Canadian Supreme Court Rules Canada Can Tax Carbon Emissions

By McKenzie Carpenter Monday, March 29, 2021

The issue of carbon emissions is discussed quite heavily as companies, organizations, and governments around the world look for alternative energy sources and ways to reduce overall carbon dioxide (CO2) emissions to help the environment. Last week the Canadian Supreme court upheld a ruling that stated the Canadian government’s plan to tax carbon emissions was legal.

Globe next to a gavel with a world map behind.

Trudeau’s Carbon Tax Plan

In 2018, Canadian Prime Minister Justin Trudeau announced a new nationwide carbon tax plan, the Greenhouse Gas Pricing Act, to meet Canada’s carbon emission targets under the Paris Climate Treaty. As a result, polluters would be charged a fee for dumping CO2 emissions into the air. The new tax plan was met with some resistance from Canadian provinces like Ontario, Saskatchewan, Manitoba, and New Brunswick.

A couple of years later, in December 2020, Prime Minister Trudeau revealed the Canadian federal government would be raising the carbon emissions tax in provinces that did not already create their own emissions reduction plans. The prices were set to increase from $30 CAD (roughly $24 USD) per ton of CO2 released to $170 CAD (about $142 USD) per ton by 2030. The tax hike was met by more backlash from several provinces. As part of the tax plan, funding would be dedicated to supporting projects and technologies that strive to reduce CO2 emissions.

Supreme Court Ruling

The backlash of tax hikes from a few provinces led the provinces of Alberta, Ontario, and Saskatchewan to challenge the legality of the Greenhouse Gas Pricing Act, citing its unconstitutionality, ultimately leaving the decision up to the Canadian Supreme Court.

Last week, the Canadian Supreme Court upheld the Greenhouse Gas Pricing Act’s legality in a 6-3 vote, stating Parliament had a right to enact the Act, “as a matter of national concern under the peace, order, and good government.” Under this new ruling, Parliament will now be able to ensure each province and territory set up its own CO2 emissions reduction plan.

Chief Justice Richard Wagner added in the ruling, “Climate change is real. It is caused by greenhouse gas emissions resulting from human activities, and it poses a grave threat to humanity’s future.”

Although the Supreme Court affirmed Parliament’s CO2 emissions tax plan, it is not stopping some Canadian Conservatives from appealing the decision. Eric O’Toole, Canadian Conservative Party leader, said, “Canada’s Conservatives will repeal Justin Trudeau’s Carbon Tax. We will protect the environment and fight the reality of climate change, but we won't do it by making the poorest pay more.”

Despite provinces criticizing the ruling, TechCrunch reported some Canadian startup companies like Kanin Energy, Quaise, Eavor, and Planetary Hydrogen might actually benefit from the CO2 tax as they are businesses who work toward sustainability and alternative energy sources, possibly resulting in more funding for their missions.

Carbon Emissions Taxes Around the World

Other countries around the world are also protesting and criticizing carbon emission taxes and gas and diesel price increases.

In 2018, the “yellow vest” drivers’ protests in France were a result of President Emmanuel Macron announcing a new gas tax as part of the country’s mission to decrease its reliance on fossil fuels. Australia similarly faced extreme criticism and repeal from the Conservative Party for a $23 AUD (about $18 USD) per ton carbon tax, which resulted in a much lower tax. Furthermore, 10 states in the United States (US) already have CO2 emissions tax plans.

About the Author

Headshot of McKenzie Carpenter

McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.

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