Professor Cherie Metcalf, climate policy and constitutional law expert, shares her insights on the recent decision by the Supreme Court of Canada (SCC) to uphold the national carbon tax. Set out below, she explains the implications and challenges of the ruling for the federal and provincial/territorial governments in the global fight against climate change.  

In the Fall of 2020, a number of provinces challenged the constitutionality of the federal Greenhouse Gas Pollution Pricing Act (GGPPA) at the Supreme Court. Last week the Court provided its response. In upholding the federal scheme under the rarely used “Peace, Order and Good Government” (POGG) power, the Supreme Court majority changed the landscape for both Canadian climate law and federalism.

The GGPPA is a centrepiece of Canada’s efforts to reach its Paris Agreement goal of reducing GHG emissions by 30 per cent relative to 2005 levels by 2030. While Canada has participated in the international climate regime since its inception under the United Nations Framework Convention on Climate Change in 1992, it has regularly failed to meet its emission reduction targets. 

The SCC’s decision to uphold the GGPPA provides clear constitutional authority for the federal government to create an effective national GHG pricing scheme, while still leaving space for flexibility and cooperation with the provinces. As the SCC recognized, this pricing is seen as critical to achieving emissions reductions. Requiring consumers, industry, and governments to take into account the full cost of their emissions will help create incentives for moving toward less GHG-intensive choices. However, while many have welcomed the decision, it is unlikely to be the last word on climate policy in Canada. 

As the SCC recognized, one of the major challenges of climate change is that the impact of emissions is shared nationally (and internationally), but mitigation costs are borne by each province individually. This can undermine effective collective action, as provinces can naturally prioritize their own costs and benefits over risks that spill over beyond their borders. The federal GGPPA imposed a national minimum price as a backstop to prevent provinces from opting out or doing too little and potentially overwhelming emissions reductions in other regions. Facts aligned with this possibility, along with the Court’s appreciation of the severity of climate risks supported the majority’s decision to uphold the Act. However, another key element of its constitutionality was the substantial flexibility for provinces to design their own equivalent schemes. This feature mitigated the danger that the use of federal POGG jurisdiction would too severely undercut provincial jurisdiction – an issue that concerned all members of the Court.  

The constitutionality of the GGPPA enables Canada to use a national minimum GHG price as part of an effective GHG mitigation strategy. This will likely help promote coordinated action on climate change between Canada and other jurisdictions, like the U.S. It will make it easier for Canada to both implement and resist carbon tax “border adjustments” that seem likely to become a feature of trade as ambitious climate change measures are adopted internationally. Certainty around pricing GHG emissions is also seen as important for creating incentives to invest in the development of less GHG-intensive alternatives at scale, reducing the cost of the shift to a low carbon economy. The SCC’s decision provides federal authority to advance all these goals through the Act.

However, the effects of the GGPPA itself will depend on how it is implemented. While planned increases in the price to $170/ton by 2030 have been announced, the Act includes substantial discretion for the federal executive to adjust the price. If political or economic factors intervene, the price increases may not match those needed to achieve Canada’s emission targets. Uncertainty also surrounds what will be considered an equivalent provincial pricing scheme. Over time, reversals or uncertainty around the minimum price commitment could undercut advantages of the national scheme. 

There are also many dimensions of climate change mitigation and adaptation beyond the GGPPA’s pricing mechanism. The federal authority recognized in the SCC decision was a rare nod to the federal POGG power to regulate national concerns, but one that was confined quite narrowly. Despite fears and arguments to the contrary, the SCC did not recognize a general authority for the federal government to regulate climate change, GHG emissions, or even minimum national GHG emissions standards. The matter upheld as valid was limited to minimum national standards of price stringency for GHG emissions. While the decision is bound to encourage creative thinking about what other “minimum national standards of … stringency” might be analogous, the decision did not substantially rebalance Canadian federalism. This means that as Canada confronts policy challenges from the risks of climate change and structural adjustments to a lower carbon economy, federal / provincial cooperation will still be needed.   

Professor Cherie Metcalf specializes in law and economics, international environmental and resource law, public law, and constitutional law. She is the recipient of an Insight Grant from the Social Sciences and Humanities Research Council of Canada for her project on “Institutions for Effective Climate Change Action” and a grant from the Canadian Foundation for Legal Research for her project on “Climate Change and Canada’s Constitution.”