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Constitutional Validity of the Greenhouse Gas Pollution Pricing Act
In September 2020, the Supreme Court of Canada heard references on the constitutional validity of the federal Greenhouse Gas Pollution Pricing Act, which establishes minimum national standards for greenhouse gas pricing in Canada to meet emission reduction targets under the Paris Agreement.
The Act is divided into two parts: Part 1 is administered by the Canada Revenue Agency, provides for 12 types of registrations, and applies a fuel charge on 21 types of fuel and combustible waste. Part 2 is administered by Environment and Climate Change Canada and introduces an output-based pricing system for industrial facilities. It applies limits on greenhouse gas emissions from prescribed large industrial emitters, allows for emissions credits to emitters that operate within their limits, and applies a charge on those who exceed the prescribed limits.
Three provinces—Alberta, Saskatchewan, and Ontario—challenged the federal carbon pricing system. Saskatchewan’s and Ontario’s appellate courts upheld the constitutionality of the Act, while Alberta’s ruled it unconstitutional. Québec, Manitoba, and New Brunswick all intervened in favor of the provincial challenge, while British Columbia intervened on the side of the federal government.
“If I had to guess, I would guess that the Supreme Court of Canada will uphold the constitutionality of the Greenhouse Gas Act for the same reason that the Ontario and the Saskatchewan courts of appeal upheld it—essentially, on the basis of the federal government’s powers to make laws for the peace, order and good government of Canada, and in particular, to regulate matters of national concern,”1 said Joanna Rosengarten, counsel at McCarthy Tétrault LLP in Toronto, in an interview with Lexpert® Magazine.
Greenhouse Gas Regulations across Canada
Across the provinces, Alberta eliminated its carbon levy on fuel and replaced its Specified Gas Emitters Regulation with a new Carbon Competitiveness Incentive Regulation, an output-based pricing system under which large industrial emitters of greenhouse gases must report and reduce their carbon dioxide and equivalent emissions since 2007. Alberta’s Technology Innovation and Emissions Reduction Regulation came into force January 1, 2020.
Ontario and Manitoba have already phased out their use of coal for generating electricity; New Brunswick’s and Alberta’s phaseouts are expected by 2030; and Nova Scotia has established a regulatory framework to transition to clean electricity from coal.
Ontario’s cap-and-trade program was revoked in 2018 and replaced with a Made-in-Ontario Environment Plan that November, which includes an emission performance standard for greenhouse gas emissions but not a carbon tax. On September 21, 2020, Ontario announced that the federal government had accepted that its Made-in-Ontario Emissions Performance Standards program will satisfy the federal requirements, and so Ontario’s own program would apply rather than the federal program.
British Columbia has had a broad-based carbon tax since 2008. Quebec has had a cap-and-trade program since 2012.
The various policy shifts over the years—from quantifying emissions and understanding the expense of greenhouse gas emissions some 20 or so years ago and “then adding on different regulatory drivers to help incentivize greenhouse gas emission reductions in various sectors including the energy sector—have all affected that sector by increasing investment in clean technology and transitioning to renewables, said John Georgakopoulos, co-managing partner and a Certified Environmental Law Specialist at Willms & Shier Environmental Lawyers LLP in Toronto, in an interview with Lexpert® Magazine.
“The energy sector has had to adapt and will have to continue to do so to respond to the varying policy shifts across Canada in order to combat climate change,” he says. “So, for example, in 2018, Canada committed to phasing out its coal-fired electrical plants by 2030. The shift has commenced and will continue [to] in order to reduce greenhouse gas emissions across the country.”
- “Changing Climes, Changing Times.” Lexpert® Special Edition — Energy. October 27, 2020. https://lexpert.ca/article/changing-climes-changing-times/.