The Greenhouse Gas Pollution Pricing Act (French: Loi sur la tarification de la pollution causée par les gaz à effet de serre) is a Canadian federal law establishing a set of minimum national standards for carbon pricing in Canada to meet emission reduction targets under the Paris Agreement. It was passed as Part 5 of the Budget Implementation Act, 2018, No. 1 – an omnibus budget bill – during the 42nd Parliament of Canada. The law came into force immediately upon receiving royal assent on June 21, 2018. On March 25, 2021, the Supreme Court of Canada rejected the 2019 appeal of the provinces of Alberta, Ontario, and Saskatchewan and ruled in Reference re Greenhouse Gas Pollution Pricing Act that the GHGPPA was constitutional. Commentators had varying reactions to who the ruling benefited most politically, with some stating that it represented a blow to the group of conservative premiers that made opposition to carbon pricing a central aspect of their policies. However, on March 14, 2025, Trudeau's successor as prime minister, Mark Carney, removed the consumer carbon tax implemented via the Act through a prime ministerial directive that was affirmed by an order-in-council signed by the Governor General.
Provisions The legislation aims to put a price on all greenhouse gases that play a significant role in trapping heat in the atmosphere through binding "minimum national standards" on the federal government and all of the provinces and territories of Canada. The standards on pricing are divided into two parts: a regulatory charge on carbon-based fuels and an output-based emissions trading system for polluting industries. The GHGPPA requires that all provincial and territorial governments establish a pollution pricing scheme that meets the national minimum price per tonne of carbon dioxide equivalent and established emission caps under the act. A federally-managed backstop system under GHGPPA applies in provinces or territories that do not have a system that meets the criteria or if the province or territory request the federal system be used. As of June 2019, five provinces and two territories are under the federal pricing system for one or both aspects of pollution pricing. The provinces of Ontario, Manitoba, New Brunswick, and Saskatchewan are under both the federal fuel charge and industrial emissions trading system; the territories of Yukon and Nunavut are voluntarily under both systems; and Prince Edward Island is voluntarily under the federal pricing system for industrial emissions trading only. Following the repeal of Alberta's provincial fuel levy on May 30, 2019, the federal fuel charge system will be applied to Alberta beginning January 1, 2020. All funds collected under the federal system are returned to the province or territory where they are collected. In cases where the provincial or territorial government requested to be part of the federal system, such as Yukon (fuel charge and emissions trading) or Prince Edward Island (emissions trading only), the funds are remitted to the government of that province or territory. Residents of provinces and territories that are under the federal system due to not implementing a pollution pricing system, such as Ontario and New Brunswick, receive their share of the collected charges directly as a tax-free Climate Action Incentive Payment paid out four times per year (until 2022 the CAI was a refundable tax credit on the federal income tax for residents of these provinces instead). Approximately ten percent of the money collected from these "backstop provinces" is separately distributed by the federal government for environmental initiatives in those provinces, such as green retrofits of public schools.
Constitutional challenges
The provisions of the GHGPPA were opposed by the governments of Saskatchewan and Ontario, and challenged in provincial courts. They were joined in their legal challenges by several others. For example, under Premier Blaine Higgs, the New Brunswick Attorney General submitted his intention to intervene in Saskatchewan's court challenge of the federal government's carbon pricing plan.
Saskatchewan On May 3, 2019, the Court of Appeal for Saskatchewan ruled in favour of the federal government in a 155-page 3–2 split decision that concluded that, "The Greenhouse Gas Pollution Pricing Act is not unconstitutional either in whole or in part." The federal government argued successfully that the Act was a legitimate exercise of Parliament’s "Peace, Order, and good Government" (POGG) power. Moe said he would bring the case before the Supreme Court of Canada. On May 31, 2019, Premier Scott Moe filed his appeal of the Saskatchewan decision to the Supreme Court of Canada. He hopes the case will be heard in the fall of 2019.
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