![]() ![]() The Court observed that, absent a federal pricing floor, any province’s failure to implement a sufficiently stringent pricing mechanism could undermine the efficacy of GHG pricing everywhere due to the risk of carbon “leakage,” i.e., that emissions reductions occurring in any given province would be offset, as emissions and business activity migrate to provinces implementing weaker programs. It also noted that GHG emissions, by their nature, pose specific coordination challenges among provinces. In reaching this conclusion, the Court held that reducing GHG emissions was a matter of national concern. ![]() The Opinion: In a 6-3 decision, the Supreme Court held that the GGPPA was constitutional, ruling that the establishment of a national GHG pricing floor was a necessary exercise of federal authority to address climate change. In split decisions, the courts of appeal for Saskatchewan and Ontario held that it was constitutional the court in Alberta held that it was not. Saskatchewan, Ontario and Alberta challenged the constitutionality of the GGPA. For those provinces that have not committed to pricing emissions, the government will return about 90 percent of the proceeds from the fuel charge to individuals in the form of a payment upon filing their tax returns the government expects the amount received to outweigh a household’s increased energy costs attributable to the price on emissions.Īlthough Ontario had previously established a cap-and-trade program linked with California and Québec, it abruptly withdrew from the cross-border market in 2018 when a new government was elected. Accordingly, all proceeds received under the federal system are returned to the province in which they are generated. A map published by the federal government shows how a patchwork of provincial programs has been knit together, along with the federal backstop, to achieve equivalency in pricing across Canada.Īccording to the federal government, the GGPPA is not about raising federal tax revenue. ![]() It also accommodates Québec’s decision to continue participating in a linked carbon market with California. Notably, the GGPPA allows those provinces that have already established their own pricing systems, such as British Columbia’s carbon tax, to continue implementing them, so long as they meet the federal benchmark. If a province’s program does not meet the carbon price benchmark, the federal backstop will supplement or “top-up” the provincial system. If a province fails to do so, the federal government will implement a “backstop,” consisting of a levy on fossil fuels and an output-based pricing system on industrial facilities. The Challenged Law: Under the GGPPA, Canada’s provinces must each elect to implement an explicit carbon price that rises to at least C$50 by 2022, or participate in a cap-and-trade program. In upholding the constitutionality of Canada’s federal pricing program, the decision is a strong affirmation of the need to impose a uniform price on carbon emissions across jurisdictions and has some significant “upshot” implications for businesses and policymakers in the United States. Several provinces challenged the law, arguing that it was unconstitutional and that it imposed unlawful taxes. Reference re Greenhouse Gas Pollution Pricing Act, case numbers 38663, 38781, and 39116. On March 25, 2021, the Supreme Court of Canada upheld the Greenhouse Gas Pollution Pricing Act (“GGPPA”), which establishes a national pricing benchmark for greenhouse gas (“GHG”) emissions. ![]()
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