In 1867, when colonies of British North America came together to create Canada, a key part of the deal was the division of powers between the federal government and the provinces. The two, equal and distinct, have been fighting over details of who can do what in the federation ever since.
Reference cases at the Supreme Court of Canada have long served as an arbiter, often revolving around the division of powers. In recent decades, major reference cases include the GST in 1992 (Ottawa won) and a national securities commission in 2011 (Ottawa lost). Win or lose, reference decisions in cases rooted in economic matters have provided much-needed certainty by answering constitutional questions.
Reference cases have likewise been valuable to delineate environmental oversight, which has no specific mention in the constitution’s division of powers and has been, in practice and legal precedent, a shared responsibility. Making clear the environmental rules helps propel the economy.
In 2018, after Ottawa passed a bill to put a price on greenhouse gas emissions, the provinces challenged the law and Ottawa won a reference case at the Supreme Court in 2021. It was deemed a national concern. But in another climate reference case, decided in mid-October, Ottawa lost. In 2019, it had passed the Impact Assessment Act, which widened federal environmental oversight of proposed projects like an oil sands mine. Alberta immediately challenged it. The Supreme Court determined Ottawa had overstepped its constitutional bounds.
The two cases, while both involved debate about emissions, pivoted on different legal issues. The result is some legal uncertainty, at a time when there is urgency to take rapid action on climate change.
Ottawa is reworking the assessment act. Taking a narrower approach might feel like a retreat but given the main goal is to reduce emissions, the assessment act isn’t the most consequential policy. Ottawa may want a bigger say over projects like Suncor’s oil sands mining and a predicted three megatonnes of annual emissions, but Canada’s climate ambitions could be better served with a simplified federal assessment act and legal certainty for the proposed clean electricity regulations.
Emissions from power generation are an estimated 52 megatonnes. Driving that number to close to zero by the mid-2030s is needed to reach economywide net zero by 2050. Clean power enables lower emissions in sectors like transportation. Getting this policy right has the larger impact.
Ottawa may be wise to seek a reference at the Supreme Court on the draft regulations. Alberta, reliant on fossil fuels for power, has said it would take the rules to court. Such a process could stretch four years, starting in a provincial court of appeal. Ottawa could halve that time, because it can bring a reference directly to the Supreme Court.
The draft power rules are already flexible – allowing new plants to run with full emissions until the mid-2040s. Ottawa could add further flexibility but Alberta would likely oppose regardless. The core legal precedents that gird the rules, Ottawa’s broad criminal law power under the Canadian Environmental Protection Act, are strong, from a 1997 Hydro-Québec case to the Federal Court in 2014 and Federal Court of Appeal in 2016 affirming Ottawa’s use of that constitutional power to regulate emissions. (Those rules were instituted in 2010 under Stephen Harper.)
Reference cases are usually meant for questions without a clear answer. In the case of clean power, while the provinces have a right to develop their resources and control their electrical grids, Ottawa’s constitutional role and power to regulate environmental matters stand on solid ground. Alberta and Saskatchewan explicitly acknowledged that in the 2021 carbon pricing case.
But with Ottawa’s loss in court this month, even though it was on different legal issues, there’s uncertainty. It’s not ideal for Ottawa to have to prove its clean power rules are constitutionally sound, and spend several years doing so, yet it’s important to get a final answer sooner than later.
There is a key role for smart regulations in areas like clean power. Ottawa also has to be careful about piling on too many climate regulations. Among its many policies, Ottawa is preparing rules to reduce emissions in oil and gas. As this space has previously argued, Ottawa shouldn’t forget the pillar of carbon pricing, where its powers are certain across the economy. More on this, later this week.