A diverse bunch of economists, commentators, free-marketers and even Exxon’s chief think that a carbon tax is better than a cap-and-trade scheme. The argument mostly goes that it is simpler, cheaper to administer, and by providing more certainty over the price of carbon, it gives businesses a stronger incentive to invest in low-emission technologies and infrastructure.
The problem is, the idea of a whole new tax is basically a political ‘third rail’ – and talking about externalities won’t very likely reverse that. But France is planning to introduce a carbon tax anyway. Well, perhaps.
Prime minister Francois Fillon reportedly told Le Figaro that the tax would be introduced at €14 per tonne, which would equate to €0.33 €0.033 per litre of petrol, or between €25 and €75 per year for household heating costs. Fillon insisted it was not a new tax as such, because all the resulting revenue would be handed back to taxpayers in some form.
It’s not exactly smooth sailing – a government panel wanted the initial price to be €32, rising to €100 in 2030.
And there might be more backpedalling on the way. Reuters reports that a poll published in France todayo found 74 per cent of respondents opposed the tax. Furthermore, the president was not quite so certain as Mr Fillon:
However, an official quoted President Nicolas Sarkozy as saying a final decision had not yet been made, undercutting his prime minister. Sarkozy met ministers to discuss the issue on
Friday but no details of their discussions emerged.
Another view on cap-and-trade giveaways (FT Energy Source, 28/05/09)
France’s complicated relationship with efficiency (FT Energy Source, 22/07/09)
Cap-and-trade versus everything else (FT Energy Source, 12/06/09)