France warned off Carbon Price Floor in July 2016 report

France warned off Carbon Price Floor in July 2016 report

A report published in mid July [1] warned France away from replicating the UK’s Carbon Price Floor. The Carbon Price Floor in the UK stands at about €25 per tonne and applies to all electricity generation.

The authors of the report – Pascal Canfin (now director of WWF France), Alain Grandjean (former leader of the national debate on the energy transition), and Gérard Mestrallet (former CEO of energy company Engie) – suggest that, if a Carbon Price Floor was levied, domestically-produced electricity in France would lose out to imported power, which would not be subject to the charge.

In what appears an omission, the vital question of also applying the Carbon Price Floor to imported electricity doesn’t appear to be studied in the report.

Both the World Trade Organisation and European Union have repeatedly confirmed that an environmental charge can be applied to imports so long as equivalent measures are levied against domestic production (the principle of non-discrimination), and second, the measure is proportionate to the aim sought to be achieved (the proportionality test).

However, proceeding on the basis of a Carbon Price Floor that would be applied to domestic electricity only, the July report rejected this reform. Instead, the report goes on to recommend measures that apply only against French coal plants. The proposals are essentially pollution controls somewhat similar to those adopted under the clean power plan in the US.

However, France has only a handful of operational coal-burning power plants and the measures outlined in the report would not put a cost on climate emissions, steer France away from gas in the longer term, or make a significant dent in climate emissions. In fact, gas would likely become more embedded on the French grid.

Whether France will tease out the feasibility of applying a carbon price floor to imported electricity before tabling reform legislation in autumn / winter 2016 remains to be seen.

References

[1] http://www.developpement-durable.gouv.fr/IMG/pdf/Rapport_mission_12_juillet_19h10.pdf

Media coverage

http://www.platts.com/latest-news/electric-power/london/france-to-impose-carbon-tax-only-on-coal-plants-26491001

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