Ontario Court of Appeal rules against the provincial challenge to the federal carbon price – Seven provinces will intervene in the Supreme Court appeal

doug ford scrap the taxOn June 28, the Ontario Court of Appeal issued their Decision , 4 to 1 in favour of the federal government’s right to impose a system of carbon pricing across Canada, under the Greenhouse Gas Pollution Pricing Act.   Some important excerpts from the majority decision:

“Parliament has determined that atmospheric accumulation of greenhouse gases causes climate changes that pose an existential threat to human civilization and the global ecosystem ….The need for a collective approach to a matter of national concern, and the risk of non-participation by one or more provinces, permits Canada to adopt minimum national standards to reduce [greenhouse gas] emissions…

The Act does this and no more. It leaves ample scope for provincial legislation in relation to the environment, climate change, and GHGs, while narrowly constraining federal jurisdiction to address the risk of provincial inaction.

The charges imposed by the Act are themselves constitutional. They are regulatory in nature and connected to the purposes of the Act. They are not taxes.

The Act is the product of extensive efforts – efforts originally endorsed by almost all provinces, including Ontario – to develop a pan-Canadian approach to reducing GHG emissions and mitigating climate change. This, too, reflects the fact that minimum national standards to reduce GHG emissions are of concern to Canada as a whole. The failure of those efforts reflects the reality that one or more dissenting provinces can defeat a national solution to a matter of national concern”

The Ontario government immediately announced that it will appeal the decision to the Supreme Court.  The Premier of Alberta, part of the Canada-wide Conservative opposition to the federal carbon tax, said that Alberta is reviewing the decision in his press release.  Saskatchewan, which lost its own court challenge to the GGPPA  in May 2019, has already filed an appeal in the Supreme Court of Canada, scheduled for December 5 2019 – notably after the coming federal election, in which climate change issues are widely expected to be a top priority for voters.

For a thorough discussion of the decision and compilation of reactions, read: “Doug Ford loses carbon tax battle with Trudeau” in the National Observer .  “Ontario Court of Appeal Upholds Federal Carbon Tax” appeared in The Energy Mix on July 2 and also compiles reaction from many sources. “Federal Carbon Pricing Regime Now Two-for-Two” (July 2) in Lexology offers a more lawyerly perspective.   And for the mood in Ontario, read “Doug Ford’s $30 million carbon tax fight is money down the drain but it keeps his brand afloat” in the Toronto Star (July 3) or in the Globe and Mail, The real carbon tax is the money provinces are spending on lawyers.”

Provinces line up to participate in Supreme Court appeal: ( Updated as of July 10):  As of July 8, seven provinces are  registered as intervenors in the Saskatchewan challenge to the carbon tax, scheduled to be heard by the Supreme Court of Canada in December 2019.  On July 8, CBC reported that  New Brunswick Premier Blaine  Higgs  abandons  planned carbon tax court fight , stating that the province will not waste taxpayers’ money on their own carbon tax court case, but will act as an intervenor in the Saskatchewan’s appeal.  Prince Edward Island is also intervening, as explained in  P.E.I. intervening in Saskatchewan’s carbon tax court challenge” (July 5).  The Premier of PEI states they are “absolutely not” joining the fight against a carbon tax, but are intervening as a way to reserve the right to participate in future. Even more surprisingly, “Quebec intervenes in Saskatchewan’s challenge of carbon tax“, as reported in the Montreal Gazette on July 8.  Quebec has joined the case to ensure its provincial rights are upheld in any court decision, and to protect Quebec’s existing cap and trade system. 

stampede ford 2019Aaron Wherry of CBC posted an analysis of the Conservative premiers’ positions against the federal carbon price in Premiers say they want a ‘co-operative’ approach to climate policy. Are they serious? (July 10).  It discusses the differences amongst  Alberta’s Jason Kenney, Ontario’s Doug Ford, Saskatchewan’s Scott Moe, New Brunswick’s Blaine Higgs and Bob McLeod of the Northwest Territories, who are meeting separately, in advance of the formal Council of the Federation meeting in Saskatoon, July 9 to 11.

 

Saskatchewan Court of Appeal rules for federal carbon tax program

With implications across the country, the Saskatchewan Court of Appeal handed down a 3-2 decision  on May 3, ruling that the federal Greenhouse Gas Pollution Pricing Act (GGPPA) falls within federal government’s “National Concern” constitutional power. The Saskatchewan Association for Environmental Law has compiled all the legal submission documents here ; the EcoFiscal Commission provides a summary of the 155-page Decision here  .

Local coverage and reaction appeared in the Regina Leader Post (May 3) in “Court of Appeal: Saskatchewan government loses carbon tax challenge , and the Premier of Saskatchewan immediately declared that the province will appeal to the Supreme Court of Canada, which it must do within 30 days.  As the Globe and Mail points out,  “Saskatchewan court rules federal carbon tax constitutional in first of several legal challenges” .  According to a CBC report, the Premier of New Brunswick  is still considering his options, but newly-elected Premier Jason Kenny of Alberta will join the Saskatchewan Supreme Court action. The Premier of Manitoba announced that his government will not abandon its own court challenge, which it launched on April 3. In Ontario, the Ford government is aggressively promoting its own battle over the carbon tax: four days of hearings ended on April 18th, and the Ontario Court of Appeal is expected to render its own decision on the constitutionality of the carbon tax in several months – possibly not until after the federal election in October 2019.

The political significance of the Saskatchewan decision:  Aaron Wherry at CBC  summarizes the general situation in  “The carbon tax survived Saskatchewan. That was the easy part”  (May 4).  The Globe and Mail states what is a widely accepted opinion in its editorial,  “Why conservatives secretly love the carbon tax”: “Round One goes to Ottawa. But the courtroom war against the federal carbon tax continues – waged by a fraternity of conservative provincial governments with more of an eye on immediate political returns than ultimate legal outcomes.”

Update:  Three law professors- Jason MacLean (University of Saskatchewan), Nathalie Chalifour ( University of Ottawa) and Sharon Mascher (University of Calgary)  published a reaction to the Saskatchewan Court’s decision on May 7 in The Conversation“Work on Climate not weaponizing the constitution”   takes issue with some of the finer legal points of the decision, but welcomes the Court’s recognition of the urgency and scale  of the climate emergency, and concludes: “We have to stop weaponizing the Constitution and start working together, across party lines at all levels of government, on urgent and ambitious climate action.”

Canada: the year past and the battle over carbon pricing in the year ahead

The Energy Mix Yearbook Review for 2018 is undoubtedly the most thorough and informed review of 2018 climate issues for Canadians.  It compiles its newsletter coverage of 2018 stories and adds context and analysis, as well as a multitude of links to further reading.  The sections of exceptional interest include “Jobs and Just Transition: Renewables and Efficiency Jobs Surge while Fossil Employment Sags “; “Fossils go for Broke”  and “Canada’s Contradiction: Low-Carbon Leader or Perpetual Petro-State?”  .  Other, briefer overviews for Canada include “State of Play 2018”  from EcoJustice, highlighting legal issues;  “ 10 wins for Canadian energy and climate action in 2018: Year in review” with a positive slant from the Pembina Institute (Dec. 20) ; and from the Council of Canadians 2018 in Review: Offshore drilling (December 21),  a chronology from Atlantic Canada.

On December 20, easily overlooked because of the holiday season,  Environment and Climate Change Canada published five separate review reports.  Clean Canada:  Protecting the Environment and Growing our Economy   is a snapshot of Canada’s federal climate action policies and expenditures, and seems intended for a wide popular audience.  Second Annual Synthesis Report regarding the Pan-Canadian Framework on Clean Growth and Climate Action   (French version here )  is a more detailed accounting of the policies and programs by the federal and provincial governments in 2018, organized in chapters relating to carbon pricing, complementary measures (buildings, transportation, electricity, agriculture, etc.); adaptation and resilience; clean technology and innovation and jobs; reporting and oversight; federal engagement and partnership with Indigenous people .  2018 Canada’s Greenhouse Gas and Air Pollutant Emissions Projections Report  (French version here ) provides, again,  a policy overview but its main purpose is to continue the series of annual reports (since 2011) of detailed emissions data for economic sector and  geographic region. It also includes emissions projections to 2030 under two different scenarios – (spoiler alert: oil and gas will be Canada’s leading source of emissions, followed by transportation and heavy industry).

Other substantial reports published on December 20 will form the basis for consultations in 2019.  The new draft for the Federal Sustainable Development Strategy 2019 to 2022 will inform a public consultation until April 2, 2019. (The companion 2018 Progress Report on the Federal Sustainable Development Strategy  evaluates the 2016 to 2019 strategy goals and the activities of  41 federal departments and agencies.)

The final Clean Fuel Standard Regulatory Design Paper focuses on the liquid fuels regulations, with comments requested by February 1, 2019. The draft regulation is scheduled to be published in 2019 and a final regulation by 2020, bringing to an end a complex consultation process that began in 2016 (summarized by WCR  in January 2018).  The Clean Fuel Standard will apply to the full life cycle of all fuels, gasoline and diesel, aviation fuel, natural gas for heating, and metallurgical coal, and has been called the single most important policy tool to achieve Canada’s emissions reductions target for 2030.

And finally, a regulatory proposal relating to the most publicized issue for 2019: carbon pricing.  Next Steps in Implementing the Federal Pollution Pricing System for Large Industry (the “Output Based Pricing System”)  was released on December 20, and carries  a deadline for public comments of February 15, 2019. The Output Based Pricing System registration system went live on November 1, 2018, with reporting and verification requirements starting on January 1, 2019.

The coming battles over Carbon tax in 2019:   As Prime Minister Justin Trudeau announced in late October 2018,  the federal government has not backed down on its determination to impose a carbon pricing policy across all Canadian jurisdictions in 2019, despite resistance and constitutional challenges led by the premiers of Saskatchewan and Ontario.  In some provinces – British Columbia , Alberta , Quebec  – established carbon pricing systems continue; in Nova Scotia , Prince Edward Island , Newfoundland and Labrador –  newly approved systems which meet the government’s benchmarks under the Pan-Canadian Framework will begin.   In the other provinces who have opposed the federal plan – Manitoba , Saskatchewan , New Brunswick and Ontario  –  the federal backstop fuel charge will be imposed starting in April 2019, sweetened by a “Climate Action Incentive”,  whereby all carbon revenue collected by the federal government will go directly back to people in the provinces from which it was generated.  The Annex of the Second Annual Synthesis Report of the Pan-Canadian Framework  provides up to date summaries for the situation in each province.

Public opinion supports the government’s carbon tax actions, though barely, according to polling made public by Global News on January 3 . Based on a November 9 internal poll conducted for the Liberal party, 46 per cent supported and 44 per cent opposed the plan  in Saskatchewan and Manitoba ; in Ontario, 43 per cent were in support and 32 per cent opposed. Nationally, support was at 47 per cent and opposition was at 29 per cent, with women more supportive than men.

Recently, one article appeared in the labour press, supporting carbon pricing:  “Pricing carbon first step to tackling climate change” in CUPE’s Economy at Work newsletter (Jan. 2).  The mainstream press has been far more active, with general support for a carbon tax: for example,  an editorial in  the Globe and Mail newspaper is titled: “ Do you want a carbon tax, or do you want to be lied to? “(Dec. 26) . The editorial is critical of the Ontario government’s Ontario Carbon Trust proposal, about which it states:  “One emerging conservative alternative to carbon pricing is working with business to spur the development of green technology. What that usually means is taxpayers giving subsidies to business.… “Ontario’s Progressive Conservatives ….say they will dish out $400-million on a “Carbon Trust” that will collaborate with industry on emissions cuts. They can rail against carbon pricing all they want; spending taxpayer money has the same effect on pocketbooks as asking consumers to pay more.”

The Canadian Chamber of Commerce was also widely cited as supporting a carbon tax, to the extent that they issued a press release on December 17 2018, clarifying their position:  “While some of the [media] coverage notes the Chamber’s support for carbon pricing, it neglects to include that the support is contingent upon significant caveats. The report calls for government to take concrete steps to reduce the overall regulatory burden on businesses in Canada, and to return the revenues from the carbon tax to business to help them lower their carbon emissions and their energy costs.”  The report referred to, outlining the full arguments, is   A Competitive Transition: How smarter climate policy can help Canada lead the way to a low carbon economy, which was published in December 2018.

Take it to the Courts!  Saskatchewan filed its challenge to the constitutionality of the federal price on carbon pollution in April 2018; the Saskatchewan Court of Appeal announced that it will hear the case in February 13 and 14, 2019, and released the lengthly list of intervenors which it has allowed to appear.  Intervenors include the provinces  of Ontario and New Brunswick on the side of Saskatchewan, and the province of British Columbia on the side of the federal government; other intervenors include the Canadian Public Health AssociationEcoJustice, representing the David Suzuki Foundation and the Athabasca Chipewyan First Nation; and the Council of Canadians , as part of a  group of seven other civil society groups, including the National Farmers Union and  Climate Justice Saskatoon.

A separate case  was filed by the Government of Ontario and will be heard by the Ontario Court of Appeal in April 2019.  The full list of intervenors, as well as the court filings by the Ontario government, appear at the Court of Appeal website here . British Columbia and New Brunswick have also applied for intervenor status in this case.

How will the courts decide?   “Courts should not have to decide climate change policy” appeared on December 21  in Policy Options,  with a discussion of the carbon pricing cases as well as the recent litigation by Quebec’s ENvironnement JEUnesse . Co-authors Nathalie Chalifour and Jason Maclean  argue that “only a collaborative  approach to policy-making is capable of delivering the kinds of rapid, forward-looking and systemic changes in how industries and societies function that are necessary to avoid the most catastrophic consequences of climate change. Litigation, by contrast, is necessarily reactive and typically divisive, time-consuming and influenced by the incremental development of legal precedent.”  Regarding the provincial carbon tax challenges, they state that “the federal Greenhouse Gas Pollution Pricing Act is an example par excellence of cooperative federalism.”…. “There’s little doubt that the courts will confirm the federal government’s jurisdictional authority to regulate GHG emissions. They may even decide that the Constitution obliges the government to take more serious climate action.”

A complex road is ahead, as indicated by a C.D. Howe Institute Memo published in October 2018:   “Federal carbon-pricing backstop is new constitutional territory”.

 

Updating the political battle of carbon pricing in Canada

Justin TrudeauOn October 23,  Prime Minister Justin Trudeau announced that the federal government will hold its resolve to impose a carbon pricing policy across all Canadian jurisdictions in 2019 – see the press release, “Government of Canada Putting a price on pollution”   (Oct. 23).  Key to the plan: the Climate Action Incentive, whereby all carbon revenue will go directly back to people in the provinces from which it was generated.  David Roberts of Vox hits the nail on the head with  “Canadian Prime Minister Justin Trudeau is betting his reelection on a carbon tax” (Oct. 24) , stating,  “It’s a thoughtful plan, remarkably simple, transparent, and economically sound for something cooked up in a politically fraught context. If it’s put into place (and stays in place), it would vault Canada to the head of the international pack on climate policy.”

Reaction from the Canadian mainstream media: From the Globe and Mail, an Editorial:  “For the Liberals, a spoonful of sugar helps the carbon tax go down” ;  “Arguments against the carbon tax boil down to a desire to do nothing” (Oct. 24)   by Campbell Clark ; “Carbon tax vs. climate change will be an epic contest” by John Ibbitson  and “Trudeau’s carbon tax rebate is smart – but complicated”  by Chris Ragan of the Ecofiscal Commission . From Andrew Coyne in the National Post: “Liberals’ carbon tax plan has its faults — but who has a better option?”  and from Chris Hall of the CBC, “How the Liberals hope to escape the ‘Green Shift’ curse in 2019”  (Oct.23)  .

The National Observer provides some detail to the complex calculations of the backstop rebates of the Climate Action Incentive, but the detail is at the government’s webpage, Pricing Pollution: How it will work  which provides links to individual explainers for each province and territory.

Other Responses: Rabble.ca Elizabeth May of the Green Party of Canada ;  Canadians for Clean Prosperity ;  and the Smart Prosperity Institute , which also provides a compilation of reaction and reports .

There seems to be general agreement that it is politics, not economics, which will determine support for the carbon plan.  Ontario Premier Doug Ford has been making the rounds with other Conservative politicians in Canada to coordinate their messaging and opposition to the federal carbon tax – culminating in the introduction of Bill No. 132—The Management and Reduction of Greenhouse Gases Amendment Act , 2018 in Saskatchewan on October 30, and on October 31, passage of Ontario’s Bill 4, The Cap and Trade Cancellation Act.  The National Observer describes the events of October 31 and summarizes the recent  political dance in “Doug Ford and Andrew Scheer play fast and loose with facts about carbon tax”  . Other press coverage: from the CBC:   “‘The worst tax ever’: Doug Ford and Jason Kenney hold campaign-style rally against carbon levy”  on Oct. 5 ;   “Doug Ford attacks ‘terrible tax’ on carbon alongside Saskatchewan Premier Scott Moe” on Oct. 29; and  “Doug Ford meets Andrew Scheer as carbon tax war heats up”  on October 30, describing their meeting in Toronto.  The gist of their arguments:  the carbon tax is a money-grab which will “drive up the price of heating your home”, with Doug Ford stating “It’s just another Trudeau Liberal tax grab. It’s a job-killing, family-hurting tax. ”  After the rebate details were announced on October 23, Ford has added that the promised rebates are “a complete scam”, “trying to buy Canadians with their own money.”   But as iPolitics reported on October 26, “Ford gets his facts wrong while bashing federal carbon tax”  and  “Ford doubles down on falsehoods about federal carbon tax”  .  iPolitics cites the independent analysis of the carbon tax’s impact by  Ontario’s Financial Accountability Officer, Ontario financial office cap and tradewhich supports the federal government’s numbers, and differs from Premier Ford’s public statements.  Meanwhile, the Ontario government promises to release their climate plan in November,  according to the Toronto Star   (Oct. 29), and Andrew Scheer also promises a climate plan “in 183 days”.

Research and opinion support a carbon tax for Canada

Carbon taxes continue to be a hot topic in Canada for many reasons, including the October Intergovernmental Panel on Climate Change report , the Nobel Prize in Economics  to William Nordhaus, and the report from Ontario’s Financial Accountability Officer on October 16, which estimates that the cancelling the province’s cap and trade program will drive the provincial deficit up by $3 billion, ($841 million in the first fiscal year alone).  And as provinces rebel against the federal carbon pricing plans, the January 1 2019 deadline approaches, by which the federal government will impose its “backstop” carbon pricing on any province without it own equivalent carbon pricing regime in place.

In response to these developments, there are many responses.  Recent articles emphasize William Nordhaus’ work: for example, “Nordhaus Nobel Recognizes What We’ve Long Known: Carbon pricing works” by Scott Vaughan at the IISD ;  “Nobel award recognizes how economic forces can fight climate change” in The Conversation Canada (Oct. 9); “Hurricanes, hog manure and the dire need for carbon pricing” in The Conversation Canada (Oct. 14);  and “Opinion: To avoid catastrophic climate change we need carbon pricing” from the Ecofiscal Commission , one of Canada’s strongest proponents of carbon pricing.  From the horse’s mouth: “After Nobel in Economics, William Nordhaus Talks About Who’s Getting His Pollution-Tax Ideas Right”  (New York Times, Oct. 13),  in which William Nordhaus is interviewed by Coral Davenport and states:  “…. I think the model is British Columbia. .. It would have the right economic effects but politically not be so toxic. … British Columbia is not only well designed but has been politically successful.”

CARBON DIVIDENDS:  The issue of political acceptability of carbon taxes generated an academic discussion  in “Overcoming public resistance to carbon taxes” by Carattini  , Carvalho and  Fankhauser  in  WiRES Climate Change  in June 2018.  In Canada, a change in vocabulary in taking hold. “Carbon Dividends could save carbon pricing – and create a new national climate consensus”  say Mark Cameron (from Canadians for Clean Prosperity) and David McLaughlin (from the International Institute of Sustainable Development) in the Globe and Mail .   The commissioned studies released by   Canadians for Clean Prosperity in September showed  that most  households, regardless of income level, would receive more money in the form of carbon dividend cheques than they would pay in carbon taxes under the backstop plan.  They have produced estimates for Alberta, Manitoba, Saskatchewan, Ontario, and New Brunswick, and maintain an online petition at a website called  Canadians for Carbon Dividends  .

rocky road tableIn  “The Rocky Road to Canada-wide Carbon Pricing,”  released by the C.D. Howe Institute on October 17,  author Tracy Snoddon from Wilfred Laurier University offers recommendations on how the revenues should be distributed after January 1, 2019, when the minimum carbon price backstop comes into force.  The author estimates carbon revenues of $ 2.8 billion in 2019 if the backstop was implemented in Ontario, Saskatchewan, New Brunswick, Newfoundland and Prince Edward Island. She recommends that the federal government should impose the backstop price and return the revenues as an equal per-capita rebate to residents- with the justification that such an approach minimizes intrusion in provincial fiscal matters, reinforces the environmental goals  rather than revenue generation, and is most progressive in its  distributional impacts.  A summary appears in the C.D. Howe press release  and in  “C.D. Howe Institute throws its weight behind federal carbon tax” in the Globe and Mail (Oct. 19).

put a price on itFinally, a new organization launched in October. Put A Price On It Canada promotes carbon pricing as a solution to climate change – and asks “why does Canada need another group fighting for carbon pricing?”  The difference: it aspires to be a national network to empower students on university campuses – currently at Simon Fraser University, the University of Ottawa, University of Waterloo, and Carleton University.

So in response to the  National Observer Opinion piece on October 18, asking  “Is it time to torch the carbon tax debate?” , the answer seems to be a strong “no”.