Researchers question new carbon tax study

REGINA The provincial government is touting a recent study as evidence that a federally imposed carbon tax would put a big dent in Saskatchewan’s economy.

But the NDP leader and two researchers contend the study — or at least the province’s reading of it — seems questionable at first glance.

According to research released Wednesday at the University of Regina, a carbon tax would cost Saskatchewan almost $16 billion in economic output by 2030.

By the time the tax hits $50 per tonne in 2022, the study predicts the provincial economy would lose about $1.8 billion per year

compared to expected growth rates — and that’s only the most conservative scenario.

Environment Minister Dustin Duncan said such a tax would have a “minimal impact on reducing emissions,” with the study predicting a drop of approximately 1.25 per cent of the province’s annual greenhouse gas emissions.

But he acknowledged the work was completely funded by the province, which commissioned a research team at the university’s Institute for Energy, Environment and Sustainable Communities through a request for proposals.

“The Ministry of Environment did put out a call, an RFP, to researchers to put together a model that would help to demonstrate the argument that we believed we could make,” he said.

That argument hinges on the claim that Saskatchewan’s “export-based, trade-exposed economy ” would be disproportionately harmed by a carbon tax.

Duncan stressed that the province was open to other possibilities, but he said the study confirmed exactly what they expected to find.

“A carbon tax will inflict unnecessary damage to the provincial economy while delivering minimal ( greenhouse gas) emissions reductions,” he told reporters.

But NDP Leader Ryan Meili said the 300-page study, which hasn’t yet been peer reviewed, leaves a lot out. He said it fails to consider the long-term cost of “inaction” and doesn’t compare the federal backstop to other alternatives.

It pits the carbon tax against a business-as-usual scenario, rather than the province’s own Prairie Resilience plan — which relies on renewable energy targets and performance standards that haven’t been fully flushed out.

While Duncan said that plan will be more effective than a carbon tax, Meili said it would sink economic growth by far more than a tax.

“The impact of using regulation as the primary means of dropping emissions is actually much more damaging to your GDP than using carbon pricing,” the NDP leader said.

He called Wednesday’s study an “extreme outlier” that differs drastically from other researchers.

Prof. Mark Jaccard, a professor at Simon Fraser University’s School of Resource and Environmental Management, wrote in an email response that a brief perusal of the study raised concerns.

“The feds have said that each province can do what they want,” he wrote, noting that Saskatchewan could use the money generated by the tax to protect tradeexposed industries, like oil and gas.

“This would mean very little GDP effect,” according to Jaccard.

Duncan said the model did account for transfers of carbon-tax revenue back to Saskatchewan people. But it assumes the government simply sends the money directly to residents, rather than cushioning the blow to exporters.

Dale Beugin, executive and research director for the Ecofiscal Commission, said mailing out cheques is the “worst case” in terms of economic impact.

He also agreed with Meili that, when it comes to reducing carbon, a tax is “cheaper than everything else.”

Dr. Gordon Huang, who led the study released on Wednesday, did not directly answer a question on that point.

He focused more on the issue of “trade-offs” between emission reductions and economic growth.

“How much do you want to pay in order to reduce the carbon emissions?” he asked.

“In reality, with this kind of carbon tax, the amount of reduction is not that high compared to the amount we have to pay.”

He said he found that the carbon tax will lead to reduced production and reduced income for Saskatchewan people, compared to continuing the status quo. His model also suggests that exports, consumption and investment would take hits.

Beugin acknowledged that Huang used the right kind of methodology in his model, but seemingly failed to account for things like technological advances or shifts in behaviour that conserve energy.

After a quick reading, he said he sees discrepancies between what the study says and what the government is drawing from it.

“I think the Saskatchewan document is inconsistent with the consultant report,” he said, referring to the province’s news release.