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France to impose a carbon tax … and a debate explodes

September 2nd, 2009 · No Comments

The news in France: a 14 Euro (about $19.90 at current exchange rates) tax per ton of carbon to go into effect in 2010. While discussion of a carbon tax has been an item of debate within French society, Prime Minister Fillon’s announcement of the actual amount and the parameters of the coming have created what might be an explosive discussion.

In short, the parameters:

  • Tax on carbon sources, including oil (gasoline, diesel), natural gas, and coal.
  • Electricity is not included (considering that France is almost entirely ‘carbon light’ (nuclear 80+%, hydro, and some (growing) wind/solar), this is not surprising)
  • This is a revenue-neutral program, with reductions in other taxes to balance this revenue source.
  • Many details yet to be worked out/announced, such as how to deal with helping those less fortunate deal with the additional costs.
  • This is the first step of a tax that will be gradually increased and spread throughout the economy to help achieve French goals for a 75+% reduction in CO2 emissions by 2050.

On first glance, writ large, this looks to be a positive move, the type of revenue source rebalancing that should be pursued around the globe to help drive moves toward a low-carbon future.

Even so, while “positive”, this is causing debate with criticism coming from all directions.

As to criticism, there are those who are arguing (strenuously) that this is far too weak.

  • The formal recommendation, from earlier this summer, called for a 32 Euro per CO2 ton tax — thus this tax is less than half that recommended.
  • There are those questioning the exclusion of electricity (especially ‘anti-nuclear’ campaigners, but also those seeking an overall reduction in energy use, even amid a prioritization of reductions of fossil fuel pollution).

Sadly, some of the earliest and loudest criticism is what looks to be political opportunism from Socialist Segolene Royal, who ran against Sarkozy for President.

Spotting a chance to score political points, [Sarkozy’s] former presidential rival Segolene Royal savaged the proposed Climate-Energy Contribution as “unjust” and “inefficient” at the Socialists’ annual congress at the weekend.

She argues a flat levy on fuel would hit low-income families disproportionately hard — especially those in out-of-town areas who have no choice but to use cars — without helping to develop clean alternatives.

Royal said the government would do better to “tax oil and energy companies based on the profits they make from fossil fuels” and invest in electric cars.

Sigh — a politician who didn’t miss a chance to have political opportuism triumph over sensible policy making and necessary moves to a prosperous, climate-friendly future. Putting it politely, “France Nature Environment [stated that] Royal’s attacks risked turning voters against the idea of green taxation.”  Royal’s arguments sound eerily familiar to those who scream bloody murder in the United States when the words ‘gas tax’ are mentioned, whether the price of gasoline is 99 cents or $4.49 per gallon. They serve to undermine an ability to shift the nation toward a more sensible fiscal policy and a more sustainable energy policy by playing to base emotions rather than educating and leading.

To provide a perspective, the 14 E tax would raise French gasoline prices by about 0.03 Euros per liter which is just about a 2.5% increase on the cost of gasoline. (With a far lower existing tax on gasoline, a $19.90 tax would have a more significant impact in several ways. It is hard to see that that 2.5% increase in France will drive drivers off the road, while the 19 cents equivalent in the United States, in the range of 6%, would likely impact driving patterns more.) Now, while it is hard to see that 2.5% driving down driving in any significant way, this is just the beginning imposition of a tax that will gradually grow which, along with items like the FeeBate based on pollution levels of new cars and growing electrification of transport (including increasing kilometers of trams), will help drive people toward lower carbon options.

All of the discussions, to date, in France have included variety of paths to assist those lower on the economic scale and those in situations requiring assistance to lower their carbon burden. The details have yet to be announced … and details matter. There is a real challenge of how to apply a tax and provide fiscal balancing while also driving changed behavior toward a lower polluting profile.

PS: It looks like Royal’s heavy criticism has had an interesting counter-reaction. Criticism from within Sarkozy’s own UMP (the right wing party) has silenced.

A taste of context … This carbon tax is being imposed even as France participates in the European Cap & Trade program (which is tightening). In addition, the French have many ‘green’ taxation items. For example, want to buy a new TV — you will be taxed a recycling/pollution fee which is on electronics and major appliances like refrigerators and stoves (taxes range between 2 and 16 Euros, depending on recycling/pollution impact).

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Tags: carbon dioxide · carbon tax · emissions · Global Warming · government energy policy