France puts a price on carbon both through a national carbon tax system and through a common cap and trade system of the European Union. The national carbon tax (officially la composante carbone, CC; more commonly known as la taxe carbone) was launched in 2014. The tax, taking the form of an excise duty, is imposed on carbon, natural gas, and energy products according to their CO2 content. It is paid by households and businesses at the time of the purchase of the product. At the launch of the tax in 2014, the carbon price was set at €7/CO2-tonne, rising to €14.50 in 2015, €22 in 2016, €30.50 in 2017, and €44.60 in 2018. These figures were based on reference values (valeur tutélaire du carbone) defined by national experts with the help of macroeconomic and technological-economic models.
The carbon tax brings more than five billion euros of annual revenue to the state, a part of which sum is reportedly channelled into funding renewable energy. The tax was expected to result in 1 million tonnes of CO2 emission cuts in road transports and 2 million tonnes cuts in housing in 2014-2017. However, in the first years of its existence, the tax had little effect on curbing emissions, in part due to global oil prices simultaneously dropping to a 10-year low and neutralising the mark-up. On the other hand, experts have also noted that if the comparison is made with a counterfactual situation, where no tax would had been introduced, emissions would have been even higher than they were. For example, it is estimated that transport sector emissions in 2017 would have been up by between 0.6 and 1.7 million tonnes.
In 2018, President Émmanuel Macron planned to further raise the carbon tax, up to €86.20/CO2-tonne by 2022. However, the proposal met with violent popular protests by the yellow vests movement, who perceived the measure as socially unjust. The raise was eventually discarded, and the tax has since been frozen at €44.60. According to State Secretary Emmanuelle Wargon of the Ministry of Ecological and Inclusive Transition, future carbon tax raises can only be considered after a proper dialogue with the country’s citizens, notably through the Citizens’ Climate Convention initiative whose work will be finalised in April.
Besides the current freeze, another problem with the French carbon tax is that it allows exemptions for various economic sectors. Domestic air and water transport remain completely exempt, while for example agriculture and road transports have their taxes partly reimbursed by the state. According to the Institute for Climate Economics (I4CE), a think tank specialising on economics and finance on a mission against climate change, in 2017, the reimbursement in the agricultural sector was €46/CO2-tonne, while different types of road transports were reimbursed between €65 and €129/CO2-tonne. Consequently, the final carbon tax on agriculture was €2/CO2-tonne and up to €172/CO2-tonne for road transports. The exemptions have been painstakingly built in the law; the very form of excise duty was chosen because previous attempts at a carbon tax (in 2000 and 2009) as an environmental tax had been discarded due to proposed exemptions having conflicted with equality decrees. The I4CE argues that the exemptions are a great liability on public expenses – €6.9 billion in 2018 – and inconsistent with the country’s climate objectives. In addition to the national exemptions, also international and European Union regulations exempt various sectors, such as international air and maritime transport and the production of concrete and glass.
Besides the carbon tax system, France employs carbon pricing through the EU Emissions Trading System (EU ETS). Please see the European Union’s page for more information on the ETS program.
Activity rating: ** Standing Still
After the French carbon tax was frozen in 2018, it has not been raised, and the many exempted sectors make the system inefficient.
Write to the President of France, Mr. Emmanuel Macron, and Ministers for the Ecological and Inclusive Transition, Ms. Élisabeth Borne, Ms. Brune Poirson and Ms. Emmanuelle Wargon:
Dear Mr. President, Dear Ms. Ministers,
Experts in various fields agree today that the carbon tax is the most effective way of tackling greenhouse gas emissions. Climate Scorecard commends France for having put a carbon tax system in place. However, with the current urgent state of the climate, we call on you to take action to raise your ambitions on the carbon tax. The level of the tax must be brought up to date and the unnecessary exemptions must be abolished. To ensure the social sustainability of the system, we appeal to you to heed to the forthcoming propositions of the Convention citoyenne pour le climat. We furthermore strongly recommend establishing a climate income system, where in the carbon tax revenue is redistributed to the people.
With our respectful and best regards,
Send Action Alert Message to:
Mr. Emmanuel Macron
Ms. Élisabeth Borne
Ms. Brune Poirson
Ms. Emmanuelle Wargon
This Post was submitted by Climate Scorecard France Country Manager Anna Savolainen