Where there's smoke, there's strife
Constitutional row brewing over emission rules
by Andrew Green
This commentary was first published in the Financial Post on October 10, 2007.
Climate change is all over the news these days. It is blamed for ice disappearing up north, pine beetles attacking large tracts of Canada's forest and droughts and floods around the world. Various governments in Canada are trying to decide how they will respond to public concern over the issue.
But there may be other trouble ahead. Former Alberta Premier Peter Lougheed, for example, has said that federal environmental regulation of Alberta's oil industry could cause a constitutional confrontation that "will be 10 times greater" than past battles.
Consider emissions trading. A "cap-and-trade" emissions trading program typically involves setting a cap on total emissions of greenhouse gases, dividing this cap among emitters through permits to emit a particular level of greenhouse gases and allowing emitters to trade these permits if they wish. Depending on how it is designed, a cap-and-trade system could be efficient and effective. To work best, the system would have to include as many major emitters and jurisdictions as possible. Right now, there are some regional systems in North America but no national system.
Can we get a national system in Canada? The odds are stacked against it because of how our federal structure is designed. The federal government cannot put in place an emissions trading regime merely because it has committed to the Kyoto Protocol. Even if it signs on to an international agreement, it still must stay within the powers granted to it under the Canadian constitution.
The constitution, however, does not assign the power over the environment to either the federal or provincial governments. The courts have been willing to find fairly broad powers for the federal government to regulate environmental issues. regulation of toxic substances. They have, for example, held that the federal government has the power to regulate ocean dumping through its powers to make laws for the peace, order and good government of Canada.
However, these powers are not unlimited. A province or private body wanting to challenge a federal trading regime would argue that the regime infringes too much on provincial areas of responsibility such as non-renewable resources. There may be some justification to such an argument as a trading regime could have a significant impact on industries such as oil and gas. To the extent the regime does not affect these provincial areas, it seems unlikely to be effective.
If the federal government cannot act to set up an effective system, can provinces? Provinces have significant powers to regulate environmental issues as the constitution grants them jurisdiction over local matters and nonrenewable natural resources. A province could act alone to set up a trading program within its own borders. Such a system may reduce emissions and have other positive impacts such as spurring the development of technology. But the system may be weak if the province fears impacting the competitiveness to particular industries. It may also be ineffective if there is "leakage" -- where an industry moves to a jurisdiction without a trading system.
In order to dampen competitiveness or leakage concerns, the provinces would have to agree on a nation-wide system. Unfortunately, we have recently seen the difficulties the provinces have obtaining such an agreement, with division among premiers on the necessity for such a system.
A federal system should allow action by the level of government that can most effectively deal with an issue. The constitution, however, limits governments' ability to efficiently and effectively address climate change. Our best hope is that our politicians at all levels co-operate on solutions --not always their strong suit.
This article is one of a series dealing with some of the questions to be explored at an upcoming interdisciplinary conference on the need for an integrated climate policy for Canada, to be held Nov. 1-2, 2007.
