What Saskatchewan stands to lose — and gain — by not signing the federal climate change plan

By not signing the federal climate change plan by Feb. 28, Saskatchewan lost a guaranteed $62 million in funding for emission-reduction programs.

But with hints of a legal challenge over the carbon tax, there's a lot more that could be at stake in the coming months.

The Pan-Canadian Framework on Clean Growth and Climate Change is the federal government's plan to meet emissions reductions targets.

The main reason Saskatchewan has given for not signing onto the plan is its opposition to a mandatory carbon pricing or tax system — a foundational aspect of the plan.

To be clear, carbon pricing is coming into effect across Canada.- Julia Kilpatrick, Ministry of Environment

Provinces and territories were given the option of developing their own climate plan under federal guidelines, or opting for one created by the federal government.

"To be clear, carbon pricing is coming into effect across Canada, regardless of whether provinces sign onto the framework or not," said Julia Kilpatrick, director of communications for the federal Ministry of Environment and Climate Change Canada. 

"It also means they miss out on the chance to design the best carbon pricing approach for Saskatchewan, as other provinces have done, and instead [are] choosing to have the federal system come into effect there," Kilpatrick said.

Differing plans for ​carbon tax revenue

The plan outlines the federal government's expectations that regions begin by charging at least $10 per tonne of carbon dioxide in 2018, increasing each year up to $50 per tonne by 2022.

Ottawa will analyze all of those provincial and territorial climate plans in September. The government is drafting legislation that would allow it to impose a federal carbon pricing plan on jurisdictions whose plans aren't up to snuff.

A carbon tax for an industry-based economy like Saskatchewan's would amount to billions each year, but that money goes directly back to the province as revenue to dole out as it chooses.

This manifests in other regions in different ways.

In Alberta, residents who file their taxes get a carbon tax rebate cheque based on income and family size.

Single adults earning below $47,500 received a rebate of about $200 in 2017, based on Alberta's $20 per tonne price on carbon.

In British Columbia, all carbon tax revenue goes toward reducing other taxes.

Pricey court proceedings

Saskatchewan has steered clear from commenting on what it would do with revenue from a carbon tax.

Instead, the province said it will challenge any imposition of a plan or a carbon tax in court.

Saskatchewan Environment Minister Dustin Duncan said the federal carbon plan would cost Saskatchewan's economy $4 billion over five years.

"At those numbers, I don't think this province can afford not to fight this in the court if it comes to that," he said.

Other regions have looked into whether a constitutional legal challenge would be successful in court.

Manitoba revealed an extensive legal analysis in October 2017. Premier Brian Pallister told CBC the analysis — intended to determine whether Ottawa had the constitutional authority to impose its carbon plan — cost Manitoba roughly $40,000.

In the end, the alternatives Manitoba's lawyers discovered were clear: by saying no, Manitoba would get Trudeau's plan. By going to court, "we lose," Pallister said. 

Eric Adams, an associate law professor at the University of Alberta, agreed there isn't a terribly strong legal case for Saskatchewan.

"The courts and legal opinion on that matter is fairly clear that the federal government does have jurisdiction to regulate through the imposition of a carbon tax. I suspect that that would be the holding when, and if, this does come to court," he said. 

Saskatchewan Premier Scott Moe said his government would be ready to launch a legal fight against a carbon tax anyway. That sentiment was echoed by Duncan Thursday.

"We're prepared. Our lawyers within justice and the constitutional branch now have the draft legislation so we know how the federal government intends to proceed on this, and they're developing a case around it," Duncan said.

Saskatchewan does have its allies on the legal matter.

Earlier this year, Jason Kenney, leader of Alberta's Opposition, the United Conservative Party, said he would cut the carbon tax if elected, and potentially join Saskatchewan in a legal battle.

Political clout 

While the chances of winning a court fight are small, according to Adams, there may be other gains for Saskatchewan.

One is the potential political gain from standing up for the province and fighting the federal government over a principle it disagrees with.

"If you have some small possibility of making it a challenge — and if you believe strongly in the rightness of that policy objective — then as a government, that may be worth spending time and energy on fighting that fight. Even if there is a small chance of success," Adams said.   

But what the province gains politically, it could lose in autonomy. Section 164 of the draft federal bill dictates how revenues from a carbon tax would be used.

As it works now, provinces with their own plans get to decide how to use the revenue, with no strings attached.

Under the current draft, the federal government could decide whether the money is allocated entirely to the province, or if some of it is distributed directly to specific people or corporations. 

Only provincial governments that voluntarily ask to use the federal carbon price system will guarantee they get the revenues to use as they see fit, Environment Minister Catherine McKenna's office told The Canadian Press.

Loss of guaranteed $62 million

Each province had part of a $1.4-billion fund set aside for it when it agreed to sign the Pan-Canadian Framework on Climate Change.

Every province and territory except Saskatchewan signed the agreement by the Feb. 28 deadline and was guaranteed their portion of the cash.

"The intent of that fund is to help signatories of the framework implement solutions for climate change and clean growth — like energy efficiency rebates for households and businesses," said the environment ministry's Julia Kilpatrick.

She said Saskatchewan's portion of that fund will now get funnelled into the Low Carbon Economy Challenge Fund.

The $600 million in the fund will be doled out for industry and public sector projects on a merit-based, project-by-project basis.

However, on Thursday, Saskatchewan's environment minister said he believes the province should still be entitled to the $62 million, aside from the option to compete for the challenge fund.

"We don't think that there should be any reason why it shouldn't still be set aside for Saskatchewan projects," Duncan said. 

In order for that to happen, though, the federal government would have to reverse its decision to put Saskatchewan's portion of the money into the competitive fund.

The fund hasn't been launched yet, but it will be a pool of cash that provinces, companies and more can compete to draw from.

"If this is about reducing emissions in the province of Saskatchewan, then we're going to put forward projects that should be evaluated on that basis and [the federal government] should not penalize Saskatchewan with the $62 million just because we're not signing the Pan-Canadian Framework," Duncan said.