Supreme Court Of Canada Finds Federal Act On Greenhouse Gas Pricing Constitutional

• Published date: 05 April 2021
• Subject Matter: Environment, Government, Public Sector, Energy and Natural Resources, Energy Law, Environmental Law, Oil, Gas & Electricity, Constitutional & Administrative Law, Climate Change
• Law Firm: Lawson Lundell LLP
• Author: Ms Ricki-Lee Gerbrandt and 'zge Yazar

The key issue before the court was whether the Greenhouse Gas Pollution Pricing Act ("GGPPA") was constitutional. The majority decided that it was, because Parliament has jurisdiction to enact this law as a matter of national concern. As such, provinces may choose to amend or enact their own legislation to meet the minimum federal requirements regarding greenhouse gas emissions'or else they will be subject to the federal Act.

The Greenhouse Gas Pollution Pricing Act

The GGPPA, passed by Parliament in June 2018, consists of four parts:

• Part 1 establishes a fuel charge that applies to producers, distributors, and importers of various types of carbon-based fuel;
• Part 2 sets out a pricing mechanism for industrial greenhouse gas ("GHG") emissions by large emission-intensive industrial facilities;
• Part 3 authorizes the Governor in Council to make regulations providing for the application of provincial law concerning GHG emissions to federal works and undertakings, federal land and Indigenous land located in that province; and
• Part 4 requires the Minister of Environment to prepare an annual report on the administration of GGPPA and have it tabled in Parliament.

Carbon pricing, or GHG pricing, is a regulatory mechanism that puts a price on GHG emissions in order to incentivize individuals and businesses to change their behaviour so as to make more environmentally sustainable purchasing and consumption choices. Parts 1 and 2 of the GGPPA function together to price GHG emissions throughout the Canadian economy.

The GGPPA pricing mechanism does not automatically apply in all provinces and territories. A province or territory will only be subject to Part 1 or 2 of the GGPPA if the Governor in Council determines that a province's GHG pricing mechanism does not meet the minimum federal standards.

Reference Cases from Saskatchewan, Ontario and Alberta

Saskatchewan, Ontario and Alberta challenged the constitutionality of Parts 1 and 2 of the GGPPA by references to their respective Courts of Appeal, asking whether the GGPPA is unconstitutional in whole or in part. The majorities of the Courts of Appeal in Saskatchewan and Ontario found the legislation constitutional while the majority of the Alberta Court of Appeal found it unconstitutional. We have previously written about these Court of Appeal decisions on our blog here. All three decisions were appealed to the Supreme Court of Canada.

Appeal to the Supreme Court of Canada

The majority of the SCC concluded that the GGPPA is constitutional, and that Parliament has jurisdiction to enact this law as a matter of national concern under the peace, order, and good...