Ontario will launch constitutional challenge of federal carbon tax plan

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Canada is scaling back its planned carbon pricing scheme to curb greenhouse gas emissions after industry executives warned it would hurt their worldwide competitiveness, the office of the environment minister said Wednesday.

The Liberal government had initially planned to tax companies for emissions over 70 per cent of an industrial sector's average pollution intensity, "with the possibility of adjustments to that starting point based on an assessment of the potential risks from carbon pricing to the competitiveness of the sector and to carbon leakage".

That plan is scheduled to come into effect in early 2019, and will be imposed on provinces that do not have a carbon pricing system of their own.

But those reductions weren't enough to sway opponents.

"A watered down poison is still poison", Saskatchewan Premier Scott Moe said in an interview on Wednesday. The provincial government says it's not opposed to reducing emissions, but argues that the tax is unconstitutional.

The news was first reported by the Globe and Mail newspaper.

"Let's be clear - we can't afford to let big polluters off the hook", Ms. McKenna said in a statement. We want to have the most energy efficient, smart industries here that create good jobs, at the same time do what we need to do to tackle emissions.

Attorney General Caroline Mulroney and Environment Minister Rod Phillips were expected to announce details about Ontario's PC government cancelling the cap-and-trade program - the costs of which are still unclear - but instead used the news conference to attack the federal carbon tax that could replace it.

Contending Ottawa is acting like "big brother", the Saskatchewan government has put forward its written legal argument against a federally-imposed carbon tax.

Keith Stewart of Greenpeace decried what he called "a step back" and said Canada could not claim to be a leader on fighting climate change if it were not prepared to take significant steps to reduce greenhouse gas emissions.

However he said the lighter burden should help industry but doesn't reduce the burden the carbon price will place on individual consumers. "We are committed to providing draft regulations in Fall 2018".

Anything beyond that raises the cost to business without changing behaviour, and that's where companies start looking to move to jurisdictions with lower taxes.

"This is a sensible approach for both the environment and the economy", Mr. Elgie said. With the case possibly headed from there to the Supreme Court, Moe said it was unlikely there would be a decision ahead of the January implementation date for the carbon tax.