Isramart : France adapts carbon tax climate plan

Isramart news:
France outlined new efforts on Wednesday to become the first big economy to tax harmful carbon emissions, with government proposals to curb pollution while protecting businesses.

The government proposed measures to amend a law that was rejected by the high court last month, days before it was to kick in -- an embarrassing setback for President Nicolas Sarkozy.

The tax is aimed at encouraging French consumers to stop wasting energy, but the court ruled last month that too many exemptions created inequalities and unfairly placed the burden of cuts on a minority of consumers.

Sarkozy had fiercely defended the measure in the face of strong public opposition, calling it a "revolutionary" approach in the fight against climate change and making it a pillar of his 2010 budget.

In a statement on Wednesday, the government said it planned to maintain a tax of 17 euros per tonne of carbon dioxide with compensation for households.

Certain "sensitive and energy-intensive sectors" will still receive special exemptions, with farming and fisheries paying just a quarter of the normal rate and road transport and shipping 65 percent.

There will also be sector-specific measures "to preserve the competitiveness of businesses," it said, without elaborating. Heavy industries subject to European quotas which become payable in 2013 will be taxed until that date.

Meanwhile the government said it will launch a consultation next month with businesses and environmentalists on how to shape the tax, it added.

The government said it would also push for an EU-wide carbon tax that would also apply to imports into the bloc, "which would establish fair competition for businesses based in Europe."

France would be the biggest economy to apply a direct carbon tax, mirroring measures that exist in Sweden, Denmark and Finland.

The government agreed that a new bill will be submitted to parliament for entry into force on July 1.

While pursuing environmental reforms on the one hand, Sarkozy risks jeopardising another of his major priorities: making French businesses more competitive.

The leading business association, Medef, called on Tuesday for the tax to be postponed to 2011 and said it should be introduced throughout the European Union in order to avoid putting French industry at a competitive disadvantage.

A poll released Wednesday showed that the public appeared to have turned against the planned tax. The survey by pollster ViaVoice showed 51 percent of the French thought the government should abandon it.

Reacting to the government's announcement on Wednesday, Green party leader Cecile Duflot said the carbon tax "will provide absolutely no way of handling the transition of energy" to clean sources.