Whether writing for the Wall Street Journal or testifying before congressional committees, LSU economist Joseph Mason isn’t shy with his views regarding climate legislation.
In a recent study, Mason suggested a carbon tax should be considered alongside cap and trade. He also warned that a cap and trade system would be incredibly complex and could saddle the U.S. economy with unforeseen consequences.
To see the full study, visit The Economic Policy Risks of Cap and Trade Markets for Carbon Emissions .
Among other titles he holds, Mason is Hermann Moyse Jr./Louisiana Bankers Association endowed professor of banking at LSU. In late September, he spoke with Delta Farm Press about the EU’s experience with cap and trade, misconceptions about market oversight and why a carbon tax should be a part of the congressional debate. Among his comments:
To reset for our readers, could you talk about differences between cap and trade and the carbon tax and how both would theoretically serve to ameliorate climate change?
“The tradeoff between cap and trade and a carbon tax is between ‘benefit certainty’ and ‘cost certainty.’
“With cap and trade, you decide how much less carbon you want emitted and you allow the market, the price, to reduce the emissions. Therefore, you know there will be X amount of tons reduced — but you must let go of the price in order to achieve the X amount of reduction. That would produce ‘benefit certainty’ with price uncertainty.
“Of course, having let go of the price under cap and trade, you don’t know what the price will be to get rid of that X amount of tons. But you’re implicitly valuing that you want X amount of tons gone.
“With a carbon tax, you trade off that ‘benefit certainty’ for a price certainty. With a tax, you’d place a stable price upon the emission of carbon. You don’t know to what extent firms will reduce their emissions given that price signal. But you’d have price stability, price ‘certainty.’”
To read the entire article, link here .