In the Saskatchewan Strategy, introduced the first week in December after much delay, the Province of Saskatchewan is preparing to give large emitters, primarily in the agriculture, oil & gas and mining industries, the most varied compliance options anywhere in Canada. The many options available include:
- Purchasing a carbon offset, representing a reduction in greenhouse gas emissions;
- Paying into a technology fund;
- Making improvements at facilities to reduce emissions intensity;
- Using best performance credits; or
- Utilizing a market mechanism outlined in the Paris Accord, such as an internationally transferred mitigation outcome.
The government has set a date of January 1, 2019 for the Saskatchewan Strategy to be fully implemented. The National Projects Group at Miller Thomson works with a number of entities which will benefit from opportunities arising from this strategy. These opportunities are discussed in detail below.
Opportunities for Renewable Energy Independent Power Producers
Particularly interesting for independent power producers are comments from Environment Minister Dustin Duncan that “there will be a lot of possibilities for people to benefit, particularly those who are putting in effort to produce their own power.” One way to accomplish this would be through a virtual net metering program jointly with SaskPower. By giving large emitters the opportunity to generate their own power and keep those renewable energy credits (RECs), we see a significant departure from the past where SaskPower retained all of these RECs. The Saskatchewan Strategy has committed to introduce regulations governing emissions from electricity generation by SaskPower and Independent Power Producers (IPPs). Although the future remains to be seen, it is clear that the future relies on IPPs to bring new clean generation into the grid. The Saskatchewan Strategy also reiterates the province’s commitment to generate up to 50 per cent of its electricity capacity from renewables, which is continued positive news for IPPs.
Opportunities for Energy Storage Companies
As part of the new regulations to be introduced, the Saskatchewan Strategy specifically commits to “investigating the feasibility of energy storage services to expand renewables capacity.” Clearly this is an opportunity for energy storage companies in Saskatchewan, but it is unknown how this will be manifested. It may be that storage on existing or future energy projects is deemed to receive a defined offset, which effectively changes the economics and business case for storage projects. This would make many past projects, which were near the threshold, now feasible with the tangible financial benefit of the offset. For those storage companies with a longer term view, this appears to be the next big market in Canada as Saskatchewan (although late to the game) transitions to a low-carbon energy future.
Opportunities for Carbon Offset Aggregators, Traders and Buyers
Of note for carbon offset market participants is the introduction of a carbon offset market whereby aggregators can purchase, combine and package carbon offsets to sell to traders who can negotiate transactions with large emitters to purchase carbon offsets to mitigate greenhouse gas emissions. This market will effectively put a price on carbon and it will be very exciting to see market participants gear up and commence negotiations and proceed with transactions.
Opportunities for Established and Aspiring Clean Technology Businesses
Large emitters may also opt to pay into a technology fund in Saskatchewan. It is unclear how this pool of money may be accessed but it is clear that the money collected will be used to fund new innovation and technology which reduces greenhouse gas emissions. This poses a unique and significant future opportunity for clean technology start-ups looking for some type of seed financing to commercialize their clean technology product for use in Saskatchewan and potentially across Canada and around the world.
Large emitters will also be given the option to make improvements at their facility to reduce emissions intensity. This is an obvious opportunity for established clean technology companies from Canada and around the world to proceed with clean tech projects together with large emitters in the province in the agriculture, oil and gas and mining industries.
Opportunities for Agriculture and the Biodiesel Industry
The Saskatchewan Strategy references technology developments in agriculture such as zero-till or no-till practices which could become carbon sinks. In the past, emissions offsets from zero-till farming were aggregated in Saskatchewan and traded on the now defunct Chicago Climate Exchange. Now there is a new market in Saskatchewan. Specific opportunities for agriculture in the Saskatchewan Strategy, in addition to no-till, are related to seeding marginal areas to grass, crop selection and using canola waste to generate biodiesel. If significant offsets can be generated for biodiesel production, the economics of these projects improves quite significantly. The Saskatchewan Strategy specifically commits to develop and implement an offset system that creates additional value for actions that result in carbon sequestration or reduced emissions, especially from our soils and forests; clearly an opportunity for aggregators to work together with farmers and the forestry industry to capitalize on the new offset system.
Opportunities for Construction Contractors and Trades
Contractors and trades in Saskatchewan with expertise in energy efficient and green construction will see many opportunities in the future as by January 1, 2019 Saskatchewan will adopt the 2015 National Building Code, with provisions that improve energy efficiency standards, and the 2015 National Energy Code for Buildings, in addition to improvements in materials, labelling and more stringent energy standards. Those contactors and trades with these skills will certainly benefit from the shift in construction standards and practice in Saskatchewan.
As the government has stated, this proposed strategy is certainly a “Made in Saskatchewan” solution as it is unique within Canada and amongst other jurisdictions. With the many options now available to reduce GHG emissions in the Saskatchewan Strategy, it remains to be seen what methods will emerge as preferred. But for the time being, the introduction of this multi-faceted approach seems to be quickly engaging the private sector to use their know-how to meet goals which the Federal government has laid out.