France to drop carbon tax plan
By Paul Homewood
Well, that did not last long then!
The French government is set to drop plans to introduce a carbon tax, French financial daily Les Echos said on Thursday.
The newspaper, quoting several sources, said the socialist government will not include the carbon tax in a draft 2016 budget update currently being discussed.
Environment Minister Segolene Royal had said in May that France would unilaterally introduce a carbon price floor of about 30 euros ($33) a tonne with a view to kickstart broader European action to cut emissions and drive forward the December 2015 United Nations-led international climate accord.
The plan had pushed power prices higher in the spring.
Les Echos quoted a source as saying that the measure is too complicated to put in place and might be unconstitutional.
The paper said that state-owned electric utility EDF, which produces mostly carbon-free nuclear power, was in favor of the measure, but that gas utility Engie SA had lobbied against the tax because it would make its gas-fired power plants less competitive than similar plants in neighboring countries.
A source close to the French government told Reuters that nothing had been decided yet on the carbon tax but confirmed there were doubts about it.
"In the current context, it is difficult, due to concerns about employment, legal difficulties and security of supply," the source said.
French power prices have spiked higher in recent weeks as a series of unplanned nuclear reactor closures have led to worries about security of supply.
The government is due to receive a report about the carbon tax in coming days and will decide on it mid-November, the source said.
Meanwhile the UK govt is still committed to a Carbon Price Support, a carbon tax in effect, of £18/tonne CO2, on top of the EU traded price for carbon.