National Carbon Pricing in Canada
Fenner L. Stewart 1 and Scott A. Carrière 2
Introduction
The need for decarbonization mechanisms in Canada, like the Greenhouse Gas Pollution Pricing Act (GGPPA),3 is unquestionable. On October 8, 2018, the United Nation’s Intergovernmental Panel on Climate Change released an urgent plea, warning that the world had less than twelve years to radically alter its consumption of carbon-intensive fuels or suffer catastrophic consequences.4 Sound science, reading more like science fiction, backs this warning.5
This chapter provides an overview of GGPPA and its enforcement mechanisms. Part II sketches out the rationale for greenhouse gas (GHG) pricing. Part III locates GGPPA on the GHG governance landscape. Part IV outlines how GGPPA works. Part V considers GGPPA’s enforcement mechanisms. Part VI is the conclusion.
A Rationale for Greenhouse Gas Pricing
Arthur Pigou first articulated the rationale for imposing price as a corrective measure for air pollution.6 In The Economics of Welfare, he explores the theory of cost externalization (i.e. when the total cost of a product’s production and consumption are not reflected fully in its price). He explains the idea in the following example:
One person, A, in the course of rendering some service, for which payment is made, to a second person, R, incidentally also disservices to others (not producers of like services), of such a sort that payment cannot be exacted from the benefited parties or compensation enforced on behalf of the injured parties.7
As Pigou’s example highlights, the central problem of such an externalization arises when a third party is forced to pay for some or all of the excluded cost.
Another example provides additional clarity. Tupou is a company that manufactures and sells widgets. A production technology exists for making widgets that prevent the contamination of groundwater, but it is expensive. Tupou elects not to use it. As a result, Tupou manufactures its products at a lower cost compared to some of its competitors.
Tupou manufactures high-quality widgets at low cost due to its inexpensive production process. Moreover, it passes this reduced cost on to its customers, helping to ensure their loyalty. This strategy has led Tupou to achieve strong annual profits for years. Many people find good value in their widgets.
However, not everyone is happy with this arrangement. Scientists have established that the effluent from Tupou’s factory is poisoning the groundwater. Plants, animals, and people living close to the factory are increasingly sick. Farmers’ crops are failing, and their animals are dying. Strange forms of cancer are on the rise. People who try to sell their property and leave the community find that their property value has decreased sharply—if they can sell it at all.8
In a world without tort law and government intervention, neither Tupou nor its customers will pay for these costs. Tupou’s choice not to adopt the technology has benefited many, but only at the expense of others. From the Pigouvian perspective, the cost of polluting has been externalized upon those who have been made worse off.9
In The Problem of Social Cost, Ronald Coase both refutes and refines Pigou’s theory by shifting focus from preventing externalities to optimizing harm reduction. He asserts:
The problem which we face in dealing with actions which have harmful effects is not simply one of restraining those responsible for them. What has to be decided is whether the gain from preventing the harm is greater than the loss which would be suffered elsewhere as a result of stopping the action which produces the harm.10
Coase uses the example of when one farmer’s cattle stray into another farmer’s field and destroy crops to illustrate his point:
In the case of the cattle and the crops, it is true that there would be no crop damage without the cattle. It is equally true that there would be no crop damage without the crops . . . If we are to discuss the problem in terms of causation, both parties cause the damage. If we are to attain an optimum allocation of resources, it is therefore desirable that both parties should take the harmful effect (the nuisance) into account in deciding on their course of action. It is one of the beauties of a smoothly operating pricing system that, as has already been explained, the fall in the value of production due to the harmful effect would be a cost for both parties.11
What Coase is alluding to in the last sentence is his theorem (which employs a form of market modelling), whose calculus identifies the optimal outcome of such hypotheticals.12 Gareth Bryant provides succinct elaboration:
Coase’s framework universalises responsibility for fixing environmental problems to all parties—polluters and non-polluters alike . . . impacts that are viewed as external to the market are to be internalised by expanding the sphere of market until everything is covered by property rights, enrolling all actors into the market solution. Popularised as the “Coase theorem,” the argument is that given clearly defined property rights and no transaction costs, trade between private actors will produce an efficient allocation of resources and maximize the total value of production.13
Applying the Coase theorem to the example of the two farmers requires working out the ideal combination of transactions involving cattle, crops, and compensation to achieve the optimal economic outcome. One must assume “a smoothly operating pricing system” exists (i.e. limited regulation other than contract and property law, zero transaction costs, full information, and rational actors).14
Today, Coase’s work helps to establish a fundamental and common understanding between most economists, which supports the agreement that GHG pricing is an essential regulatory device amongst the suite of policy options.15 Accordingly, prominent environmental economists have advanced the calculus of costs and benefits, working out market solutions to climate change.16 For instance, William Nordhaus takes two variables into consideration: one is the costs and benefits of adopting the mitigation measures that maximize the reduction of climate change damage regardless of the total cost, and the other is the costs and benefits of doing nothing and letting climate change take its course.17 He then explains how balancing these endpoints achieves a midground, which optimizes the social cost of carbon.18 William Nordhaus, and others, see GHG pricing mechanisms as a tool for helping steer policy toward such results.19
Others question the marketization of climate change, pointing to how the “dominant narratives in existing research do not sit well with the practical experience of marketized climate policy.” 20 Today, the need for climate policy action is acute as the world’s response to climate change continues to fall well short of the Paris Agreement’s targets for 2040.21 This shortfall is alarming since the Secretariat of the United Nations Framework Convention on Climate Change freely admits that the “plan to meet the 2°C target” of the Paris Agreement will only “offer a 50:50 chance of avoiding the worst effects of climate change.” 22
Locating the Greenhouse Gas Pollution Pricing Act on the Greenhouse Gas Governance Landscape
GHG governance is not limited to government action.23 Canadian governments at both the national and subnational levels operate within a more layered, or “multi-scalar, regulatory environment.” 24 The decentering of regulation has led governments to share their rule-making authority and, more importantly, their responsibility for doing so with both industry (e.g. self-regulation) and civil society (e.g. corporate social responsibility mechanisms).25 As a result, these non-state actors are not only rule-takers in a narrowly conceived economic sense, but also private rule-makers (e.g. banks as controllers of lending practices and non-governmental organizations as certifiers of corporate responsibility).26 Conversely, governments are becoming rule-takers (e.g. through participatory and collaborative mechanisms for decision-making).27 The resulting regulatory intricacy is easy to underestimate, hinting at some of the potential opportunities and challenges that multi-scalar governance presents today.28
The GGPPA also exists within a broad policy portfolio with other GHG emission reduction tools. Such tools take three basic forms at the state level: (1) command and control instruments, (2) market-based instruments, and (3) financial instruments.29 Command and control instruments usually take one of two types. The first type mandates technology-based standards (i.e. dictating equipment or processes to be adopted, such as the rate of electric car adoption or the use of carbon-capture mechanisms). The second mandates a performance-based standard (i.e. dictating the emission ends but not the means, such as an emissions ceiling for a new power station).30 Although the GGPPA possesses penalties for non-compliance,31 it more closely resembles market-based regulation.
Market-based instruments can also be subcategorized. Such instruments create a price for emitting through either a levy on emissions (i.e. setting a regulatory charge per unit of emission) or an emissions market (i.e. producing a supply of, and demand for, allowances or permits for emissions that can be traded between emitters).32
Finally, financial instruments can be a fiscal measure (i.e. using the processes of collecting and spending government revenue to incentivize lower emissions, such as tax credits or subsidies), a price-support mechanism (i.e. creating advantages for the purchase of low-emission goods or services, such as minimum price guarantees for, or mandated use of, available renewable energy), or an investment incentive (i.e. granting funds for or low-cost financing to the research, development, and/or marketing of lower emission products).33 Like other governments,34 Canada does not rely on employing only one option; it adopts a mix of command and control, market-based, and financial instruments.35
Of these potential forms of state action, economists largely agree that market-based strategies are superior.36 In particular, they tend to favour trading markets, since they reward those who can reduce emissions at the lowest cost, which in turn can optimize the cost of reducing GHG emissions.37 That said, these market-based strategies are not without detractors. Some environmentalists challenge the suggestion that the climate change crisis can be framed as a “market failure” whose optimal solution is a price on GHG emissions.38 They caution that this framing results in—whether intentional or not—a narrowing of “political pathways,” 39 which limits the potential for more meaningful “climate justice.” 40 Both the Kyoto Protocol and the Paris Agreement sided with the former, endorsing market-based strategies as the central means to reducing GHG emissions.41 Following this lead, Canada has made the GGPPA a “core element” of its emissions reduction strategy.42
Greenhouse Gas Pricing in Canada
The GGPPA sets a floor for GHG pricing throughout Canada,43 called the benchmark.44 On October 23, 2018, Prime Minister Justin Trudeau issued a press release confirming that starting in 2019, the benchmark would be $20 per tonne of emissions (CO2 equivalence), which will increase $10 each year to $50 per tonne in 2022.45
The GGPPA’s operation is detailed in two parts. Part 1 provides for a fuel charge levied formally on distributors, importers, and producers,46 but in practice, these costs are expected to be passed on to consumers, either fully or partially. Part 2 sets out a regime for industrial facilities with emissions above a specified per tonne threshold.
If a province fails to meet the benchmark, the federal government will impose it through an enforcement mechanism called the backstop.47 The backstop is triggered when a province becomes listed.48 A “listed province” is defined as “a province or area listed in Part 1 of Schedule 1.” 49 When a province fails to meet the benchmark, the Governor in Council (i.e. the federal cabinet) lists the province, making it subject to the application of the GGPPA.50
As of 2021, Ontario, Manitoba, Saskatchewan, Yukon, and Nunavut are listed with respect to both Parts 1 and 2 of GGPPA; Alberta is listed under Part 1; and Prince Edward Island is listed for Part 2.51 The GGPPA was not initially applied to Alberta due to its Climate Leadership Act,52 legislation substantially similar to the federal backstop; however, the province became listed after its legislation was repealed in 2019.53 Alberta later introduced the Technology Innovation and Emissions Reduction Implementation Act,54 which was accepted as an equivalent for the purposes of GGPPA Part 2,55 but has not moved to (re)introduce an equivalent fuel charge or similar instrument. Prince Edward Island adopted its own Climate Leadership Act in 2019, which included a fuel levy but not a regime for large emitters;56 the province has elected to rely on the backstop for the latter rather than craft its own policy.57
Enforcement of Greenhouse Gas Pricing in Canada
GHG pricing does not create an absolute prohibition, and the penalty for consumption is price. The benchmark will increase the price for emitting GHGs over time.58 In this way, GGPPA allows Canadians and firms to transition to a low-carbon lifestyle by offering financial incentives for making low-carbon choices (e.g. buying an electric car or smart energy technologies).59
In theory, when the cost of emitting is high enough, market actors will avoid emitting by decreasing emissions-producing activities or seeking efficiencies.60 This shift will create demand for less emissions-intensive inputs into production and consumer goods, which in turn will create opportunities for profit.61 Entrepreneurs will attempt to seize these opportunities, which will incentivize innovation.62 Accordingly, they will invest in new technologies that provide both enhanced energy efficiency and alternative energy sources because it is profitable to do so.63 Thus, the GGPPA leverages markets to drive decarbonization through price signals, optimizing polluter compliance and decarbonization innovation.64
From a different vantage point on enforcement, the GGPPA would never be imposed upon provinces in an ideal world. The federal government would set the benchmark, and all provinces would comply. To do so, each province would tailor a flexible, decentralized pricing mechanism, which would be calibrated for its local economic circumstances.65 Thus, the federal government would set the benchmark, and tailored provincial regulation would enforce it. The architecture of GHG pricing would be politically negotiated, allowing for broad diversity at the subnational level—a model of cooperative federalism.66 An uncontested GGPPA has the capacity to accomplish this end.
The GGPPA is generous to provinces with smaller economies. It acknowledges that creating, implementing, and enforcing regulation is not costless. Each province has the discretion to be added voluntarily to the register of listed provinces, allowing the federal government to administer GHG pricing on its behalf.67 In this way, such a province could avoid the administrative costs associated with a GHG pricing mechanism, while still receiving the benefit of the “net amount” of revenue, if it exists.68 For instance, Prince Edward Island has adopted this approach in part, deciding to administer its own fuel charge, while teaming up with the federal government to administer GGPPA’s regime for industrial emitters.69
However, Canadian federalism is not as cooperative as it would be in an ideal world, and the GGPPA acknowledges this fact, granting the federal government enough power so that it does not have to negotiate GHG pricing with provinces.70 The federal government can seize total jurisdiction over the entire field of regulation, removing the listed province from exercising any discretion over the matter.71 After a province is listed, the federal government will impose the GGPPA in the jurisdiction of the listed province, and retain the discretion to grant, or not, any of the net amount of revenues to a province directly.72 It enjoys the privilege of spending said revenues in the province as it sees fit, funding the climate change or revenue recycling initiatives that it prefers, removing the province completely from the GHG pricing initiative.73
Concluding Thoughts
Canada adopted the GGPPA as a national response to the global call to reduce GHG emissions. This pricing mechanism allows GHG emitters to adjust their economic choices, increasing incentives to decarbonize over time.
If a province or territory refuses to cooperate, the GGPPA utilizes some of the tremendous authority that the Constitution bestows on Parliament. This assertion of authority triggered a constitutional challenge. Constitutional analysis suggested GHG pricing can be valid under the criminal law power, but the drafters of GGPPA elected a different route, testing the boundaries of the federal government’s residual power.
The Supreme Court of Canada had to decide whether to approve the GGPPA in its current form (which introduces unknowns for the future balance of federalism) or deem the GGPPA invalid in whole or in part. The court elected the former. It is foreseeable that all provinces will eventually appreciate that cooperating with the federal government’s administration of the benchmark is the best option (i.e. if the primary goal is to maximize jurisdictional autonomy).74
Whatever form the GGPPA eventually settles into, the basic policy mechanism will not change. The federal government will use the benchmark to set the standard for pricing, and the provinces will pursue plans that account for their unique economies and geographies within its rubric. When the dust settles, a coordinated network of subnational regulatory laboratories for GHG pricing will emerge. Each will be customized in its means; all will be coordinated in their ends. In this way, the GGPPA allows for tremendous freedom and discretion to achieve a targeted result; the only thing a province or territory cannot do is fail to meet the benchmark. In fact, the backstop’s form is of little matter so long as each subnational jurisdiction customizes its own pricing mechanism and assumes that benchmark compliance is always the best option.
Notes
1 Associate Professor at the University of Calgary, Faculty of Law.
2 Articling Student at Osler, Hoskin & Harcourt LLP in Calgary.
3 Greenhouse Gas Pollution Pricing Act, SC 2018, c 12, s 186 [GGPPA].
4 United Nations Intergovernmental Panel on Climate Change, “Summary for Policymakers of IPCC Special Report on Global Warming of 1.5°C approved by governments” (8 October 2018), online: <www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments/>.
5 See e.g., Solomon Hsiang et al, “Estimating Economic Damage from Climate Change in the United States” (2017) 356:6345 Science 1362.
6 Stefan Speck, “The Design of Carbon and Broad-Based Energy Taxes in European Countries” (2008) 10 VJEL 31 at 36.
7 Arthur Cecil Pigou, The Economics of Welfare, 4th ed (London: Macmillan, 1932) at 183.
8 For those who believe such a scenario is farfetched, consider the alleged facts of residences from Parkersburg, West Virginia. See e.g., Nathaniel Rich, “The Lawyer Who Became DuPont’s Worst Nightmare”, New York Times (6 January 2016), online: <www.nytimes.com/2016/01/10/magazine/the-lawyer-who-became-duponts-worst-nightmare.html>; Roy Shapira & Luigi Zingales, “Is Pollution Value-Maximizing? The DuPont Case” (2017) National Bureau of Economic Research Working Paper No 23866, online (pdf): <www.nber.org/papers/w23866.pdf>.
9 Pigou, supra note 7 at 183.
10 RH Coase, “The Problem of Social Cost” (1960) 3 JL & Econ 1 at 27.
11 Ibid at 13.
12 Ibid at 6–8.
13 Gareth Bryant, Carbon Markets in a Climate-Changing Capitalism (Cambridge, UK: Cambridge University Press, 2019) at 22.
14 Economists have struggled to find theoretical solutions to similar problems before Coase, which have become axioms of his theorem. See e.g., Jonathan Law, ed, A Dictionary of Law, 8th ed (Oxford: Oxford University Press, 2015): “Kaldor-Hicks efficiency . . . A Pareto efficiency arises when at least one person is made better off and no one is made worse off. In practice, however, it is extremely difficult to make any change without making at least one person worse off. Under the Kaldor-Hicks efficiency test, an outcome is efficient if those who are made better off could in theory compensate those who are made worse off and so produce a Pareto efficient outcome.” For origins of the theory, see JR Hicks, “The Foundations of Welfare Economics” (1939) 49:196 Economic J 696; Nicholas Kaldor, “Welfare Propositions in Economics and Interpersonal Comparisons of Utility” (1939) 49:195 Economic J 549.
15 Bryant, supra note 13. “The external conception of nature views nature as external from society, often as ‘pristine, God-given, autonomous’ . . . Smith, along with Harvey, links the externalisation of nature with projects aimed at the ‘subjugation’ or ‘domination’ of nature. This is also evident in the Pigouvian faith that society can perfect its use of nature (i.e., carbon pollution) with appropriate market-based solutions. The universal conception of nature, in contrast, views society as nature, and therefore, governed by natural laws. Coase’s notion of the reciprocity of costs is presented in a similarly universal manner, where the efficiency of markets becomes a ubiquitous natural law. The political implications of the universal conception of nature is not its subjugation or domination, but rather submission to nature (i.e., the market), because ‘capitalism is natural; to fight it is to fight human nature’. Coasian market solutions universalise responsibility for climate change by implicating all actors in the pursuit of economic optimality” at 23–24. See e.g., Andrea Baranzini et al, “Carbon Pricing in Climate Policy: Seven Reasons, Complementary Instruments, and Political Economy Considerations” (2017) 8 WIREs Climate Change 1 at 4–5; Ross McKitrick, “A Practical Guide to the Economics of Carbon Pricing” (2016) 9:28 SPP Research Papers at 5; and Canada’s Ecofiscal Commission, Bridging the Gap: Real Options for Meeting Canada’s 2030 GHG Target (Montreal, QC: McGill University, 2019), online (pdf): <ecofiscal.ca/wp-content/uploads/2019/11/Ecofiscal-Commission-Bridging-the-Gap-November-27-2019-FINAL.pdf>. “Several factors will offset the effects of gradually rising carbon prices, including behavioural change, technological change, and rebates that will rise over time alongside the carbon price. Our modelling finds that a carbon price that rises from $30 per tonne in 2020 to $210 per tonne in 2030 can meet Canada’s Paris target. This translates into a 3.8 cents per year average annual increase in the price of gas. This gradual increase gives businesses and households time to respond and prepare, which helps reduce the overall costs of the policy” at 18.
16 See e.g., William D Nordhaus, A Question of Balance: Weighing the Options on Global Warming Policies (New Haven, CT: Yale University Press, 2008) at 1–29 [Nordhaus, A Question of Balance]. “In practice, an economic analysis of climate change weighs the costs of slowing climate change against the damages of more rapid climate change. On the side of the costs of slowing climate change, countries must consider whether, and by how much, to reduce their GHG emissions. Reducing GHGs, particularly if the reductions are to be deep, will primarily require taking costly steps to reduce CO2 emissions. Some steps involve reducing the use of fossil fuels; others involve using different production techniques or alternative fuels and energy sources. Societies have considerable experience in employing different approaches to changing energy production and use patterns. Economic history and analysis indicate that it will be most effective to use the market mechanism, primarily higher prices on carbon fuels, to give signals and provide incentives for consumers and firms to change their energy use and reduce their carbon emissions. In the longer run, higher carbon prices will provide incentives for firms to develop new technologies to ease the transition to a low carbon future” at 5. See also William D Nordhaus, “Revisiting the Social Cost of Carbon” (2017) 114:7 PNAS 1518 [Nordhaus, “Revisiting the Social Cost of Carbon”].
17 For a plain language understanding of his thought, see William D Nordhaus, “Climate Change: The Ultimate Challenge for Economics” (Nobel Prize Lecture in Economic Sciences delivered at the Aula Magna, Stockholm University, 8 December 2018), online: <www.nobelprize.org/prizes/economic-sciences/2018/nordhaus/lecture/>.
18 Ibid.
19 Nordhaus, A Question of Balance, supra note 17 at 148.
20 Bryant, supra note 13 at 2.
21 International Energy Agency, World Energy Outlook (Paris: OECD/IEA, 2017) at 327 [World Energy Outlook 2017]. See also Paris Agreement, being an Annex to the Report of the Conference of the Parties on Its Twenty-first Session, Held in Parties from 30 November to 13 December 2015—Addendum Part Two: Action Taken by the Conference of the Parties at Its Twenty-first Session, 12 December 2015, UN Doc FCCC/CP/2015/10/Add.1, 55 ILM 740 (entered into force 4 November 2016) [Paris Agreement].
22 Clive L Spash, “This Changes Nothing: The Paris Agreement to Ignore Reality” (2016) 13:6 Globalizations 928 at 929.
23 Michael P Vandenbergh & Jonathan M Gilligan, “Forks in the Road,” 31 Duke Envtl L & Pol’y F [forthcoming in 2020]. Noting the layers of GHG governance in the US context to include “public policymakers (e.g., international, federal, state, and local government officials) and private policymakers (e.g., managers of philanthropies, corporations, civic and cultural groups, colleges and universities, and advocacy groups)” at 2. For a broader commentary on the shift from government to governance, see David Levi-Faur, “From ‘Big Government’ to ‘Big Governance’?” in David Levi-Faur, ed, The Oxford Handbook of Governance (Oxford: Oxford University Press, 2012) 3 at 8; and RAW Rhodes, “Waves of Governance” in David Levi-Faur, ed, The Oxford Handbook of Governance (Oxford: Oxford University Press, 2012) 33. “Governance signifies a change in the meaning of government, referring to new processes of governing; or changed conditions of ordered rule; or new methods by which society is governed” at 33.
24 Cristie Ford, Innovation and the State: Finance, Regulation, and Justice (Cambridge, UK: Cambridge University Press, 2017) at 3.
25 Rhodes, supra note 23 at 35; ibid “Many aspects of modern societies are far too complex, diverse, and dynamic to be regulated in a centralized, command-and-control fashion” at 19 and “The subtlety of [such governance’s] crucial distinction from neoconservative strategies could be all too easy to ignore, in favor of a superficial and ultimately false consensus around decentralization, self-regulation, and knocking down rigid pre-existing regulatory apparatuses” at 128. Fenner L Stewart, “Dominium and the Empire of Laws” (2019) 36 Windsor YB Access Just 36 at 43 [Stewart, “Dominium”]: “This regulatory architecture provides a prime example of how [civil society movements have] supported the shift from government to governance and, in doing so, [have] also reconstituted today’s understanding of public-private governance (that is, how ‘states, markets, civil society groups, and individuals interact’), challenging long-held notions about the essential elements of law” at 44–45; Fenner L Stewart & Anthony Cioni, “Holistic Security Risk Management Strategies for E&Ps: Optimizing Performance by Reducing Surface Risk” (2018) 11 J World Energy L & Bus 49: “[T]he combinations of market mechanisms and corporate social responsibility architectures are gaining traction, representing some of the best examples of intelligent institutional design today. And yet the mapping of such governance reveals there is much work to be done, considering the ‘multitude of overlapping and sometimes inconsistent’ combinations of ‘network-design’ in the global ether” at 71.
26 Stewart, “Dominium”, supra note 25: “[The shift away from government] also marks a collective acknowledgement in policy circles that government—in particular, the welfare state—failed to be effective, leading to the conclusion that governments needed help from civil society and regulated actors (for example, business). Put differently, modern society was not going to run smoothly if government acted as the parent and regulated actors acted as the semi-cooperative children. From this perspective, the goal of dismantling the welfare state was not to create a deregulated free-for-all but, rather, to trigger a period of regulatory experimentalism, where new regulatory tools (for example, the CSR’s non-state regulatory tools) could be introduced and then calibrated to improve or replace antiquated governance processes” at 41–42.
27 Ibid.
28 Rhodes, supra note 23: “The intrinsic rationality of markets, the path dependency of institutions, and the state’s new toolkit for managing both the mix of governing structures and networks do not explain patterns of governance and how they change
. . . Governance arises out of the diverse actions and practices inspired by varied beliefs and traditions. It is the contingent product of diverse actions and political struggles informed by the beliefs of agents rooted in traditions” at 44.
29 Paul Haynes & Yongfu Huang, “Policies and Measures for Mitigating Climate Change” in Terry Barker & Douglas Crawford-Brown, eds, Decarbonising the World’s Economy: Assessing the Feasibility of Policies to Reduce Greenhouse Gas Emissions (London: Imperial College Press, 2015) 29 at 33–43.
30 Ibid at 33–35.
31 GGPPA, supra note 3, ss 133–40.
32 Haynes & Huang, supra note 29 at 36–38.
33 Haynes & Huang, supra note 29 at 39–42.
34 Carolyn Fischer, Louis Preonas, & Richard G Newell, “Environmental and Technology Policy Options in the Electricity Sector: Are We Deploying Too Many?” (2017) 4:4 J Assoc Environmental & Resource Economists 959: “concerns about global warming, local air quality, and energy security have led to a plethora of actual and proposed initiatives aiming to reduce emissions from the power sector, promote electricity generation from renewable sources, and encourage energy conservation. Examples include portfolio standards and market share mandates, such as those requiring production shares for renewable or ‘clean’ energy sources; subsidies and tax relief for renewable sources like wind power and solar, geothermal, and biomass generation; policies to price greenhouse gas (GHG) emissions through cap and trade or a carbon tax; and performance standards, such as maximum emission rates per kilowatt-hour (kWh) of electricity and energy efficiency standards for household appliances. Those policies frequently coexist within the same jurisdiction, yet little attention has been paid to whether they work together or at cross purposes” at 959–960.
35 See e.g., Environment and Climate Change Canada, Final Report of the Expert Panel on Sustainable Finance: Mobilizing Finance for Sustainable Growth (Gatineau, QC: Environment and Climate Change Canada, 2019) [Final Report on Sustainable Finance]; and Environment and Climate Change Canada, Pan-Canadian Framework on Clean Growth and Climate Change: Canada’s Plan to Address Climate Change and Grow the Economy (Gatineau, QC: Environment and Climate Change Canada, 2016) [Pan-Canadian Framework].
36 See e.g., Baranzini et al, supra note 15 at 4–5; and Nordhaus, “Revisiting the Social Cost of Carbon”, supra note 16.
37 Bryant, supra note 13 at 9: “Carbon markets are preferred over carbon taxation because different actors have different marginal abatement costs. In this context, the ability to trade is said to offer the most efficient way to find ‘least cost’ emission reductions” at 9; and Organisation for Economic Co-operation and Development, Effective Carbon Prices (Paris: OECD, 2013): “The challenge facing the world community in relation to climate change is so enormous that it is unlikely that it can be met unless countries apply policy instruments that are as cost-effective as possible” at 13.
38 Bryant, supra note 13 at 9.
39 Ibid at 146.
40 See e.g., Brandon B Derman, Struggles for Climate Justice: Uneven Geographies and the Politics of Connection (London: Palgrave Macmillan, 2020): “Understanding climate change and climate injustice in wider, systemic perspective—as a biogeochemical phenomenon tightly linked with the social relations and material practices of dispossession, privilege, and profit—enables linking them with a wide variety of already-meaningful objects of political force and opportunity. Successful articulation of this kind politicizes climate change, deepening and broadening self-identification by individuals and groups as ‘stakeholders’ in struggles for just and effective responses, and opening avenues for those struggles to unfold” at 185; and Paul Chatterton, David Featherstone, & Paul Routledge, “Articulating Climate Justice in Copenhagen: Antagonism, the Commons, and Solidarity” (2013) 45:3 Antipode 602: “Briefly defined, climate justice refers to principles of democratic accountability and participation, ecological sustainability and social justice and their combined ability to provide solutions to climate change. Such a notion focuses on the interrelationships between, and addresses the roots causes of, the social injustice, ecological destruction and economic domination perpetrated by the underlying logics of pro‐growth capitalism. In particular, climate justice articulates a rejection of capitalist solutions to climate change (e.g. carbon markets) and foregrounds the uneven and persistent patterns of eco‐imperialism and ‘ecological debt’ as a result of the historical legacy of uneven use of fossil fuels and exploitation of raw materials, offshoring, and export of waste” at 606.
41 Kyoto Protocol to the United Nations Framework Convention on Climate Change, 10 December 1997, 37 ILM 22 (1998), 2303 UNTS 148, UN Doc FCCC/CP/1997/7/Add.1 (entered into force 16 February 1997); and Paris Agreement, supra note 21.
42 Final Report on Sustainable Finance, supra note 35; and Pan-Canadian Framework, supra note 35.
43 Office of the Prime Minister of Canada, “Prime Minister Justin Trudeau Delivers a Speech on Pricing Carbon Pollution” (3 October 2016), online: <pm.gc.ca/eng/news/2016/10/03/prime-minister-trudeau-delivers-speech-pricing-carbon-pollution>.
44 Pan-Canadian Framework, supra note 35 at 49.
45 John Paul Tasker, “Trudeau Promises Rebates as Ottawa Moves to Levy Carbon Tax on Provinces Outside the Climate Plan”, CBC News (23 October 2018), online: <www.cbc.ca/news/politics/tasker-carbon-tax-plan-trudeau-1.4874258>.
46 GGPPA, supra note 3, ss 17, 20, 21.
47 Pan-Canadian Framework, supra note 35 at 49.
48 GGPPA, supra note 3, ss 10, 16–17, 38, 40.
49 Ibid, s 3.
50 Ibid, ss 3, 166(2).
51 Ibid, schedule 1.
52 SA 2016, c C-16.9.
53 An Act to Repeal the Carbon Tax, SA 2019, c 1.
54 2019, SA 2019, c 16.
55 See Part 1 of the Greenhouse Gas Pollution Pricing Act Regulations (Alberta), SOR/2019-294.
56 RSPEI 1988, c C-9.1 [Climate Leadership Act].
57 See Government of Prince Edward Island, “Carbon Levy” (7 March 2019), online: <www.princeedwardisland.ca/en/information/finance/carbon-levy>.
58 GGPPA, supra note 3, preamble. See also Environment and Climate Change Canada, Technical Paper on the Federal Carbon Pricing Backstop (Gatineau, QC: Environment and Climate Change Canada, 2017) at 4, online (pdf): <www.canada.ca/content/dam/eccc/documents/pdf/20170518-2-en.pdf>; Pan-Canadian Framework, supra note 35 at 49; Government of Canada, “Supplemental Benchmark Guidance”, online: <www.canada.ca/en/services/environment/weather/climatechange/pan-canadian-framework/guidance-carbon-pollution-pricing-benchmark/supplemental-benchmark-guidance.html>.
59 GGPPA, supra note 3, preamble.
60 For projection as to how high carbon prices must be to affect change, see World Energy Outlook 2017, supra note 21 at 47–48.
61 Anita Rønne, “Smart Cities and Smart Regulation: Accelerating Innovative Renewable Technologies in Energy Systems to Mitigate Climate Change” in Donald Zillman et al, eds, Innovation in Energy Law and Technology: Dynamic Solutions for Energy Transitions (Oxford: Oxford University Press, 2018) at 55–8.
62 Ibid.
63 Consider the discussion of the connected demand for both energy efficiency and low-carbon fuels, World Energy Outlook 2017, supra note 21 at 309–329.
64 For more of the model and theories of modern environmental regulation, see Cary Coglianese & Jennifer Nash, “The Law of the Test: Performance-Based Regulation and Diesel Emissions Control” (2017) 34 Yale J Reg 33; Dayna Nadine Scott & Adrian A Smith, “Sacrifice Zones in the Green Energy Economy: Toward an Environmental Justice Framework” (2016) 62:3 McGill LJ 861; Steven Cohen, Understanding Environmental Policy (New York: Columbia University Press, 2014); Lori S Bennear & Cary Coglianese, “Flexible Approaches to Environmental Regulation” in Michael Kraft & Sheldon Kamieniecki, eds, The Oxford Handbook of U.S. Environmental Policy (Oxford: Oxford University Press, 2012); Neil Gunningham, Peter Grabosky, & Darren Sinclair, Smart Regulation: Designing Environmental Policy (Oxford: Oxford University Press, 1998); and Eric W Orts, “Reflexive Environmental Law” (1995) 89 Nw UL Rev 1227.
65 GGPPA, supra note 3, ss 17–35, 40, 48, 165.
66 See David Cameron & Richard Simeon, “Intergovernmental Relations in Canada: The Emergence of Collaborative Federalism” (2002) 32:2 Publius (The Journal of Federalism) 49.
67 GGPPA, supra note 3, s 3.
68 Ibid, s 165(2).
69 See Climate Leadership Act, supra note 56; and Government of Prince Edward Island, supra note 57.
70 GGPPA, supra note 3, ss 10, 16–17, 38, 40.
71 Some will be mindful of the occupants of the Supreme Court of Canada being reluctant to assume that the federal government intended to seize the entire field of jurisdiction overlap with a province, however, that this must be different as to whether or not the federal government can do so with clear intention, see Peter W Hogg, Constitutional Law of Canada, 5th ed (Toronto: Carswell, 2007) (loose-leaf updated 2013, release 1) at 16–15.
72 GGPPA, supra note 3, ss 17–35, 40, 48, 165. See also Pan-Canadian Framework, supra note 35 at 49.
73 Pan-Canadian Framework, supra note 35 at 49.
74 For more on rational choice theory, consider Gary S Becker, “Nobel Lecture: The Economic Way of Looking at Behavior” (1993) 101:3 J Political Economy 385.