What do the changes to Canada’s carbon tax mean for Saskatchewan?

Things have been changing recently when it comes to Canada’s carbon tax, and some federal parties have promised even more changes during the election campaign.

On his first day as prime minister, Mark Carney signed an order to scrap the consumer carbon tax, which applied to things like fuel, effective April 1.

SaskEnergy fell under the consumer side of the carbon tax law, because the Crown corporation delivered the gas used for home heating, while the customer is the one who burns it, creating the emissions.

But as of January 1, 2024, the tax hasn’t been charged to consumers in Saskatchewan. The provincial government removed the levy from the natural gas used for home heating in response to the federal government’s decision to cut the tax from heating oil, which is primarily used in Atlantic Canada.

The legality of that change has been in limbo. Last summer, the province reached a deal with the Canada Revenue Agency over the non-payment, issuing a letter of credit – a promise to pay the amount owed – if the province loses its challenge in court.

That dispute has not yet been resolved.

On Friday, Premier Scott Moe posted a list of commitments he wanted to hear from Carney, and the list included a request for the federal government to stop trying to collect the carbon tax on home heating in Saskatchewan.

Today was my first opportunity to speak with Prime Minister Carney, and probably my last opportunity to do so before a federal election is called.

On behalf the province and people of Saskatchewan, I call on the Prime Minister to commit to the following:

1. Reach out… pic.twitter.com/X9zYD9Wb2Z

— Scott Moe (@PremierScottMoe) March 21, 2025

Currently, SaskEnergy bills include lines explaining what the charge would be, followed by lines showing a credit for that amount.

After April 1, the carbon tax line will stay on the bills, but will show $0. That’s because the carbon tax law – The Greenhouse Gas Pollution Pricing Act – is still in force, according to Crown Minister Jeremy Harrison.

“The federal government could increase the carbon tax at any time using the same mechanisms that are being used to lower it to $0 on April 1,” Harrison said in a statement.

Some customers might see the carbon tax on bills after April 1, to cover natural gas that was delivered before that date.

On the other side of the coin, SaskPower customers will continue to pay a carbon tax.

SaskPower is considered a large emitter because it burns the coal and natural gas and then delivers the power to the consumer.

However, Saskatchewan has its own carbon tax program for large emitters, called output-based performance standards. The program was brought in at the beginning of 2023 to take Saskatchewan industrial emitters away from the federal backstop.

That plan sees money flowing from SaskPower to the provincial government’s General Revenue Fund, and then into the Small Modular Reactor Investment Fund and the Clean Electricity Transition Grant. Money from the performance standards from industrial and resource facilities in the province goes towards the Saskatchewan Technology Fund, which then sends grants to regulated facilities to pay for emission-reduction projects.

Money from the output-based performance standards program helped Saskatchewan post a surplus at the end of the 2023-24 fiscal year.

In the provincial budget presented last week, the government budgeted for $431.5 million in revenue from the output-based performance standards, significantly higher than the $353.3 million projected for the past year.

Conservative Leader Pierre Poilievre has promised to get rid of the large-emitter carbon tax if he’s elected. That could create an opening for the Government of Saskatchewan, which has long been vocal about its opposition to any carbon tax.

“We’re looking at what our opportunities are as we see federal leaders zeroing out part or the entirety of the carbon tax,” said Premier Scott Moe.

Saskatchewan NDP Leader Carla Beck also called for the federal carbon tax to be removed on Monday.

When asked about Saskatchewan’s output-based performance standards, Beck said if that program were to be removed as well, she would want to see a plan to replace the revenue to the province and to reduce emissions.

International carbon taxes

Carney has said Canada will still need a carbon tax in order to be competitive in international trade.

He said European countries will either require that imports come from a country with carbon pricing, or will impose a tariff.

Carney was referring to the European Union’s Carbon Border Adjustment Mechanism (CBAM), which will fully be in place in 2026.

“The CBAM will ensure the carbon price of imports is equivalent to the carbon price of domestic production, and that the EU’s climate objectives are not undermined,” the European Commission noted on its website.

When asked about Carney’s comments, Moe rejected the idea that not having a carbon tax could hamper trade. The premier went on to make point he often does when talking about Saskatchewan commodities, saying the oil, potash, and agricultural products coming from the province are among the least, if not the least, carbon intensive in the world.