Positive Energy Faculty Affiliate
Professor, Political Science, Department of Economics, Justice and Policy Studies, Mount Royal University
The Supreme Court of Canada just ruled, in a 6-3 decision, to uphold the constitutionality of the federal government’s carbon tax. While this decision must come as a relief to the Trudeau government, it will not end battles between Ottawa and provincial governments over energy-environment policy.
Energy-environment policy is one of the most contentious sectors in Canadian politics. It has led to fights between Ottawa and the provinces, and between provinces, for decades. Prominent historical examples include the constitutional struggle for Alberta, Saskatchewan, Manitoba and parts of British Columbia to gain control over their natural resources (like all other provinces) that was achieved in 1930, the Churchill Falls hydro project involving Newfoundland and Québec in the 1960s, the National Energy Program pitting Ottawa against Alberta in the early 1980s, and the Kyoto Protocol of the late 1990s/early 2000s. More recently, we have seen the battle over oil and gas pipeline projects (Northern Gateway, Energy East and Trans Mountain) and the recently decided federal price on carbon. These conflicts, which stem from Canada’s constitutional arrangement and the economic and political interests of federal and provincial governments that govern Canada’s energy-environment policy, have had significant political, economic and environmental costs.
These conflicts often seem intractable. However, in a recent study for the University of Ottawa’s Positive Energy project, I have identified two principal options for a path forward. First, identifying the few windows of opportunity when a multilateral consensus can be achieved. Second, focusing on achieving small levels of co-operation through bilateral or unilateral provincial initiatives.
A success of multilateralism was the Pan-Canadian Framework on Clean Growth and Climate Change (2016) because it exploited a window of opportunity: a newly elected Trudeau government, the four largest provinces with provincial prices on carbon, Alberta (the country’s largest oil and gas producer) had just brought in a carbon tax, a like-minded administration in the United States, and international pressure leading to the Paris Climate Change Conference. While some provinces have since pulled out of the Pan-Canadian Framework, and some even fought the federal carbon tax in the courts, many of its mechanisms remain in place. Trudeau even felt comfortable unilaterally updating its climate plan and announced in December 2020 a gradual increase of the carbon tax that, by 2030, would triple it beyond its current level. This example shows that moments in time can emerge that allow for multilateral co-operation in energy-environment policy.
Given the difficulties associated with achieving a multilateral consensus, bilateralism has been used much more effectively: Ottawa and Ontario jointly developed civilian nuclear energy starting in the 1950s; in the mid-1970s, Ottawa-Alberta-Ontario worked together on investing in the emerging oilsands; in the mid-1990s, Ottawa and Alberta worked together on a new tax regime to encourage investment in the oilsands; and B.C. and Alberta were able to negotiate an agreement on the Trans Mountain Pipeline (although that was scuttled with a subsequent change in B.C. government).
There are examples of successful provincial unilateral actions. In 2008, B.C. was the first jurisdiction in North America to introduce an economy-wide carbon tax. In 2015, the Rachel Notley government in Alberta brought forward its Climate Leadership Plan. Successive Ontario governments over the last 20 years have restarted and refurbished its nuclear fleet and shut down coal-fired electricity generation. Successful provincial unilateralism, such as B.C.’s introduction of an economy-wide carbon tax, often has spillover effects as different provinces learn from the lead example and adopt similar programs.
Unilateral action by the federal government has sometimes had disastrous consequences (e.g., the NEP). However, there have been other examples of unilateral action from Ottawa through its use of its spending power to intervene in energy-environment issues. For example, Ottawa’s purchase of the Trans Mountain Pipeline (2018) and spending $1.7 billion to clean up orphaned oil and gas wells in Western Canada (2020).
Navigating federalism and the energy-environment sector is extremely difficult. Finding a path forward is not easy, but there are real costs to failing to co-operate. Therefore, decision-makers need to recognize when policy windows open up and take full advantage of them. However, policy windows are rare. This means that an incremental approach of a series of bilateral agreements (either between the federal government and one province, or between two provinces) and unilateral action (most likely by an individual province, but could also be done by the federal government in unique cases) is a more probable path forward. The concept is the classic Canadian formula of muddling through contentious files. One step forward and a half step back. If this is repeated long enough, eventually Canada gets to the finish line.