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Politics : Canadian Political Free-for-All

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From: Breccia	4/29/2011 9:46:37 AM
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STATEMENT FROM PROFESSOR JACK MINTZ, THE SCHOOL OF PUBLIC POLICY Canada NewsWire CALGARY, April 28 CLARIFYING STATEMENTS REGARDING COST TO CONSUMERS OF NDP CAP AND TRADE PLATFORM PROMISE 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 after that. 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 Canadian public. Please note that Prof Mintz is not available for comment because of his travel schedule.

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