France studying carbon tax introduction & possible negative effects

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France-greenhouse-gas-emissions-tax.jpgFrance is currently thinking of enacting a carbon tax to increase climate change mitigation efforts. If enacted, it would be applied to the consumption of energy in general.

With French electricity being mostly low carbon, the majority of the tax revenues would come from the transportation and housing sectors.

It is worth noting that this new tax would be compensated by a decrease in charges associated to labor.

A ton of carbon dioxide would cost emitters €32 euros (around $45) in 2010 and would bring the government an estimated €8.73 billion ($12.328 billion) during the first year.

Out of these, €3.57 billion would be collected from French households and the remaining €5.16 billion from companies and administrations.

In order to divide greenhouse gases emissions by a factor of four by 2050, the tax would increase with time to reach €56 ($80) in 2020, €100 ($140) in 2030 and around €200 ($280) in 2050.

These increases are expected to push both consumers and companies to steer away from carbon intensive solutions and to promote energy efficiency. As such, the tax would dramatically push the use of renewable energies – good news for the local clean tech sector.

The French magazine Challenges published an article with examples of what various households would have to pay. A four-person household could pay anything from € 234 to €310  during the first year depending of the type of cars they drive – and how much they drive them – and the fuel used for heating their house.

The French financial daily Les Echos noted in an article on this topic that Sweden implemented  a similar tax as early as 1991 and that it has been increased fourfold since. Neighboring countries also enacted similar charges and all of them reported good financial returns. It led to the creation of several clean tech companies and contributed to the development of the wind energy sector in Denmark.

Even if it seems to be quite a good solution to cut our greenhouse gases emissions, not everything is rosy.

The first problem addresses less affluent households which would be most concerned by the tax. This part of  the population dedicates a relatively important part of their budget to heating and transportation.

The second problem comes with the market distortions the carbon tax might create, with tax-levying countries on one side and tax-free countries on the other side.

Last but not least, people living in rural areas consume much more gasoline than their urban counterparts to drive to work. A solution would have to be found here as well.

Like the majority of my fellow citizens, I am largely in favor of this tax. I am wondering if a similar tax could be collected in the United States or in other countries.

What do you think ? I look forward to reading your comments and opinions.

[Photo credit: Flickr]

About Author

Fascinated by sustainability and cleantech since 2004, Edouard wrote both his Bachelor of Arts' dissertation and Master's thesis on sustainable energy topics. He haven't stopped writing on these subjects ever since. A French Master's graduate in international management, Edouard has had several experiences in Marketing and Communications in Europe. He worked for firms as diverse as a German water treatment company, a leading French business school and lately a Belgian automation specialist. He is currently for hire globally. Since 2007 Edouard has been selecting for his own blog the latest headlines and best researches on sustainable development, climate change, cleantech and the world energy sector. With over 1,600 published articles, he is read all over the world. On Cleantechies, Edouard has been proposing since June 2009 news articles and opinion pieces on on French and European policies. Don't hesitate to contact him as he is always interested in discussing with new people.

  • Albert Six

    It is frustrating to see so many newspapers talking about problems for which we have a solution but nobody listens. Politicians are so busy with problems that they don’t have time for solutions.

    In the past 3 years a group of engineers in Seattle USA has developed a way to increase the gas mileage of cars by 50%. All we need is $4million to confirm in a lab the results we got on the freeway, make more tests and apply for patents.

    We sent a Concept Paper to the Department of Energy. We are the ideal candidate for a grant from the Recovery Plan. That was 3 months ago. We don’t know yet if they read it.

    We are so discouraged with politicians that we are going to look for private investments.

    Taxes can be an incentive but it takes more than taxes to get the job done.

  • Ian

    It’s good to see the french government recognizing that so much of Co2 emissions is coming from individuals, not just from industry. Not sure if you’ve seen the recent study from Princeton University, but it reveals that about half of all emissions are coming from just 700 million people. This wealthy section of the global population is a major contributor to climate change, but is also taking a leadership role in solving it through several means: donations to environmental funds, toning down the life of luxury, carbon offsets etc. I know that one service in particular- Belgrave Trust- has been gaining traction among the wealthy. It provides offsets for mansions, private travel, etc. and allows the wealthy to take responsibility for their emissions. Good to see since the governments don’t seem to be taking much action (G8 Leaders Agree To Do Nothing About Climate Change)

  • doug domergue

    I don’t think there is enough data available to understand whether ~$300/ year/family of 4 is even close to accurate for the US. Also 32 Euros/$45 per ton of CO2 emmitted seems anywhere from 3 to 22 times too much depending on who you believe…Richard Tol for instance.

  • http://www.elrst.com edouard

    Thank you all for your comments and remarks. I answer to each of you below:

    > Albert : I agree with you. Politicians are indeed very slow on action. This is to the point that I wrote for my blog a reflection I had.

    Your project seems interesting and I look forward to read more about it.

    > Ian : I didn’t read that study. I will give a look at it soon as it sounds very interesting. 700 million people is exactly the amount of people in the US, the EU-15 and Japan. It’s true, we as Westerners got to change.

    If you are interested in the French project on climate change mitigation I can but recommend you to read my article on the Grenelle de l’Environnement

    > Doug : Why do you think there is not enough data ? Do you deny climate change ? 100 euros / dollars per person per year is to me not much to avoid climate change. Especially if these sums can help me cut my energy bills.

    Even if climate change were an hoax / scam / whatever, decreasing our energy consumption is the right move for our economies, our societies and yes, our environment.