Saskatchewan’s coal industry receives a stay of execution

By Brian Zinchuk

REGINA, ESTEVAN, CORONACH – For years, the conventional coal-fired power industry in Saskatchewan has been living under a death sentence, one to be carried out in four years, six months and 12 days from now. Federal regulations proclaimed the end of coal-fired power generation in Canada by 2030 as a way of reducing Canada’s greenhouse gas emissions to combat anthropogenic (manmade) climate change.

It turns out coal in Saskatchewan isn’t as dead as once thought. This was the “Bienfait Badger” dragline on April 29, 2024. Photo by Brian Zinchuk

On Wednesday, June 18, the Government of Saskatchewan issued a stay of execution, as it were. On that day, Minister of Crown Investments Corporation Minister and Minister Responsible for SaskPower Jeremy Harrison sent a letter to SaskPower workers, informing them that instead of shutting down its coal fleet, SaskPower would be rebuilding it, and operating it for years to come, as a bridge to nuclear power generation. That eventual nuclear adoption would lead to net zero emissions by 2050. That letter was also forwarded to Westmoreland Mining, which mines the lignite coal for Saskatchewan’s three coal-fired power stations.

The decision is one of the largest policy decisions the Saskatchewan government has made over the last decade. It will have one of the largest financial impacts on this province for years to come, no so much in how much it will cost, but in how much it will save.

The result will be a decades-long reprieve for both Coronach and Estevan, and the Poplar River, Boundary Dam and Shand Power Stations. Over 1000 direct jobs, between the coal mines and power plants, a large number of which pay over $100,000 per year, will be saved instead of eliminated in those four years, six months and 12 days from now. The spin-offs in each community, from crane outfits, machine shops, hydraulic suppliers, to grocery stores and hotels comprise enormous chunks of their local economies. In Coronach, it is for all intents and purposes almost the entire economy.

For the last decade, the federal government has pushed Saskatchewan to build more wind and solar power generation. But Alberta over the last three years has doubled both its wind and solar capacity. Even with now 5,688 megawatts of wind capacity, as recently as Monday, June 16, wind output in Alberta dropped to 0.7 per cent of capacity. The previous week it had fallen to 0.1 per cent. And there have been days, including in the dead of winter when temperatures are frigid, that wind output drops to zero – a total flatline. As for solar, Alberta output in the winter is a fraction of full output capacity, and of course, the sun still goes down every night.

And through all of this, Saskatchewan had been committed to adding 3,000 megawatts of wind and solar power to its grid. In January of 2024, SaskPower saw seven days with periods of no appreciable wind power generation. Thus, the need for baseload power generation, not dependent on the vagaries of the weather, has been made clear.

Long road to coal decision

The road to this decision has not been a short one, and has everything to do with harsh realities that cannot be frittered away for ideological purposes. The simple reality is that on any given day, wind power can and does go to zero output in Saskatchewan, the sun goes down every night, most of our natural gas comes from Alberta and it will likely be rising in price, and we have a lot of coal. Cheap coal. Hundreds of years of it.

On any given day in recent years, up to 88 per cent of power generation in Saskatchewan comes from natural gas and coal. And the federal government’s Clean Electricity Regulations mean to do away with all of that, unless carbon capture is applied. But the federal standards for that carbon capture are higher than what has ever been achieved to date at the Boundary Dam Unit 3 Integrated Carbon Capture and Storage Project. Impossible standards left the government of Saskatchewan with an impossible choice – follow federal regulations and shut down the coal fleet, and eventually natural gas fleet, letting our people quite literally freeze in the dark; or go its own path, effectively telling the federal government “To hell with your regulations, we’re keeping the lights on.”

The Saskatchewan First Act, introduced by then-Minister of Justice and Attorney General Bronwyn Eyre in the fall of 2022, was the first move in that direction. It reasserted provincial jurisdiction over electrical energy generation, as stipulated in Section 92A of the Constitution.

The next stage of that was using the Saskatchewan First Act’s Economic Impact Assessment Tribunal to examine the impact of the Clean Electricity Regulations, that were brought in under then Minister of Environment and Climate Change Steven Guilbeault. The impact on the province, as found by that tribunal, would be nothing short of devastating. The tribunal released its findings in September, 2024, just prior to the fall provincial election.

Along the way, the federal carbon tax, introduced under the Justin Trudeau-led Liberal Government, climbed from an initial $20 per tonne CO2 equivalent (CO2e) to $50. And then it was revised to escalate another $15 per tonne CO2e per year, until it eventually hit $170. But federal ministers indicated it could go even higher. That carbon tax meant that SaskPower was burning more natural gas than coal not because it was cheaper, but because it incurred less carbon tax. Carbon tax bills via the “Output-Based Pricing System” totalled hundreds of millions of dollars per year.

The federal government pausing the carbon tax on home heating oil, largely to the benefit of Atlantic Canada (which overwhelmingly tends to vote Liberal). That gave Saskatchewan the justification to stop charging carbon tax on home heating that it could control, under SaskEnergy. And then in early 2025, Premier Scott Moe withdrew the carbon tax on industrial emitters, too. This was followed by newly-elected Prime Minister Mark Carney withdrawing the consumer, but not the industrial, carbon tax as his first act upon election.

Text of the announcement

So what is Saskatchewan actually going to do?

Here’s the key point in Harrison’s letter, sent to SaskPower workers as well as Westmoreland:

“Work will begin this year to restore Boundary Dam 4 to service and be re-certified. Further investments will be made in long-lead items as a part of the life extension project. In the years to come, all coal units at Boundary Dam, Poplar River and Shand will receive the work necessary to extend the life of those units.