The scene was almost reminiscent of the bad old days of Trudeau I and the National Energy Program. The federal government announces a minimum carbon price in the House of Commons while the provincial premiers are meeting elsewhere, prompting a very public walk-out by a dissident group, none of whose provinces have carbon reduction programs in place. In the resulting media scrum, threats of constitutional challenges to the federal climate change strategy ring out.

Feds Reclaim Authority Over GHG Emissions

The dissident provinces may be excused for their fixation on jurisdiction. It was the federal government, after all, that finally declared greenhouse gas emissions to be provincial and not federal area of constitutional authority, then lamenting the provincial “patchwork” of regulation which filled the vacuum.

But ironically, it is likely these very provincial programs, representing approximately 85% of Canada’s population, which will ensure that the federal climate change strategy ultimately succeeds.

Provincial Pricing Plans To Be Assessed

The federal government plan proposes to assess whether the four provinces (Alberta, Quebec, British Columbia, and Ontario) with carbon pricing policies have schemes deemed equivalent to the federal plan.

Questions will, no doubt, arise as to how to assess a cap-and-trade scheme (Ontario and Quebec) against the federal carbon tax. Both Ontario and Quebec have supported a federal carbon pricing equivalency strategy, and the harmonization goals of these provincial schemes with U.S. state programs will likely make them central to the federal strategy.

Similarly, the Alberta and B.C. direct carbon pricing models will, with some tinkering in Alberta, also avoid federal replacement. The recent announcement of the Pacific Northwest liquid natural gas plant and terminal likely solidifies the support of these two provinces for the federal plan. It is also noteworthy that the federal Canadian Environmental Assessment Act Decision Statement of September 27th, 2016 expressly adopts the BC Greenhouse Gas Emission Reporting Regulation for verification and reporting for the project. An equivalency approval can’t be far behind.

Deadline 2018 for Carbon “Floor Price”

The federal government has granted the remaining provinces two years to implement some variety of a carbon tax or cap-and-trade scheme which sets a minimum carbon price will start at $10 per tonne in 2018, and rise by $10 per year to $50 per tonne by 2022.

In the absence of provincial action, the federal government will seek to impose a carbon price on emitters in any defaulting province. While the familiar refrains over constitutionality will likely be repeated during this transitional period, negotiation and not litigation may well be the means by which all provinces achieve some form of carbon pricing compliance.

What is clear, and don’t believe the constitutional lawyers, is that the impetus for cross-country GHG reductions, including some form of carbon pricing, has finally returned to the federal fold.

Thanks to the contributions of Courtney Laidlaw.