Regulating climate pollution is constitutional and necessary

by Milan on April 26, 2011

in Climate change, Economics, Ethics

Aldyen Donnelly has written a problematic article on climate change policy for the Financial Post.

She is right to say that climate policies could create regional tensions in Canada. The big problem is that she ignores the victims of climate change. We need to stop burning fossil fuels because the alternative will hurt a lot of people. We need to take action despite the political barriers in the way.

The government can and must regulate greenhouse gas pollution. Otherwise, people will continue to profit from behaviors that impose suffering on defenceless members of future generations.

[Correction: 5:17pm] As originally written, this article wrongly referred to Aldyen Donnelly as male.

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{ 6 comments… read them below or add one }

Aldyen Donnelly April 27, 2011 at 3:57 pm

Hi Milan!

I am (Ms.) Aldyen Donnelly. If you had googled my name, you would see that I am one of Canada’s longest-standing advocates for GHG regulation.

But it is almost impossible to use “cap and trade’ as a regulatory strategy in Canada, given our constitution. I would argue that cap and trade is much over-rated, even where there are no consitutional barriers to its implementation.

In 1980, all developed OECD member nations committed to cut national SO2 emissions, absolutely, to 50% below 1980 levels by 2000. Only two developed OECD nations failed to keep that commitment: the US and Canada. I remain astounded that the emission control strategy used by one of the two only nations that failed to keep their SO2 reduction commitments has morphed into the greatest emission control strategy in history!

Any basic analysis of the emission data, as well as the US SO2 emission trading record, should cause great concern to any committed environmentalist.

I strongly believe that continued, misplaced focus on “cap and trade” as a GHG regulatory strategy in Canada will only mean more delays in any real Canadian action to reduce GHGs.

Best,

Aldyen

Milan April 27, 2011 at 4:55 pm

Thank you for commenting. I apologize for my mistaken pronouns.

On the legal and constitutional question, I think a very strong case can be made that the federal government does have authority to regulate greenhouse gas emissions, due to the harm they cause. Arguably, the provinces have already accepted that authority, by not objecting when the federal government made a legally binding agreement to cut emissions through the Kyoto Protocol.

There probably will be a big constitutional fight if the federal government finally gets serious about climate change mitigation and carbon pricing. If and when that fight comes, I think the courts will accept the strong arguments that regulating GHG pollution is a legitimate federal role.

Milan April 27, 2011 at 6:22 pm

Regarding carbon pricing, I think there are several approaches that could have promise. Cap-and-trade schemes and carbon taxes each have advantages and disadvantages.

Personally, I think a system where a set number of permits to import or extract fossil fuels (and where the permits are all auctioned) is an appealing possibility. Tax-and-dividend schemes of the sort advocated by James Hansen and others also have promise.

In the near term, almost any policy that had a real impact would be preferable to Canada’s ongoing inaction.

Aldyen Donnelly April 27, 2011 at 7:24 pm

As I tried to say in my OpEd–it is always difficult when you have less than 900 words to get across a complex argument–I agree that it might be possible to create a constitutional federal cap and trade regulation. But to be consitutional, the federal regulation has to (in rather simplistic terms) treat all measurable GHG discharges equally. There cannot be one set of GHG standards for electricity producers and another for, say, farmers. There cannot be one set of standards for, say, plants operating in Quebec and another for plants operating in Alberta. The federal government cannot first say that it is a criminal offence to discharge GHGs and then say that you may be forgiven this offence by paying into a Tech Fund (as once proposed by Environment Canada).

The complication is that breaking a federal law is a criminal offence. The feds do not have the option of sanctions for civil or administrative law offenses because the feds are not authorized to introduce civil or administrative laws. (These sentances oversimplify the case and a constitutional expert would bristle at them. But I am trying to give you the general gist of the jurisdictional issues in not too many words.)

By comparison, provinces–under our constitution–do have the authority to differentiate among emission sources and play with the full range of administrative, civil and criminal remedies.

So it is not just a case of getting the provinces to say “yes” to a federal cap and trade rule. To make a federal cap and trade rule law, each of the provinces will have to pass the federal rule as provincial law. The feds cannot make them do that. At this time, the existing and proposed BC. Alberta, Ontario, Quebec and Nova Scotia all conflict with each other and cannot be reconciled. So I am hard-pressed to imagine we can convert that existing foundation to a single set of rules that are severally adopted by every province.

The question I would ask you to ask yourselves: do we really need to go through this very, very risky, time consuming, conflict-creating and costly process to regulate GHGs? Isn’t there a better way?

I would ask you to consider the product standard-type regulations that the Government of Canada successfully used to phase lead out of gasoline and paint and to reduce sulphur levels in diesel (ULSD) sold in Canada. These product standard-type regulations do not introduce all of the constitutional complications that come with cap and trade. The leaded gasoline and ULSD regulations also spawned real secondary markets for lead and sulphur during the phase down periods, but did so without asking government to introduce allowances or any other form of quota. Nor were taxpayers asked to pay the costs of administering the secondary markets.

The key to these successful regulatory histories is that we did not try to achieve our goals by regulating emissions solely or mostly at the point of production. We regulated the emission profile of polluting or pollution pre-cursor containing products, and regulated at the point of sale. So the new environmental standards applied to every unit of pollution containing or precuror product that could be sold in Canada, not just as emission limits at Canadian plants that made those products. It may sound more complicated, but, in fact, it is way easier, administratively less costsly, and constitutionally fine, for the feds to promulgate product standards that limit the fossil carbon content in the supply chain and make-up of key products. It takes only 8 to 12 product standards to cover over 80% of Canada’s GHG inventory. By comparison, it would take over 50 individual regulations to make cap and trade cover only about 30% of the national inventory–and we still would have to do much more to comply with constitutionality tests.

If you are interested, at all, in getting an idea about how those product standard markets work(ed), email me separately and I will send you some material on our historical experience of successful national environmental regulation and how that experience might be modified to apply to GHGs.

Best regards,

Aldyen

P.S. Re: “arguably, the provinces have already accepted that authority, by not objecting when the federal government made a legally binding agreement to cut emissions through the Kyoto Protocol.” In fact, at least 4 provinces that I know about formally wrote multiple PMs indicating their positions that the feds had no authority to impose Kyoto Protocol compliance on them.

Canadian law allows any PM to sign international treaties without vote in Parliament and without consulting the Provinces–as Chretian did in the KP case. But no international treaty actually becomes federal law unless until the treaty–in whole–is made domestic law in legislation that is passed by Parliament and upheld by the Supreme Court. (This is a pretty good balance, I think.) To date, no federal political party has tabled any proposed legislation that attempted to make the Kyoto Protocol into Canadian law. (Not even the Lib-NDP-Bloc bill 300 did that, in that the bill talked about only two small elements in the KP, not the KP in total. That bill did not even adopt Canada’s KP GHG budget as binding.)

If the Parliament of Canada had, at any time, attempted to pass federal legislation that would make the KP tagets and other conditions the law of the land, a number of provinces–including BOTH Alberta and Quebec–would have challenged it at the Supreme Court, and won.

Milan April 27, 2011 at 9:06 pm

But to be consitutional, the federal regulation has to (in rather simplistic terms) treat all measurable GHG discharges equally.

This is desirable economically as well. By having one carbon price for the whole economy, it should be possible to reduce emissions in the lowest-cost way possible. Everyone who can cut a tonne of emissions for less than the carbon price will have a rational incentive to do so.

The playing field could be made level with respect to imports and exports by applying a carbon tariff at the border. That would be compatible with WTO rules, provided foreigners pay the same rate as Canadians (which is also economically efficient).

I would ask you to consider the product standard-type regulations that the Government of Canada successfully used to phase lead out of gasoline and paint and to reduce sulphur levels in diesel (ULSD) sold in Canada. These product standard-type regulations do not introduce all of the constitutional complications that come with cap and trade.

It is probably possible to reduce greenhouse gas emissions by regulating products or product types individually. One risk of that approach is that it could set what amounts to different carbon prices for different activities.

Say we require cars to become 10 times more efficient, and companies find that doing so is spectacularly expensive. Meanwhile, we might set requirements for other products too ow.

If there was an economy-wide carbon price in effect, people would be encouraged to cut emissions wherever it was cheapest to do so. It also wouldn’t require an army of government employees trying to guess which technologies and approaches should be supported.

The key to these successful regulatory histories is that we did not try to achieve our goals by regulating emissions solely or mostly at the point of production. We regulated the emission profile of polluting or pollution pre-cursor containing products, and regulated at the point of sale.

This isn’t efficient for greenhouse gas pollution, since it is hard to know exactly how much is associated with any specific product or activity.

By contrast, it is easy to know how much CO2 will be produced when you burn a set amount of coal, oil, or gas. If we restrict production and import of fossil fuels, we can guarantee that we will meet our reduction targets. (Some trace gasses like HCFCs would need to be regulated separately, as would land use change.)

All that said, I am not too picky about the instrument which should be used. The key thing is to reduce Canadian greenhouse gas emissions (including those resulting from our fossil fuel exports). One efficient and politically plausible mechanism for doing that is implementing some sort of economy-wide carbon price.

Milan April 27, 2011 at 9:53 pm

Section 91 of the Constitution Acts, 1867 to 1982 establishes the powers of parliament.

There seem to be several ways in which the enumerated powers could be used to regulate GHG pollution. For instance, it lists ‘The Regulation of Trade and Commerce’ as such a power, along with ‘The raising of Money by any Mode or System of Taxation’.

Obviously, climate change wasn’t anticipated in 1867. That being said, it seems plausible that the clever people at the Department of Justice can find ways to regulate GHGs federally and without violating the constitution.

That said, I am not a lawyer, constitutional or otherwise.

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