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

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

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5. Constitutional Jurisdiction and the Environment

6. Fed Powers - Overview PowerParametersCarbon pricing tools% POGGSubjects that are (i) distinct & indivisible, and (ii) have limited impacts on prov jurisdiction - limit GHG emissions - emissions trading MMMM CriminalSubjects (i) with a valid ‘criminal’ purpose, and (ii) using a mainly ‘prohibitory’ approach - limit GHG emissions - emissions trading HMHM Trade & Commerce Address (i) inter-prov’l / internat’l trade, or (ii) general trade & commerce - emissions tradingM-H Treaty implement Power untested since 1937- limit GHG emissions - emissions trading ???? SpendingBroad power, as long as in good faith- incentives, spending - feds buy GHG credits HHHH 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)

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: 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

10. 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

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. 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’? Tax’n of nat. resources - royalties / taxes on fossil fuels H Spending Broad power, as long as in good faith- incentives, spending - buy GHG credits HHHH 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 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