Environmentalists Worry Rate Is Too Low to Have Much Impact
By DAVID GAUTHIER-VILLARS
PARIS -- France is likely to begin taxing carbon-dioxide emissions by both households and companies starting next year in the hope that consumers and producers gradually shift to more environmentally friendly goods.
From Jan. 1, a special tax of €17 ($24.74) will be levied on each metric ton of CO2 emitted by fossil fuels such as heating oil, gasoline, coal and natural gas, French President Nicolas Sarkozy said in a speech Thursday. "We cannot keep on taxing labor, taxing capital and ignore taxes on pollution," he said.
Parliament has yet to approve the measure, but it is likely to pass as part of the wider annual budget plan.
Like other European countries and the U.S., France is seeking ways to meet a series of environmental commitments. The French government has pledged to cut its CO2 emissions to one-quarter of 1990 levels by 2050 by relying on nuclear power -- which generates few greenhouse gases -- better insulating buildings and boosting the use of renewable energies.
France wants to emulate Finland and Sweden, which have succeeded in curbing C02 emissions with the introduction of greenhouse-gas taxes in the early 1990s. Mr. Sarkozy is also eager to show that France is making progress on its environmental promises ahead of a United Nations conference on climate change in Copenhagen in December.
The carbon tax, however, has become a hard sell. When Mr. Sarkozy was elected president in 2007, surveys showed that French people backed the idea. More recent opinion polls suggest enthusiasm has faded as people grow wary that the tax will dent their spending power amid the economic crisis.
In his speech, Mr. Sarkozy said the tax would help the French economy grow while being energy conscious. He added the tax would be offset by subsidies for some payers. Taxes and subsidies would rise in following years, but Mr. Sarkozy offered few details on the timeline or rate of change.
Yet, environmentalists were skeptical of the tax's benefit. They said it has been set at a low level and criticized the subsidies planned for households and business to offset its impact.
"With this tax, the incentive to shift to energy-efficient goods will be close to zero," said Pascal Husting, head of the French branch of Greenpeace.
Mr. Sarkozy's plan falls short of recommendations from a report he commissioned that called for setting the tax at €32 per ton of CO2 in 2010 and increasing it by 5% every year after in order to reach a level of €100 in 2030. The €100 mark is necessary to achieve the broader goal of slashing CO2 emissions, the report said.
The French president said he opted for an across-the-board level of €17 a ton because he was concerned that households wouldn't agree to pay significantly higher taxes on CO2 emissions than big industrial emitters -- which are already subject to a European Union mechanism aimed at reducing greenhouse gases. European CO2 emission certificates trade at about €15.
Mr. Sarkozy, who has pledged not to increase taxes despite France's rapidly widening budget deficit, has said the money raised through the new tax would be returned to taxpayers.
Households subject to income tax will be awarded tax rebates as early as February 2010; those that are exempted from income tax will receive a check from the fiscal administration. Companies won't be awarded rebates but a local corporate tax will be scrapped to help offset the new carbon tax.
Write to David Gauthier-Villars at David.Gauthier-Villars@wsj.com