Saskatchewan, Alberta eye new measures after losing carbon-pricing decision

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Saskatchewan and Alberta are mulling over new consumer carbon-pricing regimes, including fuel charges, as they come to terms with losing their constitutional challenge against the federal carbon charge.

The Supreme Court, in a 6-3 decision released Thursday, ruled that Ottawa has the authority to impose a minimum price on greenhouse gas emissions across the country. The ruling means the federal government can make car drivers, homeowners and businesses in every province pay a steadily increasing charge for their use of fuels, and industry for their emissions. And provinces that object can’t do anything about it.

Saskatchewan Premier Scott Moe arrived at a media conference after the decision with a swath of carbon-pricing options in hand, including a fuel charge similar to the one used in New Brunswick.

Saskatchewan will develop a greenhouse gas offset program, too, expected to be in place in 2022. Mr. Moe said it would allow heavy-emitting industries to meet pollution-reduction targets by buying carbon credits from farmers, ranchers, forestry operators and other businesses that sequester carbon.

The province has also applied to Ottawa to move its electricity and natural gas Crown corporations under Saskatchewan’s own emissions regulations, so they are not subject to federal rules.

It made that request in February, which NDP Leader Ryan Meili said is a clear sign the Saskatchewan Party government “saw the writing on the wall” that it would lose its legal challenge.

Mr. Meili said in an interview Friday that while he’s agnostic about the exact carbon-pricing mechanisms the government chooses, they must result in emissions reductions.

“I want to make sure that whatever policy is coming in, it’s not about where you pay it – it’s about who pays it and how much, and making sure that it’s the biggest polluters that pay the most,” he said.

In an e-mail to The Globe and Mail, federal Environment Minister Jonathan Wilkinson said provinces and territories “have the flexibility to be able to introduce their own carbon-pricing mechanisms, so long as they meet certain national minimum standards.”

“We said in December when we released our strengthened climate plan that those national minimum standards need to be strengthened, but certainly we are open to conversations with provinces – including Saskatchewan,” he said.

Alberta Premier Jason Kenney has been more circumspect about what the ruling means for taxpayers in his province. He has floated a few possibilities, however, including the New Brunswick fuel charge program eyed by Saskatchewan and a cap-and-trade model similar to Quebec’s.

But Mr. Kenney’s United Conservative government may also maintain the status quo by keeping the federal consumer charge that was imposed on Alberta through a 2018 law on any province or territory that didn’t develop its own carbon-pricing plan.

“Obviously I don’t like it. I fought it. But if there is any virtue in the federal approach, it’s that 90 per cent of those revenues at least notionally go back in rebates to people,” Mr. Kenney said Friday during a Canadian Association of Oilwell Drilling Contractors event.

“We’re keeping an open mind, but the bottom line is we want to minimize costs to Albertans and our economy.”

Mr. Kenney’s next steps will be a tricky political play. Repealing Alberta’s consumer carbon charge was his party’s No. 1 promise during the 2019 election, and its first bill when it formed government.

Aside from the implications of a now-mandatory carbon-pricing regime, both Mr. Moe and Mr. Kenney voiced concern about how the ruling could effect Section 92A of Canada’s Constitution, which guarantees provinces exclusive jurisdiction over their natural resources.

Former Alberta premier Peter Lougheed and his Saskatchewan then-counterpart Allan Blakeney insisted on Section 92A to avoid the reimplementation of anything like the National Energy Program, which wreaked substantial economic damage on Western Canada. Introduced by then-prime minister Pierre Trudeau in 1980, the program shifted oil wealth from Alberta to other parts of Canada.

“I hope Peter Lougheed, wherever he is, didn’t have his radio or TV on [on Thursday] morning, because he’d turn over in his grave,” said Ted Morton, a former conservative Alberta cabinet minister and current political science professor at the University of Calgary.

While he doesn’t think the carbon charge alone is a make-or-break issue for Alberta or for the Canadian energy sector, Mr. Morton said it’s problematic when combined with other climate policies introduced by Ottawa since 2015, including the clean fuel standard.

“Any one of those by themselves isn’t fatal, but it’s death by 1,000 cuts,” he told The Globe.

Both Mr. Kenney and Mr. Moe argue that Ottawa shouldn’t impose a carbon charge just because it legally can.

Mr. Moe maintains that consumer carbon pricing is a “blunt, ineffective instrument that kills jobs” and threatens industry, with no reductions to emissions.

For Mr. Kenney, “this comes back to being a political issue, a democratic issue,” which will be on the ballot in the next federal election.

“Ultimately,” he said, “this will be up to Canadian voters.”

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