France aims to head off storm on carbon levy
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France will next year become the largest economy to levy a carbon tax, but will introduce it at a low starting rate to try to pre-empt a backlash from an already heavily taxed public.
President Nicolas Sarkozy, who will unveil details of the tax on Thursday, hopes the move will underscore France’s environmental credentials ahead of December’s Copenhagen conference intended to draw up an international agreement for emissions reductions after 2012.
The tax will be initially set at the current market price – from €14 to €16 per tonne of CO2 – lifting the cost of petrol, diesel, gas, heating fuel and coal.
France is the largest economy to follow Finland, Sweden and Denmark and introduce a tax linked to the price of carbon dioxide, although most EU members have high energy taxes.
Nevertheless, a starting rate of €14 per tonne ($20, £12) – which translates into 3 cents on a litre of petrol, raising €3.5bn a year – has been criticised by environmental campaigners as too low to have a big impact on emissions.
A government commission led by Michel Rocard, the former prime minister, in July proposed a starting rate of €32 per tonne, rising to €100 per tonne by 2030.
The French government has promised to cut greenhouse gas emissions by 75 per cent from 1990 levels by 2050. With 88 per cent of its electricity coming from nuclear power, the reductions will depend largely on lower road fuel consumption and on better household energy efficiency.
The new tax will extend the so-called carbon price signal to transport and household energy, which are not covered by the EU’s emissions trading scheme, but not apply to electricity.
The principle of curbing emissions by internalising the price of carbon enjoys support among economists, environmentalists and political leaders. But designing a scheme to discourage consumption while compensating low-income and rural households is very difficult.
The government insists the carbon tax – officially the climate-energy contribution – will be revenue-neutral. Off-setting cuts could be made to income tax or social charges.
But by announcing the tax before setting out the off-setting cuts it has triggered a political storm, with criticism from the opposition Socialists, the governing UMP party and bickering within the government.
According to a TNS-Sofrès opinion poll for Europe1 radio, 66 per cent of French people oppose a carbon tax.
As well as protecting the planet, Mr Sarkozy has electoral considerations in mind. He wants to woo green voters ahead of regional elections next year and presidential elections in 2012. The Greens did unexpectedly well in June’s European parliamentary elections, winning 16 per cent of the vote and nearly overtaking the Socialists.
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