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30/09/2016

France aims to set carbon price of at least €50 by 2030

Climate & Environment

France aims to set carbon price of at least €50 by 2030

France will tax the most polluting energy source to finance the energy transition.

[Paul Downey/Flickr]

France has confirmed it will introduce a floor price for carbon emissions from coal power stations, which will increase from around €20 in 2020 to €50 in 2030. EurActiv’s partner Journal de l’Environnement reports.

“A significant tax on carbon emissions is one of the most appropriate and effective responses [to the threat posed by climate change], and while it is clear that the whole world will have to accept this decision in order to completely ward off this danger, it is also clear that France has a duty to lead, anticipate and educate.”

This quote from France’s former prime minister Michel Rocard was included in a report on carbon pricing submitted to Ségolène Royal, the French minister for ecology, on Monday (11 July).

Carbon pricing

Coordinated by the former minister for development, Pascal Canfin (now director of WWF France), the former leader of the national debate on the energy transition, Alain Grandjean and the former CEO of energy company Engie, Gérard Mestrallet, the document summarises the French position on carbon pricing. The priorities had been sketched out a month ago at a forum in Paris.

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In Europe, “the current workings and planned reforms of the European cabon market are not compatible with the Paris Agreement”, Canfin said. “And the only chance to preserve the integrity of the common climate policy is to open a carbon price corridor.”

The carbon price must provide a sufficient incentive for heavy industries to reduce their greenhouse gas (GHG) emissions. It must also rise progressively without becoming impossibly high. The three authors recommend the establishment of what economists call a floor price and a ceiling price for European GHG emissions quotas.

From €20 to €100 per tonne

For the authors, the price floor should be fixed at €20-30 and the ceiling at around €50 in 2020. It would then increase by between 5% and 10% each year to form a floor of €50 and a ceiling of €100 in 2030, according to Mestrallet.

This is a recipe they hope will please everyone. “At €20 per tonne, the revenue from the auction of quotas would reach at least €1 billion in 2020, compared to €315 million in 2015. This would be enough to finance the energy transition,” said Royal.

The idea is tempting, but the argument is far from over in Europe. Paris is preparing an initiative to try and turn the situation around. Firstly, by asking MEPs to amend the text of the Paris Agreement to increase its ambition. Secondly, Ségolène Royal will urge the president of the World Bank to launch a high level initiative to fix an appropriate carbon price at an international level.

And finally, by the end of the month the French government will set a carbon floor price for the country’s coal-fired power stations. This will be included in the 2017 draft budget.

At the latest environmental conference, President François Hollande insisted on the fact that “This floor price will increase the visibility of all the investors and will favour the use of gas over coal in the electricity sector.”

This may be true of France. But it is certainly not the case for German or Spanish coal-fired power stations, which will become more competitive over night once this French floor price comes in.

“This measure will above all penalise French gas power stations,” said Anne Chassagnette, the director of environmental responsibility at the French-Belgian energy company Engie.