Global Climate Action: Canadian Supreme Court Upholds Carbon Tax & More

In a 6-3 decision announced late March, the Canadian Supreme Court ruled that the country’s federal carbon pricing system under the Greenhouse Gas Pollution Pricing Act (GHGPPA) was constitutional. The ruling was cemented around the Constitution’s “peace, order and good government” clause, which gives the federal government authority to enact laws to deal with an issue that concerns the entire country when provincial cooperation is necessary to successfully address it. [1]

Given that climate change is a global problem, cooperation among nations, and provinces or states within those nations, is essential to tackling the issue. Prime Minister Trudeau and the Canadian government continue to set and raise targets for emission reductions, most recently with the new A Healthy Environment and a Healthy Economy plan released last December. For the Federal government to successfully tackle this problem countrywide, cooperation between the provinces is necessary.

Writing the majority opinion, Chief Justice Richard Wagner argued:

“A failure to include one province in the scheme would jeopardize its success in the rest of Canada. What is more, any province’s refusal to implement a sufficiently stringent GHG pricing mechanism could undermine GHG pricing everywhere in Canada.”[2]

In 2018 the government of Canada passed the GHGPPA, which required all jurisdictions to establish a pollution pricing scheme for fuel and industrial emissions that met federal standards and price minimums per tonne. The initial price was set at $20 per tonne of CO2 in 2019, with an annual increase of $10 every year until 2022. However, under new guidelines, the annual increase would become $15 per year starting in 2023 until the carbon tax reaches $170 per tonne by 2030. Given the flexibility provided in the GHGPPA, any province or territory could design its own carbon pricing system that was tailored to local interests, or they could opt (partially or fully) into a standardized federal pricing system.[3]

Despite this flexibility, some provinces thought that the federal government was overstepping its constitutional powers by mandating minimum requirements for a system in every province. The Supreme Court heard arguments from Quebec, New Brunswick, Manitoba, and other jurisdictions that acknowledged the need for climate action but were against the notion that the federal government can institute national standards to apply to all provinces and territories.

With the ruling, Canada can now proceed with its plan to leverage carbon pricing as a cornerstone of its climate agenda. The news comes as other world leaders began to meet and discuss plans for greater climate action.

Last week President Xi Jinping of China, Chancellor Merkel of Germany, and President Macron of France, met together virtually to discuss progress and policy solutions on climate change, including the creation of a carbon border tax in the European Union.[4] The carbon border tax is a key component of the EU’s Green Deal, which would force foreign companies selling products in the EU to purchase pollution permits from the EU Emissions Trading Scheme.[5] The intent of the proposal is to create fair competition across industries conducting business in the EU, as some non-EU manufacturers may originate from areas that do not currently take into account a price on carbon.

As this conversation was being held, John Kerry, President Biden’s Climate Envoy, was meeting with leaders in India and China to rekindle relationships and reestablish the United States as a leader on climate action.[6] The Biden administration has been hard at work to gain back the trust from the global community, beginning with re-entering the Paris Agreement and promising more ambitious climate action. On Earth Day, President Biden hosted a virtual Climate Summit with 40 world leaders to lay out his climate agenda for the country moving forward. Among the promises made, the highlight is the commitment for the US to cut greenhouse gas emissions in half by 2030 from 2005 levels.[7]

As the second largest contributor to climate change, this is an important step for the US to take. Not only from an emissions perspective to help the world remain under 1.5 degrees of warming, but also as a global leader to influence others to do the same, if not more. Joining President Biden during the Earth Summit were the leaders of Brazil, Japan, and Canada, all pledging greater climate ambition within the next decade.[8]

And though President Biden did not include a carbon tax in his plans, it’s a tool that continues to be discussed within the administration and is already being implemented to various degrees on the world stage. Now affirmed, Canada’s system is a good example for federal-state cooperation that puts a price on carbon and forces polluters to pay. It’s a model that offers flexibility, which, for a country like the United States, would be critical to success. The US already has two cap-and-trade markets (the California Cap-and-Trade Program which is linked with Quebec, and the Regional Greenhouse Gas Initiative which includes 11 northeastern states), so any national pricing system would need to coordinate with these existing efforts while also bringing along new states.

One can hope that this is a turning point for more effective and coordinated action on climate change, with the US taking on a leadership role once again in global discussions. If a price on carbon is to be introduced in the near future by the Biden administration, it could provide industry and conservatives in Congress the flexibility to lower emissions while also giving progressive leaders and activists a boost to achieve the climate solutions we all know are needed to restore “peace, order and good government” nationwide.


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