Prices up at French Pumps in 2010?

Prices up at French Pumps in 2010?

A government panel has suggested that France should aim to tax greenhouse gas emissions by 2010. This tax is lauded as a mechanism to encourage clean and greener habits among the French population. But the big questions remain: how effective will the tax be and who will it affect?

The panel concluded that: “carbon dioxide emissions are a threat to life on this planet…among the many necessary responses, a significant tax on carbon dioxide emissions is one of the most pertinent and efficient.”

France aims to divide its greenhouse gas emissions by 4 by 2050; a tax seems enviable to achieve this level of reduction. Economy Minister, Christine Lagarde, sees implementation of such a tax as “the beginning of a wider process of reflection and consultation [on climate change].”

The carbon tax plan would see France bill 32 € (~$46US) for every ton of carbon dioxide emitted in 2010. The levy would be raised progressively on a yearly basis until it reaches 100 € in 2030. Effectively, this regulation would add 7-8 cents to the cost of a liter of fuel. The tax is proposed to apply to all sectors that are not part of existing emissions trading programs.

The plan is drawing hot opposition from intensive fuel users, especially small-scale farmers and fishers. “We haven’t received any objection to the tax in principle, but there will be lots of fighting over the details of course,” said the Panel’s head, Michel Rocard, on France Info Radio.

Under the proposal, the extra cost per household would be around 300 € per year. There is a strong debate concerning how to compensate low income households; such as those that qualify as “fuel poor.” Rocard recognizes that, “there are whole jobs, farming, fishing, and taxi drivers where we need to find ways to make the jobs economically possible in spite of this tax.”

A key part of the debate is how to compensate poorer households, workers in certain sectors, and those for whom driving is a necessity because they work odd hours or live in rural areas. The small business union, CGPME, said in a statement that “for [the tax] to be accepted by households and companies…it must be compensated by an equivalent fall in taxes elsewhere.” The Panel did suggest that extra costs would vary according to household size and location.

Sweden, which is the current EU presidency, does have a carbon tax in place, as do Denmark and Norway.

The Panel’s report will provide the basis for legislation, due to be debated after the French parliament’s summer break.

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