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Editorials The real carbon tax is the money provinces are spending on lawyers

It’s fair to say at this point that the conservative-led movement to discredit Ottawa’s carbon-pricing regime is in tatters.

Two courts in two different provinces have now ruled that the regime is constitutional. At the same time, the climate-change plans introduced by provincial governments that oppose carbon pricing, as well as by the federal Conservative Party, are being criticized for their lack of effectiveness.

Add the continuing implosion of the Doug Ford government in Ontario – it has tried to boost its flagging popularity with an expensive ad campaign targeting the federal plan – and what was once a putative pan-Canadian resistance to the signature environmental policy of Liberal Prime Minister Justin Trudeau is looking like a quixotic political crusade.

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It was easy to predict this would happen. The Trudeau government was always confident in its legal power to create legislation imposing carbon pricing on provinces that didn’t meet minimal standards for reducing greenhouse gas emissions.

Saskatchewan was the first to challenge Ottawa, and the first to lose. The province’s Court of Appeal ruled in May that the federal regime was valid.

Last Friday, the Ontario Court of Appeal came to the same conclusion, with a twist: The thing Conservative Party Leader Andrew Scheer and Mr. Ford love to call a “tax” is in fact a regulatory fee, the judges ruled.

This is in part because the federal levy is imposed on GHG emitting industries and on the producers and distributors of carbon-based fuels, who pass the costs onto consumers. This is the stated purpose of carbon pricing: As a behaviour-changing mechanism that uses price signals to reduce consumption and spur innovation.

But the Ontario court also said carbon pricing is not a tax because the money collected by Ottawa will be sent back to the provinces, with nearly all of it going to individual taxpayers, and the remainder to schools, hospitals, municipalities and small and medium-sized businesses in the five provinces on which it is or will be imposed.

This is the key fact that Mr. Ford and Mr. Scheer, along with Alberta Premier Jason Kenney and Saskatchewan Premier Scott Moe, deliberately obfuscate when they inaccurately damn the federal regime as a “tax grab," without mentioning that the money collected will be returned to Canadians.

The Ontario court has laid it out in black and white. It stands in jarring contrast to the refusal of Mr. Scheer and his allies to do the same.

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The Ontario ruling also makes the case for why a federal regime is necessary. The provinces of Mr. Kenney and Mr. Ford – Alberta and Ontario – produce 60 per cent of Canada’s annual GHG emissions, but it is Atlantic Canada and the territories – which produce a combined 6 per cent – that will most feel the consequences of global warming, in the form of rising seas and the loss of permafrost and ice cover.

“As a practical matter and indeed as a legislative matter, there is nothing these provinces and territories can do to address the emission of GHGs by their geographic neighbours and constitutional partners. Without a collective national response, all they can do is prepare for the worst,” the court said in its ruling.

In other words, carbon pricing is about Ottawa getting the provinces to overlook self-interest and jointly fight a battle that is crucial to the federation, not to mention part of a global fight to limit GHG emissions.

Ottawa is also trying to get the provinces to adopt a mechanism that has proven to be a conservative, efficient and market-friendly way of reducing GHG emissions.

Instead, Saskatchewan is appealing to the Supreme Court and Alberta intends to file its own constitutional challenge to the federal plan.

Meanwhile in Ontario, Mr. Ford says his government will lower GHG levels by encouraging companies to develop green technology – an inefficient and bureaucratic solution that will push costs onto consumers in an opaque fashion, and take money out of their pockets that they won’t get back. It also happens to be pretty much the same plan that Mr. Scheer is proposing.

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The Liberal scheme is not perfect. It alone will not make Canada meet its GHG reduction commitments under the Paris Agreement. But it has three things going for it that no conservative leader of any stripe has offered so far: coherence, honesty and a realistic chance of making a difference.

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