| Sourced From Energytribune.com |
European governments are warming to the idea of taxing end-users directly for their carbon emissions. France, despite popular opposition, has announced it will introduce a so-called carbon tax next year, and Ireland has suggested it may do the same.
But why now? And is this a trend that could spread throughout Europe or to other countries?
The idea is not new. In the early 1990s, the European Commission attempted to impose a regional carbon tax, but it failed as member states, including France, rejected the concept of allowing tax policy to be controlled by Brussels. Instead, policymakers and industry agreed on the European Emission Trading Scheme, in which carbon credits are traded.
But the system hasnt been all that effective, most agree, although its real implementation wont start until 2013. Still, less than half of the blocks emissions are actually included in the trading scheme. Industries are also allocated a number of credits for free, thus pushing prices lower and eroding the incentive to cut their carbon emissions.
In announcing his decision earlier this month, French President Nicolas Sarkozy tried to convince French citizens about the plan, which still needs to be approved by parliament. He also said he would like other European countries to follow Frances lead and that France may impose tariffs on products from other countries that are not carbon friendly, to make up for the decreased competiveness of French industries.
The French carbon tax will take effect in January at the equivalent of $25 per ton of carbon dioxide emissions. Thats equal to about 23 cents per gallon of gasoline and it will be applied to diesel, gasoline, and coal. The French power sector, which gets 80 percent of its electricity from nuclear reactors, will not be affected. Most French said they oppose the measure, although slightly more than half also said they would agree if it was fiscally neutral, as Sarkozy claims.
Critics, including environmentalists, say the price per ton is too low to alter peoples behavior, although it will increase gradually over time. The initial proposal by an independent commission led by former Prime Minister Michel Rocard argued that the minimum price to have an effect is $46 per ton.
Other European countries, including Sweden, Denmark, and Norway, have already imposed carbon taxes, but France is the biggest country to embrace it. Sweden, which holds the rotating EU presidency, has been lobbying other member states for a Europe-wide tax. It was the first in 1991 to impose a carbon tax starting at $40 a ton. Now it is almost $168 a ton.
Spain and Ireland, which until recently were considered unlikely candidates to follow suit because of their high unemployment rates, are also weighing adding similar levies next year. Irelands Finance Minister, Brian Lenihan, said recently that the government would not raise taxes to finance next years budget, with the single exception of a carbon tax. He didnt offer further details.
Spains Prime Minister Jose Luis Rodriguez Zapatero, which has announced a fiscal reform to raise more money to control a rampant deficit, called the carbon tax an
Related posts:
