A Made-in-Alberta carbon levy

By Catherine Griwkowsky March 26, 2021

Canada’s top court ruled the federal carbon tax is constitutional and does not overstep Ottawa’s jurisdiction over provincial autonomy.

The Supreme Court’s majority (6-3) decision determined global warming, caused by carbon-related emissions, results in harm beyond provincial borders and qualifies as a “genuine” issue of national concern, therefore giving the federal government clearance to enforce laws under the “peace, order and good government” clause of the Constitution.

“The effects of climate change have been, and will be, particularly severe and devastating in Canada” and represent an “existential threat to human life,” per the court.

While the ruling, drafted by Justice Richard Wagner, notes the court must use “great caution” when deeming a matter one of national concern, the majority judges determined the Greenhouse Gas Pollution Pricing Act meets that threshold because provinces, even if they worked together, would be constitutionally unable to set a national carbon emissions standard. Additionally, should even one province be left out of the pricing scheme, it would undermine the efficacy of carbon pricing countrywide.

“Any province’s failure to implement a sufficiently stringent GHG pricing mechanism could undermine the efficacy of GHG pricing everywhere in Canada because of the risk of carbon leakage,” Wagner wrote. That would “have grave consequences for extraprovincial interests,” per the ruling.

The law’s mechanisms, which grant provinces the flexibility to create their own pricing system and only implement the federal backstop if a province withdraws, were held up as an example of “modern co-operative federalism.”

The three dissenters — Justice Suzanne Côté, Justice Russell Brown and Justice Malcolm Rowe — argued the federal carbon pricing backstop granted too much power to the federal cabinet and oversteps into provincial jurisdiction.

“It is not possible for a matter formerly under provincial jurisdiction to be transformed, when minimum national standards are invoked, into a matter of national concern,” Brown wrote.

Right-wing governments in Alberta, Ontario and Saskatchewan have spent years fighting the Greenhouse Gas Pollution Pricing Act. While Alberta’s top court erred on the side of provincial autonomy (one provincial justice deemed the carbon pricing scheme a “constitutional Trojan horse”) courts in the other two provinces upheld the levy.

Fighting the carbon tax was a major plank in the UCP’s campaign platform, and eliminating the former NDP government’s version was the party’s first move after it was elected.

The court also took issue with the much-used “carbon tax” moniker. Federal backstop fees are “constitutionally valid regulatory charges” and have “nothing to do with the concept of taxation.”

Premier plans to consult on alternative to carbon pricing
Premier Jason Kenney said the UCP will now begin consulting on an Alberta alternative to the federal carbon backstop, in hopes of developing a system that is less onerous than the NDP’s consumer carbon tax or the federal government’s current scheme.

While the NDP’s carbon tax was priced at $30 per tonne of CO2 equivalent, Ottawa’s backstop will hit $50 per tonne next year and $170 per tonne by 2030.

Kenney pointed to Quebec’s cap-and-trade system, which currently prices emissions around $20 per tonne.

The UCP took the lead on developing a tax on large industrial emitters, which Ottawa accepted as a valid equivalent to the federal backstop in 2019.

But NDP Leader Rachel Notley said Kenney has had two years to come up with a plan.

“Instead of getting Albertans back to work, he damaged our international reputation and laughed at the leading global investors who take climate risk seriously,” she said.

Many battles ahead
The carbon pricing battle isn’t the only court fight the province has waged against Ottawa. Legal challenges to Bill C-69, which Kenney calls the “no more pipelines act,” and Bill C-48, which he has dubbed the “tanker ban,” are still to be fought.

Environmental groups pointed out the Supreme Court ruling affirms the federal government’s authority over climate change policy, which will dampen any future province-led fights on the file.

But Kenney said Thursday’s decision was very limited in its application to the carbon tax and he doubts the highest court would intrude on provincial jurisdiction over natural resources, should Bill C-69 end up there.

“To me, it’s inconceivable that a court would allow the federal government to pull a rabbit out of the constitutional hat to see that the clear meaning of the Constitution or provincial jurisdiction on resources does not exist,” he told reporters.