Supreme Court Of Canada Rules On Carbon Pricing, Paving Way For Offset Credit Regulations

The Supreme Court of Canada (SCC) has released its highly anticipated decision on the constitutional validity of the federal framework for carbon pricing under the Greenhouse Gas Pollution Pricing Act (GGPPA), which became law in 2018. In a split decision on March 25, 2021, the majority of the SCC found the GGPPA to be valid federal legislation (authorized under the national concern branch of the federal Peace, Order and Good Government (POGG) power) and upheld the fuel charge imposed under the GGPPA as a regulatory charge rather than a disguised tax.

With somewhat less fanfare, on March 6, 2021, the federal government published draft regulations that will implement the federal offset credit system contemplated under the GGPPA's Output-Based Pricing System (OBPS). Draft regulations were also published in Québec on March 3, 2021, primarily to simplify the existing offset credits of the Québec carbon market.