Canada’s Supreme Court upholds Trudeau govt’s pet ‘carbon tax’ law but opponents promise to fight ‘constitutional Trojan horse’

In a win for his ‘Green agenda’, Canada’s Supreme Court has ruled that Prime Minister Justin Trudeau’s polarizing 2018 tax on carbon emissions is constitutionally valid. But a vocal political opposition looks to fight on.

In its 6-3 split decision delivered on Thursday, Canada’s top court ruled that reducing greenhouse gas (GHG) emissions is a matter of “national concern.” 

The law allows Trudeau’s Liberal government to tax provinces for carbon emissions in excess of a nationally mandated minimum standard – and the verdict delivers a blow to a number of provincial governments who had been challenging it on the grounds that it potentially affords the federal government the power to dictate economic and industrial policy to them. 

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At issue was the Greenhouse Gas Pollution Pricing Act (2018), a national framework for pricing GHG emissions for both industry and consumers at the heart of Trudeau’s ‘Green agenda’ to achieve net-zero emissions by 2050. Its detractors claim it is a “constitutional Trojan Horse” since emission levels are tied to industrial and economic activities, which fall under provincial jurisdiction under Canada’s federal division of powers.

In his ruling Chief Justice Richard Wagner wrote that establishing minimum national standards to reduce GHG emissions is “of concern to Canada as a whole” and “critical to our response to an existential threat to human life” worldwide.

Two dissenting justices, Malcolm Rowe and Russell Brown, argued the law impinges on provincial rights and “rewrites the rules of Confederation.” In his dissenting opinion, Brown wrote the implications go “far beyond” the carbon tax law and open the door to “federal intrusion” into “all areas of provincial jurisdiction.” A third justice, Suzanne Côté, dissented partially, noting that the law gives Trudeau’s cabinet too much power.

The law sets minimum standards for pricing carbon with provinces allowed to establish their respective policies to implement it. However, provinces that fall short of the national standard or refuse to comply are hit with the ‘backstop’, a federal tax rated at C$30 per tonne of carbon dioxide released.

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Seven of the country’s 13 provinces and territories currently pay the ‘backstop’, which will rise to C$170 per tonne by 2030. By that year, Canada has committed to reducing GHG emissions by 30% below 2005 levels under the Paris Climate Change accords.

Ahead of the verdict, a study by the Fraser Institute, an independent Canadian public policy think-tank, found the carbon tax would result in the loss of 202,000 jobs and shrink the country’s GDP by 2.1 percent. The report stoked intense debate about the economic impact of the law, particularly in the fossil fuel-dependent provinces of Alberta and Saskatchewan.

The leaders of the provinces that challenged the carbon tax law – Saskatchewan, Ontario, Alberta and Manitoba – have publicly promised to continue their opposition to the tax. 

Saskatchewan Premier Scott Moe tweeted that the ruling “does not change” his province’s “core conviction” that the law is “bad environmental policy, bad economic policy, and simply wrong.”

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“While today’s decision does effectively end our legal avenues as a province, it does not end our opposition to this costly and ineffective tax,” Moe said later, adding that this was a “fight that needed to happen.”

Meanwhile, Manitoba Premier Brian Pallister said Thursday’s ruling will not stop his government from pursuing an ongoing, separate legal challenge of the tax. Both Manitoba and Ontario have proposed their own emission pricing schemes. 

The law also figures to be a factor politically with Erin O’Toole, leader of the Conservative party, promising to repeal Trudeau’s tax if elected to power in the 2023 federal election.

But prominent environmental groups said the verdict was a step in the right direction.

“Now Canadians can rest assured that all provinces will do their fair share to tackle the climate crisis, getting Canada on the path to meeting our Paris commitments and net-zero emissions by 2050,” said Joshua Ginsberg, of Ecojustice, an influential Canadian environment law charity. 

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