Thursday, September 10, 2009

The Politics of Energy #20 - France's Sarkozy urges carbon tax

AP Business Writer

PARIS -- French President Nicolas Sarkozy wants to tax carbon dioxide emissions by households and businesses, a measure aimed at helping France slash its output greenhouse gases over the coming decades - but viewed with skepticism by many.

In a highly anticipated speech on the subject, Sarkozy sought to convince his compatriots of the need for the carbon tax, which surveys show around two-thirds of the French oppose. France would be the largest economy to impose one so far.

Sarkozy said that faced with threats to the climate and the need to reduce its dependence on oil, "it is time for France to profoundly adapt its taxation system and create real ecological taxation."

The tax would be initially based on the market price for carbon dioxide emissions permits, which is now euro17 ($24.74) per ton of carbon dioxide, Sarkozy said. At that level, the government expects to raise euro3 billion, which will be entirely returned to households and businesses through a reduction in other taxes or repaid via a so-called "Green Check," Sarkozy said.

The result would be a shift of the tax burden from other revenue sources to energy derived from fossil fuels in an effort to discourage their use.

Gasoline, diesel fuel, coal and natual gas will be subject to the tax, but not electricity, Sarkozy said. France generates most of its electricity via nuclear power, which doesn't emit greenhouse gases.

The tax would add 4.5 euro cents to each liter of diesel, 4 cents to each liter of gasoline and 0.4 cents for each KWh of natural gas consumed, Sarkozy said. The tax is intended to rise gradually from this level, Sarkozy said.

The plan, dubbed a "carbon tax" by most observers despite the government's effort to brand it as a "climate-energy contribution," has stirred passionate debate in France, where surveys say most voters oppose the idea.

Balance of article: Miami Herald

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