CLARIFYING STATEMENTS REGARDING COST TO CONSUMERS OF NDP CAP AND TRADE
CALGARY, April 28 /CNW/ - This morning, I issued a "tweet" saying that
based on previous research I believe the cost of the NDP cap and trade
platform proposal would be ten cents per litre of gas.
Later, I "re-tweeted" a "tweet" that could be interpreted as implying
that I believe the cost to consumers of the NDP proposal would be three
to four cents.
To be clear, based on the information available to me from the NDP
platform, and based on previous research that I have done, I stand by
the conclusion that the cost to consumers of the NDP cap and trade
platform promise would be ten cents per litre of gasoline, increasing
To elaborate, The NDP proposal would begin with a $45 per tonne price on
carbon that would apply to big emitters. As this would presumably
affect all large emitters including utilities and refiners to raise
$7.4 billion, much of the carbon price would be shifted forward to
higher home heating and gasoline prices. To deny this would
significantly undermine the effectiveness of a cap-and-trade system to
shift consumption away from carbon-intensive goods.
The current federal excise tax on gasoline of 10 cents is equivalent to
a $42 carbon charge. So, a cap and trade system applying to refiners
would have a similar impact since it increases the cost of refined oil.
Consumers could avoid the carbon cost by importing gasoline but this
significant leakage would likely be stopped by a tariff on gasoline.
The $45 carbon price under the NDP plan affecting refiners and other big
emitters will result in a 10 cent hike in gas prices. This would be
consistent with effective carbon pricing which is the aim of these
systems. While governments might try to force prices down by regulation
the effort is impossible as so many other factors influence the market
price and costs.
To fool people that somehow they don't bear the cost of environmental
policies does a disservice to sound environmental policies and the
Please note that Prof Mintz is not available for comment because of his
SOURCE University of Calgary - School of Public Policy
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