Canadian carbon tax is here to stay: Supreme Court rules Greenhouse Gas Pollution Pricing Act constitutional
Kevin Landry and William Wojcik
In September 2020 the Supreme Court of Canada heard Reference re Greenhouse Gas Pollution Pricing Act, 2021 SCC 11, a case featuring appeals from Ontario, Saskatchewan, and Alberta with respect to the constitutionality of the Greenhouse Gas Pollution Pricing Act (“GGPPA”). Much of the debate focused on two parts of the GGPPA:
- the regulatory charge on fuel imposed under Part I of the GGPPA (“Fuel Charge”); and,
- the Output Based Pricing System (“OBPS”) imposed under Part II of the GGPPA.
See our previous article for a refresher on the Fuel Charge and the OBPS.
The decision
On March 25, 2021 the Supreme Court release their decision. A majority of six ruled that: “The GGPPA is constitutional. It sets minimum national standards of GHG price stringency to reduce GHG emissions. Parliament has jurisdiction to enact this law as a matter of national concern under the peace, order, and good government (“POGG”) clause of s. 91 of the Constitution Act 1867”.
The majority also decided that the fuel and excess emission charges under the GGPPA were sufficiently connected to the regulatory scheme of the GGPPA to be considered constitutionally valid regulatory charges that advanced the GGPPA by altering behaviour as opposed to taxes (which are limited to recovery of costs for the government, and require parliament to enact instead of just the Governor in Council).
What this decision means for those subject to the carbon tax
Aside from developing the case law surrounding POGG in a significant way (which is outside the scope of this update), the decision all but assures that carbon pricing in Canada will rise in accordance with the government’s previously published plan: A Healthy Environment and a Healthy Economy. Expected increases are $15 per year per tonne of carbon pollution, starting in 2023, rising to a total of $170 per tonne of carbon pollution in 2030.
Background: Appellate court decisions
Ontario
In the Reference re Greenhouse Gas Pollution Pricing Act, 2019 ONCA 544 the Ontario Court of Appeal decided (with a lone dissenter) that the GGPPA was constitutional. The majority concluded that the GGPPA was permissible under the national concern branch of the POGG powers of the federal government.
Saskatchewan
In the Reference re Greenhouse Gas Pollution Pricing Act, 2019 SKCA 40 the Court of Appeal for Saskatchewan decided in a 3-2 decision that the GGPPA was constitutional and that the purpose of the GGPPA (setting a minimum price on greenhouse gas emissions nationally in order to mitigate their use) was of national concern and fell under the POGG authority of Parliament.
Alberta
In the Reference re Greenhouse Gas Pollution Pricing Act, 2020 ABCA 74 the Court of Appeal of Alberta ruled that the both the Fuel Charge and OBPS were unconstitutional in their entirety but declined to express any opinion on other parts of the GGPPA. In that case a lone dissenter found the GGPPA constitutional.
This update is intended for general information only and should not be relied upon as a substitute for consultation with a lawyer respecting the reader’s specific circumstances. Each legal or regulatory situation is different and requires review of the relevant facts and applicable law.
If you have questions about the above, please contact the authors to discuss your needs for specific legal advice relating to the particular circumstances of your situation.
Due to the rapidly changing nature of the law, Stewart McKelvey is not responsible for informing you of future legal developments related to this update.
Archive
By Levi Parsche As 2022 winds to a close, it’s a good time to review some of the legislative changes that have impacted Atlantic Canada in the last year — and consider what’s ahead for…
Read MoreBy Kevin Landry and Colton Smith The Bank of Canada (“BoC”) has announced the supervisory framework (the “Framework”) it will use to oversee payment service providers under the Retail Payments Activities Act. The Retail Payments Activities…
Read MoreBy John Samms, Stuart Wallace and Dave Randell On December 14, 2022, the Newfoundland and Labrador Department of Industry, Energy and Technology announced the launch of a Crown land call for bids for wind energy…
Read MoreWe are pleased to present Beyond the Border: A Year End Immigration Wrap-Up. Compiled by lawyers from our Immigration team, this 2022 update covers topics including a look back at the end of pandemic restrictions…
Read MoreNote: this is an update to a previously posted Thought Leadership piece from November 2020 to reflect the delayed coming into force of these proposed changes, as well as additional information that has become available. …
Read MoreAs part of our presenting sponsorship of the 2022 Halifax Chamber of Commerce Annual Fall Dinner, lawyers in our Immigration group compiled a series of Thought Leadership articles drawing on the themes of population retention…
Read MoreBy Brittany Trafford and Michiko Gartshore On November 16th, 2022 the Federal Government switched to the 2021 National Occupational Classification (NOC) structure from the prior 2016 version. The NOC is Canada’s national system used to…
Read MoreAs part our presenting sponsorship of the Halifax Chamber of Commerce’s Annual Fall Dinner, we are pleased to present a series of thought leadership articles highlighting the dinner’s themes of immigration, recruitment, and labour market…
Read MoreKevin Landry, Charlotte Henderson, and James Pinchak The governance of Artificial Intelligence (AI) is entering a new era since the Canadian Government first announced a digital charter in 2019 as part of a larger-scale overhaul…
Read MoreWe are pleased to present the eleventh issue of Discovery, our very own legal publication targeted to educational institutions in Atlantic Canada. With a new academic year well underway, the Atlantic Region is finally seeing…
Read More