GHG Emission Trading
and the Constitution
Stewart Elgie
University of Ottawa, Faculty of Law, and
Chair, Sustainable Prosperity
Overview of Presentation
• Main mechanisms to put a price on carbon
– Emission trading / payments (this talk)
– Taxes and other fees (next talk)
• Federal powers
• Provincial powers
• Upshot
Emissions Trading
CheatNeutral
What is Cheat Offsetting?
When you cheat on your partner you add to the heartbreak,
pain and jealousy in the atmosphere.
Cheatneutral offsets your cheating by funding someone else
to be faithful and NOT cheat. This neutralises the pain and
unhappy emotion and leaves you with a clear conscience.
Can I offset all my cheating?
First you should look at ways of reducing your cheating.
Once you've done this you can use Cheatneutral to offset
the remaining, unavoidable cheating
Constitutional Jurisdiction and
the Environment
Fed Powers - Overview
Power
Parameters
Carbon pricing tools %
POGG
Subjects that are (i) distinct & indivisible, and - limit GHG emissions
(ii) have limited impacts on prov jurisdiction
- emissions trading
M
M
Criminal
Subjects (i) with a valid ‘criminal’ purpose,
and (ii) using a mainly ‘prohibitory’ approach
- limit GHG emissions
- emissions trading
H
M
Trade &
Commerce
Address (i) inter-prov’l / internat’l trade, or
(ii) general trade & commerce
- emissions trading
M-H
Treaty
implement
Power untested since 1937
- limit GHG emissions
- emissions trading
?
?
Spending
Broad power, as long as in good faith
- incentives, spending
- feds buy GHG credits
H
H
Tax
[Next talk]
- carbon tax or ‘levy’
?
Other types of climate measures feds likely could take:
Federal lands & property, transport, aviation, shipping, fuels, fed. regulated industries, agriculture
(shared), sign treaties, nuclear power, hydro dams
* S. Elgie, “Kyoto, the Constitution and Carbon Trading”, 13:1 Review of Constitutional Studies 1 (2008)
Evolving Judicial Approaches
• Courts have fleshed out const-env powers
over past 30 years, balancing:
– Need for national standards, and
– Protecting provincial jurisdiction
• Two main approaches to constrain fed power
– Limit breadth of subjects addressed (POGG)
– Limit depth of tools used (Criminal)
POGG
Residual power
‘National Concern’ test:
•
•
•
Distinct and indivisible (likely met)
‘Provincial inability’ (likely met)
Scale of impact on prov’l jurisdiction (?)
 Issue: Does test allow greater prov’l impacts
to address inherently far-reaching problems?
•
Scope: Could include emission trading, but
can’t reach too far into industrial practices
Criminal Power
Test:
1) Valid criminal purpose (likely met)
2) Prohibitory approach (?)
– OK to have some regulatory elements
– Controls on GHG emissions likely OK
– Is emission trading too ‘regulatory’?
 This is current federal approach - risky
Trade & Commerce
•
Combine with Criminal power (for trading)
Two branches:
1) Interprov’l / internat’l trade
2) General trade & commerce
 Key: “problem cannot be effectively
regulated unless it is regulated nationally”
•
Good chance of success
Treaty Implementing
• Power untested since 1937
• Strong arguments that power exists
– Const’n said feds can implement UK treaties
– Canada has weakest fed treaty powers
– Impairs international affairs
• Possible boundaries on power?
– treaties re: ‘internat’l’ matters, not ‘domestic’
– powers strictly limited o/s trad’l fed areas
If power exists, includes e-trading
Provincial Powers
Property &
civil rights
Regulate commercial or private
activities in the province
- limit GHG emissions
- emissions trading
M
L-M
Local
matters
Residual power to address matters of
provincial concern
- limit GHG emissions
- emissions trading
M
L-M
Tax
[Next talk]
- carbon tax or ‘levy’
?
- royalties / taxes on fossil
fuels
H
- incentives, spending
- buy GHG credits
H
H
Tax’n of nat.
resources
Spending
Broad power, as long as in good faith
Other types of climate measures provs likely could take:
Fossil fuel development & regulation, electricity production & regulation, provincial works
(roads, transit), building codes, provincial lands & property agriculture (shared), forestry,
planning and urban development
Provincial E-Trading Power
• Prov power to regulate GHG emissions
– show provincial purpose? (global impact)
– likely OK, but uncertain
• Prov power over extra-prov e-trading
– provs can’t regulate extra-prov activities
– show provincial purpose?
– very questionable
– might help if parallel, multi-prov approach
Summary
• Feds likely can regulate e-trading
– raises significant new const’l questions
• Provincial power more questionable
• Fed & prov trading systems
– 2 parallel systems likely ok – but why?
– coordinated systems could work
• e.g. provs implement, set tougher limits
• tough if feds use intensity targets
• Both levels can use spending and
incentives