Saskatchewan has reached a deal with Ottawa on reducing greenhouse gas emissions in its coal-fired power sector, but the two governments remain at odds over carbon pricing ahead of next week's first ministers' meeting on climate change.
Saskatchewan Environment Minister Scott Moe and his federal counterpart, Catherine McKenna, announced Monday that the two governments will conclude an "equivalency agreement" that could keep one or more coal-fired power plants operating past 2030, so long as the province makes major GHG reductions elsewhere in its electricity sector.
Ms. McKenna last week unveiled the federal plan to accelerate the phase-out of coal-fired electricity as part of the Canada's commitment to reduce GHG emissions by 30 per cent from 2005 levels by 2030 under the international Paris Agreement on climate change.
At the time, the federal minister announced that Nova Scotia had agreed to negotiate an agreement that would allow that province to keep coal plants open, subject to achieving equivalent GHG reductions from its power sector.
Saskatchewan Premier Brad Wall has been the leading opponent of Prime Minister Justin Trudeau's approach to a pan-Canadian climate strategy, particularly the Prime Minister's proposal for a minimum national-carbon price that would imposed on provinces if they do not adopt their own carbon-pricing plan.
Last week, the premier reacted angrily to the federal coal phase-out announcement, arguing it was not in keeping with Ottawa's pledge to work with the provinces. Mr. Moe said Monday that the two governments have been negotiating on coal phase-out for several months, but a provincial official said there is no deal in the works on carbon pricing.
"We're pleased as we've come to an agreement with the federal government with regards to equivalency for our electricity sector here in the province," Mr. Moe told reporters in Regina. "It's an agreement that recognizes fleet-wide emissions so that it recognizes our investment in renewables as well as in carbon capture and storage."
Saskatchewan currently has seven coal-fired generating stations, including one that is equipped with carbon capture and storage technology and provides carbon dioxide for enhanced recovery in nearby oil fields. All but one of the other plants were scheduled to either be closed or be equipped with CCS by 2030 under 2012 phase-out timetables set by the former Conservative government.
However, the 276-megawatt Shand power station - which was commissioned in 1992 - is not due to close until 2042 under the Conservative regulations. Under the Liberal plan announced last week, that closing date would have been moved up to 2030 in the absence of a federal-provincial agreement, and its owner, SaskPower, would have faced hundreds of millions of dollars in writeoffs and decommissioning costs.
Alberta last week committed to paying $1.3-billion to three utilities to cover their losses as a result of its plan to shutter traditional coal-fired plants by 2030.
SaskPower president Mike Marsh said the federal-provincial deal announced Monday would allow the utility more flexibility in meeting emissions reduction targets in the most cost-effective manner. The province has committed to doubling the share of renewable power on the system from 25 per cent to 50 per cent by 2030. And it aims to reduce GHGs by 40 per cent from 2005 levels in the electricity sector.
The equivalency agreement would "give us tremendous opportunities to spread this out over a longer period time, minimize the impact and of course minimize the increases in rates," Mr. Marsh said in an interview. He added SaskPower is working with Manitoba Hydro on the feasibility of expanding imports of hydroelectric power into the province but would require federal support for the required transmission infrastructure.