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The Ontario Court of Appeal has upheld the federal government’s carbon price as constitutional, saying it falls within Ottawa’s powers to address matters of national concern under the “peace, order and good government” clause.

In a 4-1 decision, the court rejected Ontario’s claim that the federal government had exceeded its jurisdiction by applying a tax on greenhouse gas emissions. It said the carbon price is not technically a tax because it is meant to achieve a regulatory result and the revenues are returned to jurisdictions in which they are collected.

“The need for a collective approach to a matter of national concern, and the risk of non-participation by one or more provinces, permits Canada to adopt minimum national standards to reduce GHG emissions,” Justice George Strathy wrote for the majority.

The federal legislation “leaves ample scope for provincial legislation in relation to the environment, climate change and GHGs, while narrowly constraining federal jurisdiction to address the risk of provincial inaction.”

The Liberal government imposed the levy on four provinces that did not have their own pricing systems: Ontario, New Brunswick, Saskatchewan and Manitoba. Environment Minister Catherine McKenna says Albertans will face a federal carbon price on Jan. 1, after the move by Premier Jason Kenney to kill the system imposed by the previous NDP government.

Saskatchewan’s top court also upheld the federal legislation in May, and the provincial government is appealing. Mr. Kenney said his government will also launch a legal challenge to the federal plan to impose its carbon levy in his province.

The Ontario Court of Appeal decision is a major victory for Prime Minister Justin Trudeau, who is heading into a fall election campaign in which climate change will likely be a major issue. The Liberal government will defend its carbon tax, which kicked in on April 1 at $20 per tonne – or 4.5-cents per litre of gasoline – and will rise to $50 per tonne in 2022.

However, Ms. McKenna said recently the Liberals do not plan to increase the rate after 2022, but will rely on additional measures to meet Canada’s target of reducing greenhouse gas emissions by 30 per cent below 2005 levels by 2030.

Conservative Party Leader Andrew Scheer has vowed to scrap the carbon tax if elected this fall, but he would maintain a regulatory cost on large industrial emitters. Ontario Premier Doug Ford is campaigning aggressively against the Liberal carbon price, with television ads and a regulation forcing gas stations to post notices about its cost.

The levy is expected to cost a typical household $258 this year and $648 by 2022. The federal government is providing rebates and had estimated the average rebate would be $300 in Ontario, but the Canada Revenue Agency said earlier this month the average payment was $203 in the province.

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