The French carbon tax

France is finding is hard to pass a stiff carbon tax, though of course they already use lots of (non-carbon) nuclear power:

Details are finally emerging about the country’s planned “carbon tax,” to be put in place next year. And the idea is anything but popular.

The center-right French government wants to levy a tax of 14 euros per ton of carbon dioxide starting in 2010; carbon taxes are popular with many economists and business leaders because they are seen as easier to implement than carbon-trading plans, which France also belongs to.

In reality, France’s carbon tax is basically just a gasoline tax–and a tiny one at that. The electricity sector, overwhelmingly powered by emissions-free nuclear power, isn’t part of the plan [TC: Duh!], Prime Minister Francois Fillon told Le Figaro. The tax will basically fall on liquid fuels–raising pump prices 3 euro cents a liter (that’s roughly 15 U.S. cents a gallon).

In theory it will be revenue-neutral but most French voters are nonetheless opposed to the measure.  Here is further information:

Large CO2 emitters, such as oil refiners and steel makers, will be exempted from paying the new tax. The government will propose special compensations for fishermen, farmers and truckers…

Comments

So the big offenders where you could actually get some benefit will be exempted and the other commercial operators will get subsidies. So you are basically just making it incrementally more expensive to drive. I can see why this isn't too popular.

Does this really meet the big issue exception to local blogging?

Do you think that the political feasibility of strategies for dealing with climate change, whether carbon trading or carbon tax, is not a big issue?

No, not "duh!".

You appear to have missed the fact that the EU has had a cap-and-trade programme (the EU Emissions Trading Scheme, or EU ETS) in place four and a half years. The French power sector already is part of this, as is all of its heavy industry (including the refiners and steel makers mentioned in the article). Taxing any of these emissions further would be completely pointless, and this is the reasons for the exemptions. The level of €14 / tCO2 has been proposed as it is the current price level in the EU ETS.

[For what it's worth, the EU ETS has a more challenging emissions reduction trajectory than that of Waxman-Markey, already laid down in law until 2020.]

per,

The European cap and trade program is also chock full of exemptions, loopholes, subsidies, etc. and has essentially been a big, fat failure.

Translation..."We wish to tax the middle class and create more barriers to entry for any new competitors to the big politically connected firms...only a conspiracy theorist could oppose this."

per,

Apparently the New York Times (that bastion of libertarian thinking) is just utterly wrong: http://www.nytimes.com/2008/12/11/business/worldbusiness/11carbon.html?_r=1

Money quote:

But that plan unleashed a lobbying free-for-all that led politicians to dole out favors to various industries, undermining the environmental goals. Four years later, it is becoming clear that system has so far produced little noticeable benefit to the climate — but generated a multibillion-dollar windfall for some of the Continent’s biggest polluters.

Apparently the observations of public choice economics apply to Europe and the United States.

More countries are now imposing carbon tax to bring down the pollution under control and also to protect the environment.. Developed countries will be more affected if carbon tax is applied on a global basis.

All political processes will lead to some exemptions and loopholes! Should that be the reason for not doing anything? Is this not a step in the right direction? IMO this is about incentives (and not about final costs to the consumer - who ultimately bears the cost of all taxes) - just compare the US and Europe to understand that higher fuel prices do have an impact on fuel consumption of cars and use of public transportation

Bert,

Some processes are less prone to such than others. Any time the government is mandating certain technologies, certain methodologies, etc. that is going to be worse from the "Baptists & Bootleggers" aspect than the government mandating a couple of simple goals and then market actors figuring out how to meet them. Cap and trade is more like the former than the latter.

...just compare the US and Europe to understand that higher fuel prices do have an impact on fuel consumption of cars and use of public transportation.

What has happened in Europe is that diesel cars have become more popular there as a result of high fuel taxes. I don't think it has had much effect on fuel consumption since people can find more friendly technologies that beat back the tax bite.

"So the big offenders where you could actually get some benefit will be exempted and the other commercial operators will get subsidies. So you are basically just making it incrementally more expensive to drive. I can see why this isn't too popular."

Read the whole article on Le Figaro, please. Companies that emit large amounds of CO are already under the jurisdiction of eauropean carbon allowences quotas.

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