Supreme Court rules federal carbon pricing law is constitutionally sound

OTTAWA – The Supreme Court of Canada upheld the federal carbon pricing law in a judgement issued on March 25. The Greenhouse Gas Pollution Pricing Act, 2018 (GGPPA) requires that provinces implement a carbon gas pricing system that meets minimum national standards by January 1, 2019 or adopt one imposed by the federal government. The split 6-3 decision found that climate change causes harm beyond provincial boundaries and is a matter of national concern under the ‘peace, order and good government’ (POGG) clause of the Constitution.

Three provinces (Saskatchewan, Ontario and Alberta) challenged the constitutionality of the GGPPA. Courts of appeal for Ontario and Saskatchewan did find the GGPPA constitutional while the Alberta Court of Appeal found it to be unconstitutional. At issue was whether the federal government had the authority to pass a law that put a price on carbon.

“It is an historic ruling in the sense that is confirms parliament’s authority to implement a carbon price,” noted Nathalie Chalifour, full professor at the Faculty of Law, University of Ottawa and a co-director at the Centre for Environmental Law and Global Sustainability. “This is the first time the Supreme Court has pronounced on climate change.”

In the decision, Chief Justice Richard Wagner wrote, “The evidence in the instant case shows that even significant emissions reductions in some provinces have failed to further the goals of any cooperative scheme, because they were offset by increased emissions in other provinces. Between 2005 and 2016, Canada’s total GHG emissions declined by only 3.8 percent… In that period, emissions fell by 22 percent in Ontario, 11 percent in Quebec and 5.1 percent in British Columbia, three of the five provinces with the highest levels of emissions in Canada, as well as by over 10 percent in New Brunswick, Nova Scotia, Prince Edward Island and Yukon. But these decreases were largely offset by increases of 14 percent in Alberta and 10.7 percent in Saskatchewan, the other two provinces among the five with the highest levels of GHG emissions. As a result, Canada failed to honour its commitment under the Kyoto Protocol before withdrawing from that agreement in 2011, and it is not currently on track to honour its Copenhagen Accord commitment.”

“I think that recognition of the unevenness is what really turned the court to concluding that this is a national concern and something that requires a national benchmark,” Professor Chalifour added.

Professor David Robitaille, also a full professor at the Faculty of Law, University of Ottawa, agreed this is a landmark decision in constitutional law. “It’s maybe the most important decision in 15 years,” he said. “The court reminded Canadians of what is the correct way to interpret the Constitution.” The court held a great importance on the principle of federalism and the balance of power between the provinces and the federal government and also between diversity and unity, he said. “It’s at the heart of this judgement,” and clarifies specific powers of national concern doctrine principles and some rules about this power.

Provinces must be able to jurisdictionally fight against the climate crisis and climate change,” said Professor Robitaille. “Had the court held that greenhouse gas (GHG) emissions reduction as a whole is an exclusive federal power, it could have reduced the autonomy and jurisdiction of the provinces, but it’s a very specific power to establish robust minimum national pricing standards throughout Canada as a backstop in provinces where there’s no carbon mechanism.” He believes it’s a well nuanced and balanced decision that allows for both federal and provincial roles in environmental protection. 

The decision recognized that reducing GHG emissions is “critical to our response to an existential threat to human life in Canada and around the world.” Even in the provincial Court of Appeal cases there was a general agreement that climate change was a serious problem and was characterized in those decisions as an existential threat. 

It is significant for the Supreme Court to pronounce it this way, said Professor Chalifour. “The court recognizes that it’s an issue that has no boundaries. It’s an issue that no one single province can address on its own and requires a collective response. I think both the urgency and the existential nature of it combined with the fact that it’s a collective action problem are two really important statements that the Supreme Court has made that will likely come back in future litigation.”

The provinces, as well as two dissenting justices, argued that the decision could create a precedent for the government to venture into setting national standards on other policy areas, such as health care, which fall under provincial jurisdiction. “They raised the slippery slope argument that if this is upheld as a matter of POGG that could open the door to the federal government doing this in other areas,” Professor Chalifour said. “I think the Chief Justice, in his minority judgement along with five other judges, was very careful about that, saying there has to be a genuine extra-provincial situation here and he characterized it as it has to have really profound implications on other provinces. He set the bar fairly high, I think particularly to address that concern by provinces and others and this could start to create a precedent for really wide-ranging unwieldly set of powers. I don’t think this decision does that.”

Professor Robitaille agrees. “I think this judgement could have an impact on further federal policies. The message from the court is if the federal government wants to play a role in applying other kinds of national standards throughout Canada, it has to be specific on a really precise matter that is really not only in the hands of provinces. Climate change is the clear example of such matters that are of national concern because there’s no boundaries for climate change. If some provinces chose not to act seriously not to act to fight climate change it can have a severe and real concrete impact, a real direct impact on other citizens from other provinces.”

The argument that the federal carbon pricing system will cost Canadians more is a mischaracterization, said Professor Chalifour. “The way this is designed is that provinces keep all of the revenue that is generated. The federal government has to come in and impose the price in a jurisdiction because it’s not willing to do so but the first step is always that the province has a choice to do it. If they’re not willing to do so and the federal government imposes it all the revenues that are generated go back to the provinces, either to the taxpayers in the form of rebates or into other kinds of programs to fund things such as hospitals, innovation and schools. The money does go back. It’s really about sending a signal to investors and consumers that it’s getting more expensive to emit greenhouse gases so we should change our purchasing and our investing decisions. Ultimately, 80 percent of consumers are going to receive more back in rebates than they’re going to pay in the actual carbon tax. It shouldn’t hit their pocketbooks in the way I think it’s being characterized as a big tax being imposed on people. It’s much more of a behaviour modification signal.”

It’s also not a tax in the constitutional sense. Words matter in this case, and they matter for several reasons, Professor Chalifour said. “There are federal taxation powers and the GGPPA could have been designed as a top down revenue raising measure but it wasn’t. The court accepted that and agreed this is an environmentally motivated climate policy aimed at mitigating greenhouse gas emissions nationally and that’s what in law is what is called a regulatory charge and not a tax. So the words are quite precise in the ruling.”

The court might have gone further in recognizing more specifically the impact of climate change on women, on marginalized groups in Canada and on First Nations, said Professor Robitaille. Many organizations were granted intervenor status in the case, including the Anishinabek Nation, intervening jointly with United Chiefs and Councils of Mnidoo Mnising (UCCMM), to stand up for First Nation rights and jurisdiction in the fight against climate change. 

In a press release, UCCMM Tribal Chair Patsy Corbiere wrote, “The UCCMM intervened in this case because we do not accept any inaction from Ontario when it comes to our lands and waters. As stewards of the largest freshwater island in the world, we must ensure the courts take the Anishinabek perspective into account when determining if climate change is a matter of national concern. Climate change disproportionately affects First Nation communities, our traditional way of life, and our ability to assert and exercise jurisdiction in relation to environmental issues that directly impact our lands and waters. The quality and quantity of our natural resources, including our waters and medicines, continues to diminish with the effects of climate change. It is vital that our voices be heard, and our rights be respected.”

UCCMM and the Anishinabek Nation did not specifically take any position on the current federal carbon pricing regime but asserted that where provinces are unable to effectively protect these rights, the federal government must be permitted to step in and enact legislation. First Nations should not be left without effective redress as a result of federal-provincial jurisdictional disputes, Ogimaa-kwe Corbiere stated.

It’s true that First Nations are not at the heart of the decision, agreed Professor Robitaille, “but at least the court recognized that climate change and the climate crisis will have a disproportionate impact on First Nations. The court specified that GHG emissions and climate change could have an impact on First Nations ways of life, on their land and on their water.” He thinks the decision could have an impact in other cases where provincial inaction on climate change could have an impact. “They will surely base their arguments on the quotes in the Supreme Court reference and so it can have an impact in the long term on other cases.”

In a statement immediately following the ruling, Jonathan Wilkinson, minister of environment and climate change for Canada said, “This is an historic day for Canada, and for the planet, for our economy and for all Canadians for generations to come. Canadians rightly expect their government to build an economy that fights climate change using the most effective tools at our disposal and now we can get on with the job. Our plan includes a price on the pollution causing climate change. It reduces pollution and returns the money to people’s pockets in rebates. The plan also includes key regulations as well as almost $100 billion in direct investments.”

“Today’s Supreme Court ruling confirms that carbon pricing is integral to reducing GHG emissions and responding to the existential threat of climate change,” he added. “As of today, the federal government can continue to use a price on pollution as one key element of its comprehensive climate plan because climate change impacts Canadians no matter where they live in this country.”

“The majority of economists will tell you that pricing pollution is the most economical way to reduce emissions while concurrently driving innovation,” the minister said. The current carbon price set by the federal government is $30 per tonne. This rises to $50 per tonne by 2022 and $170 per tonne by 2050.