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Canada, Alberta governments square off in court over carbon tax

Alberta's top court has started hearing evidence in a dispute between the province and the Canadian government over a wide-ranging federal levy on emissions that has already been the subject of unsuccessful challenges in other provinces.

The so-called reference case before the Alberta Court of Appeal got underway Dec. 16 in Edmonton, Alberta, with lawyers for the province arguing that the federal government has overstepped its constitutional authority in applying the levy at the consumer level, including home heating and motor fuels. The hearing is expected to include a defense raised by the federal government and arguments from intervening provinces, First Nations and other groups.

The governments of Ontario and Saskatchewan have launched similar, unsuccessful actions in their own courts. A reference case is sent directly to the top provincial court by the provincial government for review. Both previous cases are now being appealed to the Supreme Court of Canada by the provinces. Even if Alberta's case succeeds, it too is likely to end up before the nation's highest court for appeal.

Alberta had a carbon levy that was compliant with the federal statute, but that tax was thrown out after the right-leaning United Conservative Party government unseated the socialist New Democratic Party in a provincial election earlier this year.

"Expert evidence presented in court shows that the similar carbon tax brought in by the previous Alberta government cost the province 10,000 to 16,000 jobs," Alberta Minister of Justice Doug Schweitzer said in a Dec. 16 statement. "We believe that each province has the right to set its own policies to fight climate change and that the federal government's one-size-fits-all federal tax, which punishes people for driving to work and heating their homes, is not the best policy for Alberta."

Canada's government under Prime Minister Justin Trudeau introduced the tax in provinces it considered were not doing enough to fight emissions effective April 1, with plans to return about 90% of the revenue raised under the fee to those provinces through climate change-mitigation programs. Alberta's election was held later in April, and after the federally compliant levy was abolished the Trudeau government announced that the so-called backstop tax would be imposed as of Jan. 1. That means motor fuel sellers like Suncor Energy Inc.'s Petro-Canada and gas utilities including those owned by ATCO Ltd. will add the tax to bills in 2020.

Alberta currently has a tax on large emitters that is in accord with the federal levy. The province is also involved as an intervenor in the Supreme Court of Canada appeals launched by Saskatchewan and Ontario. Those appeals are expected to be heard in January.