The Supreme Court has ruled in favour of the carbon tax — here's what might happen next

Despite legal challenges from Alberta, Saskatchewan and Ontario, the Supreme Court of Canada upheld the federal carbon tax in a 6-3 decision on Thursday.

Federal minister discusses next steps on the latest episode of CBC's West of Centre podcast

Environment Minister Jonathan Wilkinson told CBC's West of Centre podcast that now that the carbon tax has been ruled as constitutional by the Supreme Court, next steps would involve exceeding targets stated under the Paris agreement while creating jobs. (Adrian Wyld/The Canadian Press)

Despite legal challenges from Alberta, Saskatchewan and Ontario, the Supreme Court of Canada upheld the federal carbon tax in a 6-3 decision on Thursday.

Alberta, along with Saskatchewan and Ontario, had argued the carbon tax represented an unconstitutional intrusion on the rights of provinces, and Alberta Premier Jason Kenney said the province would consult with Albertans on the path forward.

"We will continue to fight to defend our exclusive provincial power to regulate our resource industries," Kenney said during a press conference held Thursday.

But the ruling means the tax is now constitutional, and Ottawa will be able to ensure provinces and territories enact nationwide pricing standards on carbon.

So the question that arises is: What might come next?

Environment Minister Jonathan Wilkinson told CBC's Kathleen Petty that now that jurisdictional issues have been settled, the next step is to implement the Liberal government's updated climate change plan announced in December 2020.

"Moving forward, [we will] ensure that Canada will be able to not only meet, but exceed its obligations under the Paris agreement," he said on the latest episode of the West of Centre podcast.

"But also [ensure] that we're building an economy that's going to create jobs and economic opportunity for all regions of the country."

  • Listen to this week's full episode of West of Centre here:

Paris targets

As part of the climate change plan released in December, the federal government said it would hike the carbon tax to $170 a tonne by 2030 in a bid to significantly reduce greenhouse gas emissions.

The measures included in the plan put forward a pathway to slightly exceed the current Paris agreement target, Wilkinson said, adding that a new target is coming.

"We knew that we needed to do more in terms of level of ambition. The current targets under Paris are not sufficient to keep the rise in global average temperature to a range where the effects are not going to be catastrophic," he said.

Wilkinson said a new target will be brought forward by the time of the U.S.-convened climate summit in April.

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Wilkinson acknowledged that Alberta and the federal government has disagreements surrounding climate plans, but said Ottawa was working to ensure it "created regional strategies" that will create economic opportunities.

"I mean, you know, Premier Kenney can say what he likes. But if you actually talk to the energy industry and you talk to the majors in Calgary, most of them have net zero by 2050 targets," he said. "Most of them have ambitious targets to 2030.

"They all have developed thoughtful climate plans and they all are engaging with the federal government to ensure that we're working together to do that."

The fights to come

Andrew Leach, an associate professor in the Alberta School of Business at the University of Alberta, told West of Centre that though the ruling simply kept the carbon price in effect, it was just the end of one five-year fight.

"It's been something that has been really since Prime Minister Trudeau announced his pan-Canadian framework on carbon pricing plan, started with [former Saskatchewan premier] Brad Wall and moved to the other provinces," Leach said.

"This is the end of that fight, if not the start of some others."

When it came to new carbon targets, Leach said there is a view that the federal government has a "secret agenda" to try to shift its way into "discriminatory regulations against the oilsands."

"You contrast that against, remember, that the previous government had what they called a 'sector-by-sector' regulatory approach, where they were setting individual regulations for individual sectors," he said.

"Which, you know, you read that in the context of the dissenting opinions yesterday, [it's a] far greater reach into provincial jurisdiction and management of energy than is ever on the table with federal carbon pricing regulation."

Certainty in long-term planning

David Yager, a Calgary oil service executive, writer and author, told West of Centre that in many ways, there was certainty in the ruling which could bring relief.

"In many ways, the big oil producers have been ahead of regional governments from time to time in realizing that the climate ship has sailed, this is what people want," Yager said. "They would like regulatory certainty on their pricing.

"Then they can go back into their boardrooms, or back into their departments of finance, run the numbers and say, 'Look, can I make money here or not?'"

A dump truck works near the Syncrude oil sands extraction facility near the town of Fort McMurray, Alberta in 2014. (Jason Franson/Canadian Press)

Yager said there were a number of "black swan" events on the horizon that could cause massive disruptions in the oil industry, like the future of Enbridge Line 5 pipeline.

"There's multi-levels of certainty, and I think that, as for a voice in the industry, there's no such thing anymore," he said. "It's really every person for themselves."

New lines of argument

Kelly Cryderman, who covers politics for the Globe and Mail, told West of Centre that Kenney's comments on Ottawa "elites" favouring places like Quebec were very interesting given his approach to the province in the past.

"Up until now, he has counted Quebec as an ally. Of course, Quebec, I think, had intervener status in the Supreme Court case, and is definitely not in favour of more federal reach into areas that it sees as provincial jurisdiction," Cryderman said.

Cryderman noted that Quebec is in an interesting position because its climate plan has a stamp of approval from Ottawa.

"So, now, it looks like the new line of argument that Jason Kenney is opening up has to do with something that [former B.C. Liberal premier Christy] Clark brought up in 2016," she said.

"That's the issue of whether there is fairness between the provinces in terms of carbon pricing."

Former B.C. premier Christy Clark expressed concern in 2016 that her province would have a higher price on carbon than provinces like Ontario and Quebec. (Canadian Press)

Cryderman said Clark's arguments now seem to be rehashed by Kenney and may suggest new lines of argument.

"He is saying that he acknowledged that the Supreme Court ruling is final, but seemed to suggest that a new line of legal argument could be about pricing inequality between the provinces, and whether Ottawa is accepting policies in one province that are not equal to policies in another," she said.

"I think it's an interesting argument. I think it's fraught, on a lot of levels, that it opens Alberta up to being in an adversarial stance with provinces that it wants to count as allies on a lot of other fronts."

However, Cryderman said that argument also seems to go against Kenney's argument that each province is individual and best positioned to design its own carbon strategy.

"But, I have a feeling that we're going to hear more on that," she said.

  • Listen to the complete West of Centre podcast series right here.

With files from CBC's West of Centre podcast and The Canadian Press