French Panel to Recommend Carbon Tax on Fuel

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Agence France Presse

French Panel to Recommend Carbon Tax on Fuel

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Greenpeace activists install a 16 meter (52 feet) inflatable iceberg on the Seine River in front the Eiffel tower in Paris July 7, 2009 to protest against climate change on the eve of the G8 Summit in Italy. (REUTERS/Gonzalo Fuentes)

PARIS - A French experts' panel is to recommend introducing a carbon tax on fuel from January 2010, as part of a government drive to slash global warming emissions, the group's head said on Wednesday.

The French government announced plans for a new Climate-Energy Contribution, aimed at steering consumers and business away from energy-hungry goods and services, following a nationwide environment conference in 2007.

A government-named expert panel headed by former Socialist prime minister Michel Rocard is to report back on Friday on how much the levy should be, which products should be covered, and what taxes can be cut to offset it.

Under Rocard's recommendations, leaked in Les Echos business daily and confirmed to AFP, France would bill 32 euros (46 dollars) for every tonne of carbon dioxide emitted in 2010, rising to 100 euros per tonne in 2030.

In practice the levy -- which Rocard said could come into force from 2010 "if it is technically ready" -- would add 0.077 euros (0.11 dollars) to the cost of one litre of unleaded fuel and 0.085 euros to a litre of diesel.

Household gas and fuel heating costs would rise by between 60 and 170 euros per year, depending on the type of building and method used, according to the French agency for development and energy control.

But the carbon levy would also generate some eight billion euros in new tax revenues, part of which would be used to compensate the most vulnerable French households and businesses, Rocard said.

Rocard -- whose proposals still need final approval from President Nicolas Sarkozy's government -- told AFP the net cost of the new contribution would be about 300 euros per year for around half of all French households.

His panel failed to agree however on whether to tax electricity, in part because much of the power pumped to homes and businesses comes from a mix of sources -- nuclear, hydraulic or coal -- some cleaner than others.

Rocard is to present his findings Friday to French Economy Minister Christine Lagarde and Environment Minister Jean-Louis Borloo.

French consumer group UFC-Que Choisir has already attacked the plans, saying they amount to subsidising business with a tax on households and warning against penalising families already feeling the pinch of recession.

Sarkozy's government has said it hopes eventually to extend the carbon contribution to all goods and services, to shift part of the overall French tax burden from labour towards polluting goods.

Four European countries -- Sweden, Denmark, Germany and Britain -- have so far adopted similar measures to curb consumption of energy-hungry products.

The French climate contribution is separate from a proposal floated by Sarkozy in March for a carbon tax on imports from countries which have lower environmental standards than France.

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