GHG Emission Trading and the Constitution

1. GHG Emission Trading and the Constitution Stewart Elgie University of Ottawa, Faculty of Law, and Chair, SustainableProsperity

2. 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

3. Emissions Trading

4. 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

5. Constitutional Jurisdiction and the Environment

6. Fed Powers - Overview * S. Elgie, “Kyoto, the Constitution and Carbon Trading”, 13:1 Review of Constitutional Studies 1 (2008)

7. 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)

8. 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

9. Criminal Power Test: • Valid criminal purpose (likely met) • 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

10. Trade & Commerce • Combine with Criminal power (for trading) Two branches: • Interprov’l / internat’l trade • General trade & commerce • Key: “problem cannot be effectively regulated unless it is regulated nationally” • Good chance of success

11. 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

12. Provincial Powers

13. 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

14. 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