The Supreme Court of Canada’s ruling that Ottawa’s controversial carbon pricing regime is constitutional weighs in at more than 400 pages and delves into complex legal issues that date back to Confederation. But it also reaffirms something strikingly simple: that under the right circumstances, when it really matters, Canada is still allowed to act like, you know, a country.
Wait, you say. Of course Canada is allowed to act like a country. It is a country; a nation with its own government, occupying an internationally recognized territory.
But Canada is also a federation of provinces and territories, all of which have broad jurisdictions that include key areas like health, education and natural resources, and all of which jealously protect a balance of powers that tips in their favour from even the slightest hint of federal interference.
Which is why six provinces took Ottawa to court over the Greenhouse Gas Pollution Pricing Act. The law, enacted in 2018, obliges the provinces to put a minimum price on their carbon emissions, either through a mechanism of their own choosing, or one imposed by the federal government.
The Trudeau government brought in the law in order to meet Canada’s emissions-reduction commitments under the 2015 Paris climate accord. It had the support of most provinces at the time, and its carbon-pricing regime was carefully crafted as a revenue-neutral backstop. If Ottawa had to tax because the provinces wouldn’t, all monies raised would be returned to provincial taxpayers.
But subsequent changes in government in Alberta and Ontario led to a constitutional challenge to Ottawa’s power to bring in carbon pricing. The challenge raised the eternal Canadian question of how far the federal government can reach into provincial affairs.
The Supreme Court has often leaned in favour of the provinces. For instance, the court said in a 2011 reference ruling that Ottawa can’t establish a pan-Canadian securities regulator, because there was no overriding national concern to justify it – even if having multiple provincial regulators creates a lot of inconvenience and costs for businesses.
In another example, the court ruled in 2019 that the autonomy of the provinces to control their own interests is so vital that they can fine a person for bringing home too many cans of beer from another province.
But this time, six of the court’s nine judges ruled that the threat of climate change is real and that greenhouse gas emissions cause harm across provincial borders, making it a matter of national concern under the Constitution’s “peace, order and good government” clause.
The majority essentially said that Canada as a nation can’t have a hope of meeting its international commitments under the Paris accord if provinces are allowed to exempt themselves from even minimal emissions-reduction standards.
The ruling is a double relief: because unless Ottawa has the power to act, there can be no national climate strategy; and because putting a price on carbon is generally the most efficient and transparent way of reducing emissions.
The federal carbon tax, currently set at $30 a tonne and rising to $40 in April, has increased the cost of a litre of gasoline and the price of heating a home. But, because the regime is revenue-neutral, most Canadians are getting an annual rebate that is greater than the amount of tax they are paying, according to the Parliamentary Budget Office.
Not only that, but a PBO review of the regime in February of 2020 also said the benefit to taxpayers is progressive, with lower-income households getting larger net rebates that higher-income ones.
In Canada, oil-company executives have long been in favour of carbon taxes. And by sheer coincidence, on the same day as Thursday’s Supreme Court ruling, the American Petroleum Institute, the lobby for U.S.-based oil companies, came out in support of the principle of carbon pricing.
But this ruling isn’t just about climate change. It’s at least as much about federal-provincial relations, and critics worry that it opens the door to federal interference into other provincial matters.
That seems unlikely, though, given the Supreme Court’s long-standing record of sensitivity to provincial rights.
And let’s be serious: If Ottawa didn’t have the power to fight what the Supreme Court called an “undisputed… threat to the future of humanity,” you’d have to wonder just what the threshold would be for it to act like, you know, a country?
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