Sussex Strategy Group Press Release
The Alberta Court of Appeal has ruled in a 4-1 decision that the federal carbon pricing backstop is unconstitutional. The finding applies to both the system for large emitters known as the Output-Based Pricing System and the distributed fuel charge.
The federal government argued that the carbon tax falls within its mandate to address matters of national concern under the “peace, order and good government” clause of the constitution. The Alberta Court found, however, that implementation of the Greenhouse Gas Pollution Pricing Act will “forever alter the constitutional balance that exists between the heads of power allotted to Parliament and the provincial Legislatures in the federal Canadian state.”
Courts in Ontario and Saskatchewan came to the opposite conclusion in 2019, concluding that the Act is indeed constitutional. Both provinces have appealed the rulings to the Supreme Court, which will hear arguments in March. Today’s decision from Alberta will help inform that process, and almost certainly shakes the federal government’s confidence in a favourable outcome.
Despite the ruling, the federal carbon pricing system continues to apply in Alberta, Saskatchewan, Manitoba, Ontario, and New Brunswick. This ruling does not invalidate the current implementation. Large industrial emitters, homeowners and drivers who were under the system yesterday will remain under the system tomorrow. This is because the cases brought forward by the Governments of Alberta, Saskatchewan and Ontario were non-binding reference cases.
In Canadian law, a reference question or reference case (formally called abstract review) is a submission by the federal or a provincial government to the courts asking for an advisory opinion on a major legal issue. Typically, the question concerns the constitutionality of legislation. The rulings are non-binding.
The opinion given by the Supreme Court following the hearing in March will be similarly non-binding. Nevertheless, no government has ever ignored the opinion of the Supreme Court and left legislation deemed to be unconstitutional in place.
Today’s decision has been hailed as a victory by Alberta Premier Jason Kenney. Coming after two provincial rulings in favour of the Act, it has made the ultimate outcome more uncertain. The future of carbon pricing in Canada remains very difficult to predict.
For more information on the ruling, the process ahead and how your interests may be impacted, please contact your Sussex representative.