Canada’s pollution pricing ruled constitutional
Canada has achieved a major win for the protection of people and Nature against extreme climate impacts.
On Thursday, Canada’s Supreme Court ruled by a clear majority that the federal government does have the power to enact a nationwide price on greenhouse gas pollution, noting that “global warming causes harm beyond provincial boundaries and that it is a matter of national concern”. This ruling upholds what is essentially a flexible innovation in carbon pricing that could be used anywhere in the world.
The federal case was brought by oil-rich Alberta and Saskatchewan and the Conservative provincial government of Ontario, with the aim of preventing a strong national carbon pricing policy. They argued it was unconstitutional for the federal government to require pricing in their jurisdiction if they opposed it, even if federal tax powers were used.
The Court disagreed and found that the need to protect all Canadians against the already visible and worsening impacts of climate change justified the pricing policy. Canada’s minister for natural resources Seamus O’Regan tweeted:
The Greenhouse Gas Pollution Pricing Act (GGPPA) enacts a nationwide standard for pricing pollution, requiring a minimum price and implementation of policies to ensure pollution carries a cost.
Implementation is flexible, in that provinces and territories are empowered to design and implement their own plans.
If they do not, a backstop policy is offered which carries minimal administrative cost and returns 90% of money to households and 10% to the MUSH sector (municipalities, universities, schools, and hospitals).
If they decline to enact that policy, the federal government is empowered to apply the backstop policy, returning all funds to the province or territory.
Referred to by some as “the Canadian model”, this flexible approach ultimately results in nationwide pricing of global heating pollution. By doing that, it creates a stronger signal to investors, lenders, consumers, and to enterprise, to begin moving away from business practices that generate high climate-related costs. That makes the whole economy more efficient and converting investment into new value.
Cathy Orlando, leader of Citizens’ Climate Lobby Canada, which has advocated for this kind of pollution pricing since 2010, says of the ruling:
The world was watching Canada. My colleagues were in a state of suspense with us this past week. My colleague in Nigeria, David Michael Terungwa, was the first to send out a congratulatory tweet.
Mark Reynolds, Executive Director of Citizens’ Climate Lobby, said:
We’re thrilled with today’s decision. We hope this ruling by Canada’s Supreme Court inspires the U.S. Congress to move forward with effective carbon pricing, too.
South of the Canadian border, the discussion has evolved dramatically in recent years. Oil industry representatives now say they would prefer a strong carbon tax, because the clear and intensifying market signal would free them to innovate at the pace required to achieve new, low-carbon business models. Right now, mainstream economic and policy incentives reward them for pollution.
Part of what makes the Canadian model so attractive, as a blueprint other nations might follow, is that it returns revenues to the Canadian people directly. Households receive climate action rebate payments. This means the carbon tax, or emissions pricing systems, do not fall harder on lower income people. Instead, the cost of pollution must be internalized by industry.
In December, Canada strengthened its pollution pricing, with a few key changes:
Extending the national carbon price through to 2030, rising at $15 per ton after 2022.
Giving the proceeds to Canadian households on a quarterly basis, rather than annually, starting as early as 2022. (The majority of Canadians will receive more money back than they pay in provinces where the federal system applies.)
Exploring the potential of border carbon adjustments, and work with like-minded economies—including the E.U. and Canada’s North American partners—to consider how this approach could fit into Canada’s broader strategy to meet climate targets while ensuring a fair environment for businesses.
Ultimately, this is about a choice between planning to be part of a better future or seeking to profit by denying that better future to others. This victory in Canada’s Supreme Court is only the latest important precedent finding that the right to be protected from preventable harm overrides the desire of some to take profits without being accountable for the effects of their actions.
