The Supreme Court rules Canada’s carbon price is constitutional. It’s a big win for Justin Trudeau’s climate plan

OTTAWA—The Supreme Court of Canada ruled Thursday that the federal government has the power to impose a minimum carbon price across the country in the name of reducing greenhouse gas emissions “as a matter of national concern.”

The decision is a victory for Prime Minister Justin Trudeau and his Liberal government, who have staked the success of their climate plan on Ottawa’s authority to ensure there is a minimum carbon price in all provinces and territories.

In a split 6-3 decision, a majority of the nine judges on Canada’s top court upheld the federal Greenhouse Gas Pollution Pricing Act as constitutional in its entirety, dismissing legal challenges from the governments of Ontario, Alberta and Saskatchewan that argued the law interfered with provincial jurisdiction. The court sided with federal government lawyers who made the case that Ottawa has the authority to impose a minimum carbon price because reducing greenhouse gas emissions is a “national concern” under the Constitution’s “peace, order and good government” clause.

“Climate change is real. It is caused by greenhouse gas emissions resulting from human activities, and it poses a grave threat to humanity’s future,” reads the majority decision written by Chief Justice Richard Wagner.

The court found that provinces are also limited in their ability to combat the threat of climate change alone, and that Canada’s overall effort to reduce emissions would be jeopardized if any one province refused to take part in carbon pricing schemes with a minimum level of stringency.

In light of this, the court determined that potential interference in a province’s “preferred balance between economic and environmental considerations” is justified, because of the harms that would occur if Ottawa could not lead a national response to climate change.

“This irreversible harm would be felt across the country and would be borne disproportionately by vulnerable communities and regions in Canada,” Wagner wrote. “The impact on those interests justify the limited constitutional impact on provincial jurisdiction.”

Three justices on the top court disagreed with the majority decision, however. Justice Suzanne Côté agreed carbon pricing is a matter of “national concern,” but did not accept the federal law to impose a national minimum price is constitutional as written.

Justices Malcolm Rowe and Russell Brown disagreed completely with the majority ruling, concluding the carbon price law interferes with areas of exclusive provincial jurisdiction and therefore unconstitutional.

“It is not possible for a matter formerly under provincial jurisdiction to be transformed, when minimum standards are invoked, into a matter of national concern,” Brown wrote in his dissenting opinion.

To do so, Brown argued, “would be to accept a model of supervisory federalism” that opens “any area of provincial jurisdiction to unconstitutional federal intrusion.”

In a written statement, federal Environment Minister Jonathan Wilkinson called the decision “a win for the millions of Canadians who believe we must build a prosperous economy that fights climate change,” and questioned whether it would “put an end to the efforts of Conservative politicians fighting climate action in court.”

The federal NDP and environmental policy groups also hailed the ruling, with Clean Prosperity executive director Michael Bernstein calling on federal and provincial opponents of carbon pricing to reconsider their positions.

“Canada has the most ambitious economy-wide carbon pricing system in the world,” Bernstein said in a statement. “Today’s court decision leaves that system intact.”

The federal carbon price law was enacted in 2018 and created a requirement for provinces to either make their own carbon pricing schemes — through a tax or cap-and-trade system — that meet minimum standards set by Ottawa. Provinces that do not create such systems are subject to the federal “backstop” carbon price, which includes a “fuel charge” on gasoline and other fuels that is offset by rebates sent to households, and a separate pricing system for heavy industries like cement and steel production.

The federal minimum price is currently set at $30 per tonne of emissions, and the Liberal government intends to keep raising it until it hits $170 per tonne in 2030.

The policy has been the locus of a heated political battle, however, with federal Conservatives and like-minded provincial governments deriding the carbon price as a “job-killing tax on everything.” Conservative Leader Erin O’Toole has vowed to scrap the policy if he wins power, and has promised to unveil a credible plan to reduce emissions without it.

Ontario Premier Doug Ford’s government also fought against the policy, including by spending $30 million on misleading stickers for gasoline pumps that showed how the carbon price would increase the cost of fuel but did not mention the rebates.

The federal Parliamentary Budget Officer reported in 2019 that most households in provinces with the fuel charge would get back more than they paid because of the rebates.

Only the fuel charge portion of the federal carbon price applies in Ontario, after Ottawa deemed the Ford government’s pricing system for heavy emitters met the federal government’s minimum standards.

In a statement Thursday, Ontario Environment Minister Jeff Yurek did not address the province’s legal defeat but said “we will continue to do everything we can do to make life more affordable for families and businesses.”

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The Canadian Taxpayers Federation, a group that wants lower taxes, called the decision “disappointing” and vowed to continue fighting the carbon price in the public arena now that the Supreme Court has deemed it “legal.”

The Liberal government has defended the carbon price as an essential tool to reduce emissions and fulfill its promise to Canada’s current goal of reducing emissions to 30 per cent below 2005 levels by 2030, and to hit net-zero emissions by 2050.

It was the centrepiece of the government’s new $15-billion climate plan, which charts how Canada will overcome a persistent shortfall and exceed that target by reducing emissions to at least 31 per cent below 2005 levels by 2030.