Climate Action Initiative payment amounts (excluding supplement for residents of small and rural communities) in Saskatchewan in future years would be as follows:

Building on the examples above, based on current projections, in 2022, Molly will receive $1,277 for her family of three, and Michael will receive $1,205 for his family of two (including the supplement for residents of small and rural communities).

Costs summary

Federal Fuel Charges – Starting in April 2019 and increasing in stringency over time, the federal carbon pollution pricing system will add a nominal cost to everyday fuels.

In Saskatchewan, for example, in 2019 the fuel charge on gasoline will be 4.42 cents per litre in 2019 and the fuel charge for natural gas used in home heating will be 3.91 cents per cubic metre – these rates will increase over time. A complete list of fuel charge rates is available on Finance Canada’s website.

Estimated Annual Costs – We know from experience in British Columbia, Alberta, and Quebec that provinces with a price on carbon pollution in 2017 were the fastest-growing economies in Canada.

Under the federal system, the average cost impact for a household in Saskatchewan is $403 in 2019, which is less than the corresponding average for Climate Action Incentive payments ($598). Residences of Saskatchewan can also reduce this cost through many options, such as better home insulation, switching to a more fuel efficient vehicle, using public transit, and lower cost solutions like LED lightbulbs.  

Studies consistently show the cost of inaction is much greater than the cost of addressing climate change. Extreme weather events like floods and wildfires are becoming more severe and happening more frequently due to climate change.  These disasters can carry huge costs from damaged homes, businesses and infrastructure. For example, insurance losses related to climate change and severe weather averaged $405 million per year between 1983 and 2008, and $1.8 billion between 2009 and 2017.

Canada’s clean growth investments in Saskatchewan

Since 2016, the Government of Canada has allocated over $336 million for investments in public transit projects in Saskatchewan. Projects like bus fleet renewals in Saskatoon and Moose Jaw are ways we’re working to make sure public transit is available for all, ensuring that people can get where they need to go, quickly and safely while reducing pollution. It’s part of the Government’s Investing in Canada Plan.  

In addition, over $416 million is allocated for investments in Green Infrastructure in Saskatchewan, for projects that will reduce emissions, build resilience to the impacts of climate change or provide additional environmental benefits such as clean air and clean water. The Saskatchewan Government and Canada are working together to fund priority projects that will help reduce carbon pollution and grow the economy.
The Government of Canada invests in programs that improve energy efficiency in industrial buildings, like the one at Terra Grain Fuels facility in Belle Plaine. This program helps farmers and industry cut costs, and supports clean technologies like biofuels,that help reduce emissions.

To protect Canadians from the impacts of climate change, Canada is collaborating with Saskatchewan, and other prairie provinces to create a regional climate organization to jointly deliver climate services with the Government of Canada’s Canadian Centre for Climate Services. In addition, specific initiatives to increase resilience to climate impacts within Saskatchewan include education and awareness raising, assessing risks like flooding and forest fires to make sure that, as the climate changes, Saskatchewanians remain safe.