Federal Environment Minister pitching carbon plan for Saskatchewan.

The federal government is revealing more details about the carbon pricing plan it will impose on Saskatchewan if the province doesn’t create its own levy.

A technical discussion paper is expected to be released on Thursday. It outlines what the federal government will impose on Saskatchewan if the province fails to come up with its own carbon pricing plan. 

Premier Brad Wall’s Saskatchewan Party government is refusing to introduce a plan, despite the federal Liberal’s announcement they will establish a “floor price” of $10 a tonne on carbon pollution in 2018, with the price rising to $50 by 2022.

The proposed federal plan, as it stands now, is said to be a hybrid involving two main components.

One places a carbon taxA carbon tax is a levy on the carbon content of fossil fuels. Because virtually all of the carbon in fossil fuels is ultimately emitted as carbon dioxide, a carbon tax is equivalent to an emission tax on each unit of CO2- equivalent emissions. An energy tax - a levy on the energy content of ... on fossil fuelsEnergy from fossil sources, such as natural gas and oil. This type of energy contributes to climate change and because of its finite nature it is not a permanent resource., acting basically like a tax on liquid fuels such as gasoline or diesel.

The other is a cap-and-trade system allowing industry producers to have a baselineThe baseline (or reference) period defines the climatology against which future changes are projected. (UKCIP) They are used to decide on the emission reductions for Joint Implementation and Clean Development Mechanism.Emissions in the base year, or first year of reporting, are required as a ... limit of pollution. Companies then, in theory, have an incentive to create technology allowing them to pollute less than they are allowed.

If that happens, they are offered credits. Those who exceed their baselinebaseline, monetary indicators amount will have to pay more or purchase credits from those who came in under the baseline limit.

Federal Environment Minister Catherine McKenna said designing the plan in such a way “will ensure we’re addressing the competitiveness piece.”

“We know that any credible system needs to have a price on pollution, not only because it’s the most efficient way to reduce emissionsEmissions of greenhouse gases, greenhouse gas precursors, and aerosols associated with human activities, including the burning of fossil fuels, deforestation, land-use changes, livestock, fertilisation, etc. (IPCC),” she said. “It also creates incentives for companies to innovate and develop clean solutions, and it provides certainty for business.”

McKenna said she “hopes they don’t” have to use what is outlined in the technical paper, because Saskatchewan is better positioned to introduce its own plan. 

Such a plan exists and was created by Wall’s government: Environmental legislation requiring large carbon emitters to pay into a fund that would be used to invest in low-emissionEmissions of greenhouse gases, greenhouse gas precursors, and aerosols associated with human activities, including the burning of fossil fuels, deforestation, land-use changes, livestock, fertilisation, etc. (IPCC) technologies was passed in 2010, but has never been enforced. 

Asked if upon seeing the federal plan he might be prompted to accept it, Saskatchewan’s Environment Minister Scott Moe said, “I don’t think that’s going to be the case at all.”

Moe has suggested the province has made a significant investment in reducing emissions already through SaskPower’s $1.5-billion carbon capture and storageA process consisting of separation of carbon dioxide from industrial and energy-related sources, transport to a storage location, and long-term isolation from the atmosphere. (IPCC)An integrated process in which CO2 is separated from a mixture of gases (e.g. the fl ue gases from a power station ... (CCSA process consisting of separation of carbon dioxide from industrial and energy-related sources, transport to a storage location, and long-term isolation from the atmosphere. (IPCC)An integrated process in which CO2 is separated from a mixture of gases (e.g. the fl ue gases from a power station ...) facility in Estevan. As a result of that, Moe argues, taxpayers in the province already are paying more for their electricity, and by extension, reducing emissions.

McKenna says that in order to be commercial, CCS technology requires a price on carbon pollution “because it’s an innovative technology that reduces pollution and it’s only commercial if you actually price pollution.”

It is likely the province will also have concerns over how any money collected from an imposed carbon price system would be spent.

McKenna’s office has previously said “every penny of direct revenue from pricing pollution would go right back to the provinces” and that “this would empower provinces like Saskatchewan‎ to cut provincial taxes and support investment, jobs, innovation and growth.”

On Wednesday, she said any revenues raised, if the province decides not to work with the federal government or develop its own pricing system, goes back to the province. 

“We are evaluating different options, including providing, returning the revenues directly back to individuals and businesses in the province. There are different models for that.”

There will also be questions about what agricultural inputs are exempt from a tax. McKenna said the federal option won’t apply to gasoline or diesel used on farms, but Saskatchewan’s government has asserted the industry is taking great steps to become carbon neutral.

dfraser@postmedia.com

Twitter.com/dcfraser

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