2. Canada

2. Canada (1) Federal Floor Price on Carbon By far the most significant development in Canadian climate change law and policy in 2016 was the federal government’s announcement of its plan to impose a floor price on carbon. If implemented, the plan would establish a minimum carbon price throughout Canada’s provinces and territories. The plan, however, could also be the subject of a constitutional challenge. On 22 April, the federal government signed the Paris Agreement, which was then ratified on 5 October. In anticipation of ratification, the federal government announced a floor price on carbon of CDN $10 a ton by 2018 and CDN $50 a ton by 2022. The federal government explained that this price would be imposed within the provinces and territories that had not adopted their own carbon-pricing scheme. The federal government expressed no preference as to whether provincial and territorial carbon pricing schemes were based on cap and trade (which is in place in the provinces of Quebec and, by 1 January 2017, in Ontario) or a carbon tax (which is in place in the province of British Columbia). The federal government, however, would require that the scheme impose the requisite floor price on carbon by 2018. Few details of the plan have been made available, but the federal government maintains that floor pricing would be ‘revenue neutral’ for the federal government. In other words, revenue generated by the federal government would presumably be remitted to the province or territory such that it would not leave the jurisdiction. The federal government’s plan to impose a floor price on carbon is controversial and arguably raises new issues—or at least issues of novel application—regarding the division of powers between the federal government and the provinces in Canada’s federal system. The government of the province of Saskatchewan, which has carbon-intensive potash and oil industries, is opposed to the plan, as are all three territorial governments, which are in Canada’s far north and are arguably the jurisdictions most sensitive to increases in the cost of energy. The government of Alberta, where the bulk of Canada’s tar sands are located, is implementing a carbon levy and has expressed conditional support for the principle of a carbon floor, but will not support the federal plan until a pipeline to the ocean is built. (Pipelines are controversial in many parts of Canada, particularly where they deliver fossil fuels through a jurisdiction and are sometimes perceived to create a risk of environmental harm without corresponding economic benefit). Such controversies are typical of Canada’s federation. Other provinces have expressed concerns about the concept, and all provinces have a history of guarding areas of provincial jurisdiction against perceived encroachment from the federal government. As a result, there is a possibility that one or more provinces will eventually challenge the constitutionality of federal legislation that seeks to implement a floor price on carbon. (2) Syncrude Canada Ltd v Attorney General of Canada and Federal Jurisdiction to Legislate in Respect of Climate Change To survive a constitutional challenge like the one described above, federal legislation imposing a floor price on carbon would need to be found to fall within an area of federal jurisdiction under Canada’s 1867 Constitution Act. One such federal head of power is the criminal law power, which Canadian courts have held is characterized by the existence of a prohibition, a corresponding penalty, and a ‘public purpose.’ The ‘public purpose’ part of the test for whether a law is truly criminal law arose this year in one of the first pieces of climate change-related constitutional litigation in Canada: Syncrude Canada Ltd v Attorney General of Canada (2016 FCA 160). In this case, the Federal Court of Appeal upheld an impugned regulation under the Renewable Fuels Regulations (RFRs) (SOR/2010-189) that required 2 percent of diesel fuel to be renewable fuel. Syncrude Canada conceded that the reduction of greenhouse gasses (GHGs) was a proper objective of the federal government’s criminal law power but argued that the impugned provision of the RFR was not really aimed at the reduction of air pollution but, rather, at the creation of a local market or at non-renewable natural resources, which are areas of provincial jurisdiction (Syncrude, para. 20). Syncrude Canada argued that ‘the evidence of practical effects of the RFRs overwhelmingly contradict the suggestion that the dominant purpose of the RFRs is to reduce GHG emissions’ (para. 52). The Federal Court of Appeal rejected this argument and concluded that the RFR was a valid exercise of the federal government’s criminal law power. The court held that: [t]he evidence demonstrates that part of the objective of the RFRs was to encourage next-generation renewable fuels production and to create opportunities for farmers in renewable fuels. However, the evidence also demonstrates that a market demand and a market supply for renewable fuels and advanced renewable fuels technologies had to be created to achieve the overall goal of greater GHG emissions reduction. The criminal law power is not negated simply because Parliament hoped that the underlying sanction would encourage the consumption of renewable fuel and spur a demand for fuels that did not produce GHGs. All criminal law seeks to deter or modify behaviour, and it remains a valid use of the power if Parliament foresees behavioural responses, either in persons or in the economy. (at paras. 68–9) The Federal Court of Appeal reasoning in this case is consistent with a tendency to recognize concurrent jurisdiction over environmental matters to the extent that doing so will not upset the balance of Canadian federalism. © The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Yearbook of International Environmental Law Oxford University Press

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Oxford University Press
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© The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com
ISSN
0965-1721
eISSN
2045-0052
D.O.I.
10.1093/yiel/yvx036
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Abstract

(1) Federal Floor Price on Carbon By far the most significant development in Canadian climate change law and policy in 2016 was the federal government’s announcement of its plan to impose a floor price on carbon. If implemented, the plan would establish a minimum carbon price throughout Canada’s provinces and territories. The plan, however, could also be the subject of a constitutional challenge. On 22 April, the federal government signed the Paris Agreement, which was then ratified on 5 October. In anticipation of ratification, the federal government announced a floor price on carbon of CDN $10 a ton by 2018 and CDN $50 a ton by 2022. The federal government explained that this price would be imposed within the provinces and territories that had not adopted their own carbon-pricing scheme. The federal government expressed no preference as to whether provincial and territorial carbon pricing schemes were based on cap and trade (which is in place in the provinces of Quebec and, by 1 January 2017, in Ontario) or a carbon tax (which is in place in the province of British Columbia). The federal government, however, would require that the scheme impose the requisite floor price on carbon by 2018. Few details of the plan have been made available, but the federal government maintains that floor pricing would be ‘revenue neutral’ for the federal government. In other words, revenue generated by the federal government would presumably be remitted to the province or territory such that it would not leave the jurisdiction. The federal government’s plan to impose a floor price on carbon is controversial and arguably raises new issues—or at least issues of novel application—regarding the division of powers between the federal government and the provinces in Canada’s federal system. The government of the province of Saskatchewan, which has carbon-intensive potash and oil industries, is opposed to the plan, as are all three territorial governments, which are in Canada’s far north and are arguably the jurisdictions most sensitive to increases in the cost of energy. The government of Alberta, where the bulk of Canada’s tar sands are located, is implementing a carbon levy and has expressed conditional support for the principle of a carbon floor, but will not support the federal plan until a pipeline to the ocean is built. (Pipelines are controversial in many parts of Canada, particularly where they deliver fossil fuels through a jurisdiction and are sometimes perceived to create a risk of environmental harm without corresponding economic benefit). Such controversies are typical of Canada’s federation. Other provinces have expressed concerns about the concept, and all provinces have a history of guarding areas of provincial jurisdiction against perceived encroachment from the federal government. As a result, there is a possibility that one or more provinces will eventually challenge the constitutionality of federal legislation that seeks to implement a floor price on carbon. (2) Syncrude Canada Ltd v Attorney General of Canada and Federal Jurisdiction to Legislate in Respect of Climate Change To survive a constitutional challenge like the one described above, federal legislation imposing a floor price on carbon would need to be found to fall within an area of federal jurisdiction under Canada’s 1867 Constitution Act. One such federal head of power is the criminal law power, which Canadian courts have held is characterized by the existence of a prohibition, a corresponding penalty, and a ‘public purpose.’ The ‘public purpose’ part of the test for whether a law is truly criminal law arose this year in one of the first pieces of climate change-related constitutional litigation in Canada: Syncrude Canada Ltd v Attorney General of Canada (2016 FCA 160). In this case, the Federal Court of Appeal upheld an impugned regulation under the Renewable Fuels Regulations (RFRs) (SOR/2010-189) that required 2 percent of diesel fuel to be renewable fuel. Syncrude Canada conceded that the reduction of greenhouse gasses (GHGs) was a proper objective of the federal government’s criminal law power but argued that the impugned provision of the RFR was not really aimed at the reduction of air pollution but, rather, at the creation of a local market or at non-renewable natural resources, which are areas of provincial jurisdiction (Syncrude, para. 20). Syncrude Canada argued that ‘the evidence of practical effects of the RFRs overwhelmingly contradict the suggestion that the dominant purpose of the RFRs is to reduce GHG emissions’ (para. 52). The Federal Court of Appeal rejected this argument and concluded that the RFR was a valid exercise of the federal government’s criminal law power. The court held that: [t]he evidence demonstrates that part of the objective of the RFRs was to encourage next-generation renewable fuels production and to create opportunities for farmers in renewable fuels. However, the evidence also demonstrates that a market demand and a market supply for renewable fuels and advanced renewable fuels technologies had to be created to achieve the overall goal of greater GHG emissions reduction. The criminal law power is not negated simply because Parliament hoped that the underlying sanction would encourage the consumption of renewable fuel and spur a demand for fuels that did not produce GHGs. All criminal law seeks to deter or modify behaviour, and it remains a valid use of the power if Parliament foresees behavioural responses, either in persons or in the economy. (at paras. 68–9) The Federal Court of Appeal reasoning in this case is consistent with a tendency to recognize concurrent jurisdiction over environmental matters to the extent that doing so will not upset the balance of Canadian federalism. © The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com

Journal

Yearbook of International Environmental LawOxford University Press

Published: Dec 28, 2017

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