Supreme Court of Canada Decides the Federal Greenhouse Gas Pollution Pricing Act is Constitutional

On March 25, 2021, the Supreme Court of Canada released its decision in the Greenhouse Gas Pollution Pricing Act (the "GGPPA" or the "Act") references, with the majority confirming that the federal carbon pricing backstop is constitutional. The Supreme Court heard oral submissions on September 22 and 23, 2020 after the majority of the Saskatchewan and Ontario Courts of Appeal concluded the GGPPA was constitutional, while the majority of the Alberta Court of Appeal concluded it was unconstitutional.The Reference was heard by a full nine-judge panel. Six of the judges concluded the Act is constitutional. Justice Wagner authored the majority decision. 

This is the first time since its 1997 decision in R. v. Hydro Quebec that the Supreme Court of Canada has updated its jurisprudence with respect to the “national concern” doctrine of the Constitution’s Peace Order and Good Government (“POGG”) power.

The majority of the SCC decided that the GGPPA sets minimum national standards of greenhouse gas (“GHG”) price stringency to reduce GHG emissions, and Parliament has jurisdiction to enact this law as a matter of national concern under the POGG clause of section 91 of the Constitution. The majority held that “the effects of climate change have been and will be particularly severe and devastating in Canada,” with the Canadian Arctic facing a disproportionately high risk. Justice Wagner noted that “no one province, territory or country can address the issue of climate change on its own. Addressing climate change requires collective national and international action. This is because the harmful effects of GHGs are, by their very nature, not confined by borders.”  

The majority defined the matter (what the Act does and why) of the Act precisely, concluding that the true subject matter of the GPPAA is “establishing minimum national standards of GHG price stringency to reduce GHG emissions.” The majority rejected broader characterizations of the Act advanced by the majorities of the Courts of Appeal of Ontario and Alberta and found that this matter, implemented by means of the backstop architecture in the Act, relate to a federal role in carbon pricing that is qualitatively different from matters of provincial concern. The GHG pricing under the Act seeks to change behaviour by internalizing the cost of climate change impacts.  This does not amount to the regulation of GHG emissions generally, and allows each province to enact its own (sufficiently stringent as determined by the Governor in Council) pricing mechanism. The majority held that the GGPPA is “tightly focussed” on the distinctly federal role. Further, the provinces are constitutionally incapable of establishing minimum national standards.