Whether writing for the Wall Street Journalor testifying before congressional committees, Louisiana State University (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.’”

If those espousing that climate change will be dramatic in coming decades are correct, it would seem the carbon tax would be the easier way to go simply because you could manipulate the price to (achieve emissions goals). You could raise the tax to lower energy usage. If the environment is in such dire straits would it not make sense that environmentalists would want that?

“I think environmentalists do desire action in a workable framework. That’s why some are now rejecting cap and trade. Remember, cap and trade is focused on getting rid of a specific amount, X, of carbon emissions. If we don’t know exactly what X is, then setting a specific amount that is wrong is just like setting a tax at the wrong value.”

Can you talk about the EU’s experience with cap and trade and how it might translate in the United States?

“The trends I see stacking up in Europe seem to be forming a narrative suggesting the EU went backwards. They initiated cap and trade before a carbon tax.”

Since Mason wrote a piece on cap and trade for the Wall Street Journal in August, “France has made moves towards implementing a carbon tax in order to put a sort of base price on carbon no matter what price cap and trade markets may evolve to – and in the case of Europe, that’s essentially zero. France has moved to provide some benefit – even if that benefit is uncertain – on the basis of a minimum existing price.