Why France Wants to Introduce A New Tax on Carbon Emissions

It’s hard to imagine a new tax getting a bigger cheer from a political leader than the one unveiled by Nicolas Sarkozy Sept. 10. The French President’s radical plan to impose a carbon tax on homes and businesses, he said on a factory visit in eastern France, addresses the “question of survival of the human race.” Slated for introduction next year, the levy marked the “first step,” Sarkozy said, in “a fiscal revolution.”

As Europe wrestles with the challenges posed by climate change, France’s new tax is unlikely to be the last. Governments in the E.U. and U.S. have tried other big levers in their efforts to choke harmful emissions in recent years. Large, industrial companies in Europe that pollute beyond acceptable levels have to pay up for the permission to do so, for instance; under plans approved by the House of Representatives in June and currently with the Senate, U.S. firms could be required to do the same. But in its bid to meet ambitious targets on greenhouse gas reductions, Europe looks set to try taxing emitters. The French plan, says Christian Egenhofer, head of the energy and climate program at the Brussels-based Centre for European Policy Studies, is just “the first salvo.” (See pictures of ways to boost energy efficiency.)

Sweden, Denmark and Finland all imposed similar levies as early as the 1990s, but France – should its lawmakers approve the plan – will become the biggest country yet to try taxes to slow global warming. Initially set at $25 per ton of emitted carbon dioxide (CO2), the tax on the use of oil, natural gas and coal would nudge up the cost of a liter of petrol by $0.06 ($0.23 a gallon), Sarkozy said, and diesel by a little more, helping generate roughly $4.4 billion in annual revenues. A pledge to return that money to taxpayers through various new rebates has so far failed to win over the public; two thirds of voters opposed the tax in a poll published by Paris Match days before the announcement. Denis Baupin, Paris’s green deputy mayor, likened it to “treating a gravely ill patient with aspirin.”

Time