Jack Mintz and putting a price on carbon

A central figure in the carbon-pricing debate is economist Jack Mintz. In protesting the NDP’s cap-and-trade proposal, for instance, the Conservatives have invoked—see here, here and here—the projection of the respected economist that the NDP’s 2011 proposal would have raised gas prices by 10 cents per litre. (There was some debate on this point during the last election. Andrew Leach projected the increase at about four cents per litre. The Pembina Institute found likewise.)

For the record, Mintz’s preferred policy in this regard is a carbon tax. Via email, I asked him about his position and he explains as follows.

I remain of the view that the appropriate approach to pricing carbon is a carbon tax, not a cap-in-trade system. Last week I was in Germany at IFO Institute which advocates a cap and trade system. There are pluses and negatives to each approach—I think a carbon tax is superior since capital intensive technologies need to be adopted that take some time and certainty in pricing is critical.

In the past, I have also argued with Nancy Olewiler that it would be an improvement in both efficiency and equity terms that the federal fuel excise tax should be converted into a broad-based environmental tax (carbon, sulphur or noxes or whatever). The current federal excise tax has little rationale except for half of it being a transfer to municipalities. I am still of that view even though the Liberal Greenshift plan that adopted this basic concept based on an academic paper that Nancy and I had written went down in flames.

Finally, I find it very irritating that parties might propose carbon policies without being honest with respect to their consequences for consumer prices or jobs. The NDP platform last election was a case in point. But so are current regulations and feed-in tariffs that are less optimally structured and have consequences that should be understood by voters.

As Kevin Milligan notes, the Mintz-Olewiler report is here.

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