Sask. carbon levy program for heavy emitters lacks transparency: auditor

Saskatchewan's provincial auditor Tara Clemett presented the first volume of her 2024 report to the Legislative Assembly of Saskatchewan. Clemett said the government needs to provide more information to the public about its carbon levy program. (Kirk Fraser/CBC - image credit)
Saskatchewan's provincial auditor Tara Clemett presented the first volume of her 2024 report to the Legislative Assembly of Saskatchewan. Clemett said the government needs to provide more information to the public about its carbon levy program. (Kirk Fraser/CBC - image credit)

Saskatchewan's auditor says the provincial government's carbon levy program for heavy emitters should be more transparent.

Tara Clemett released Volume 1 of her annual report on Wednesday.

Clemett offered recommendations to improve how the Ministry of Environment regulates its Output-Based Performance Standards (OBPS) program. The program is aimed at regulating heavy emitters to reduce their greenhouse gas emissions while maintaining their competitiveness in the sector.

Industrial emitters exceeding emissions intensity thresholds must pay a carbon levy or use performance credits to offset the levy.

"Nearly half of regulated emitters exceeded their permitted limit for 2019 and 2020. The Ministry does not report these results to the public," Clemett said.

The report found that regulated emitters accounted for 16 per cent of Saskatchewan's total greenhouse gas emissions.

Clemett said the data for 2021 was not yet available to her office.

"The Ministry has not determined sufficient measures to assess and publicly report on the performance of the program, so it does not know whether the program is achieving the desired environmental and economic results," Clemett said.

"Public reporting on performance measures helps the public hold the government accountable for achieving the expected program benefits."

Clemett said the government has no measures to judge whether the OBPS program is successful.

Money collected from companies in the non-electricity sector is dedicated to supporting regulated facilities in reducing emissions with technology.

Tara Clemett, Saskatchewan's provincial auditor, presents the first volume of her 2024 report to the legislative assembly of Saskatchewan.
Tara Clemett, Saskatchewan's provincial auditor, presents the first volume of her 2024 report to the legislative assembly of Saskatchewan.

Tara Clemett is Saskatchewan's provincial auditor. (Kirk Fraser/CBC)

Clemett said as of Dec. 31, 2023, the ministry had yet to fund any "industry-driven technologies."

She said as of March 2024, no money has been spent from the technology fund, which started collecting in 2019.

Clemett said $35 million in cash is in the fund, which is earning interest, and there are $117 million in receivables.

She said the government is allowing "a long time period" for emitters to pay, on average longer than other jurisdictions with similar programs.

The ministry took in $29 million from industrial emitters in 2022-23 and expects to bring in $121 million in 2023-24.

The auditor's report said $4.4 million was spent through the Ministry of Environment in 2022-23 on climate change initiatives.

The OBPS program had 80 industrial emitters in 2019, growing to 154 last year.

In November 2022, the federal government approved the province's application to have electricity generation included. Beginning in 2023, industrial carbon levies stayed in the province.

In the 2024-25 budget, the provincial government projected that with electricity generation included, the OBPS would generate $351 million in revenue.

In March, Finance Minister Donna Harpauer explained how the OBPS funds would be allocated.

"For the SaskPower money, half of it is going to be rebated back to SaskPower in order to help us keep our rates as low as possible," Harpauer said. "Then half will go into a designated fund for future green power initiatives to help keep power at an affordable rate in the future."

Government, opposition weigh in

The Ministry of Environment provided a statement in response to the auditor's report. The ministry said it is already working to address the auditor's recommendations.

"The OBPS program is a unique and tailored approach to reducing emissions in Saskatchewan. We are proud of the design and delivery of the OBPS program, but we also acknowledge concerns around timelines and the progression of the Saskatchewan Technology Fund," the statement said.

"As the Ministry works to address the Auditor's recommendations, we will continue to ensure flexibility and regulatory certainty for industry here in Saskatchewan, not in Ottawa."

Opposition NDP MLA Trent Wotherspoon said the government is collecting "hundreds of millions" from heavy emitters "without any measurement as to whether the program is working."

Wotherspoon said the province is "hypocritical" in criticizing the federal consumer carbon tax but using its carbon levy from heavy emitters to "pad" its finances.