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Carbon Pricing

France Introduces Carbon Tax Months After Fracking Ban

Originally published on ThinkProgress.
By Emily Atkin.

The French Parliament on Thursday adopted a budget for 2014 which includes a tax on carbon emissions from gas, heating oil and coal, according to a report in Platts.

The money derived from the tax — which largely targets transport fuels and domestic heating — will be used to reduce emissions through increased installation of renewable energy throughout the country, according to the report. The move is projected to raise €4 billion, or $5.5 billion, per year by 2016, which can then spent on tax breaks for the wind and solar power industries.

“Its operation is simple: part of domestic consumption taxes on fuels and fossil fuels will be based on CO2 emissions given off by their use,” Prime Minister Jean-Marc Ayrualt said when introducing the proposed tax in September, noting the tax will affect the petrol, diesel, coal, natural gas, and heavy fuel oil industries. “Throughout this transition, the Government will pay attention to the situation of the French, especially the poorest, who often worry about these changes.”

According to Platts, carbon will be taxed at a rate of 7 euros per tonne emitted in 2014, and will rise to 14.5 euros per tonne in 2015. The rate will again rise in 2016 to 22 euros per tonne emitted. President Francois Hallonde also pledged in September to reduce the country’s use of fossil fuels by 30 percent by 2030, and by 50 percent by 2050.

Companies who are currently participating in France’s Emissions Trading Scheme, an EU initiative to reduce emissions of carbon dioxide and other greenhouse gases, will be exempt from the tax, along with the fishing and transportation sectors.

The move is a win for environmentalists and those concerned about climate change, as a carbon tax has been shown to be essential to preserve a livable climate. According to a November study from the Organisation for Economic Cooperation and Development, a carbon tax is one of the most cost-effective ways to reduce emissions. Indeed, if the U.S. were to impose a carbon tax of $25 per ton of emissions, it would cut the deficit by $1 trillion over a decade, according to the Congressional Budget Office.

France’s adoption of a carbon tax is not the first environmentally friendly policy change the country has made recently. In October, France completed its ban on fracking, after a constitutional court upheld a 2011 law prohibiting the practice and canceling all exploration permits. The decision posted on the court’s website said the ban “conforms to the constitution” and is not “disproportionate,” effectively protecting it from any future legal challenge.

At the time, French Environment Minister Philippe Martin called it “a judicial victory but also an environmental and political victory … With this decision the ban on hydraulic fracturing is absolute.”

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