London, 31 July (Argus) — France has not ruled out extending a proposed carbon tax to power generation and other sectors that are already covered by the EU emissions trading scheme (ETS), but such a move seems unlikely.
The proposed tax is intended to enable the country to meet its emissions reduction targets, rather than to generate revenue. It is expected to be introduced for companies that are not subject to the EU ETS, including transport firms, for 2014-20.
There has been little discussion of extending the tax to businesses already subject to the EU ETS, including power generators. But no definitive decision has been taken about whether such firms will be subject to the tax, the energy ministry said.
The rate of emissions reductions by large industries covered by the EU ETS has put France on course to achieve the EU's 2020 emissions reduction targets, according to the committee on ecological taxation, which the country's new government formed last November to research the introduction of taxes and ecological incentives. As such, it has not found a need to extend the proposed tax to sectors subject to the EU ETS.
The committee has called for the government to discuss its findings, and to consolidate them into a firm set of proposals — including clarity on which sectors will be liable to pay the tax — allowing for the introduction of the measure in the 2014 budget.
France attempted to introduce a carbon tax in the 2010 budget. But the constitutional council blocked it on the basis that exemptions granted to the power generation sector and other heavy emitters subject to the EU ETS meant that the tax burden on other sectors was disproportionate to their environmental impact. The power generation sector was still receiving free ETS allowances at the time.
Under the EU ETS, the power generation sector no longer receives free allowances, making it less likely that it would be captured by the new proposals. The committee says the carbon tax should be designed to complement the ETS and a possible future pan-European carbon tax — a view that most committee members support.
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