May 12, 2015 / 6:02 PM / 2 years ago

Veolia CEO says EU companies could agree on robust carbon charge

PARIS, May 12 (Reuters) - European companies should be able to reach consensus on ambitious plans for carbon emissions reduction at the business and climate summit in Paris next week, Veolia Chief Executive Antoine Frerot said.

The French water company’s chief said that CEOs of large European businesses that met in Davos in January broadly agreed on the need for a “robust” carbon price and that the 30-40 euro level Veolia supports had been discussed.

Frerot said that 30-40 euros per tonne would be a level at which environmental measures such as carbon capture and storage become economically feasible.

“A relatively ambitions consensus should be achievable,” he told reporters on Tuesday.

Frerot said that there has been no agreement on whether a carbon charge should take the form of a tax or a market mechanism, but this might be discussed at the two-day summit that starts on Wednesday.

“The market approach has been tried but has not been a great success. We need to find another way,” he said.

Some top companies prefer a carbon tax because it would be more stable, though they acknowledge that it would be hard to get the 28 EU member states to reach agreement on such a move.

Exxon Mobil Vice President of Strategic Planning Bill Colton said in Brussels this month that a tax is easier to administer. His company’s 2040 energy outlook assumes a $60 per tonne carbon cost.

Some EU countries have already put in place a tax to compensate for the shortcomings of the European Emissions Trading System (ETS), in which carbon allowances currently trade at around only 7.60 euro a tonne.

British utilities pay a carbon tax of 18 pounds ($28) per tonne on top of the EU carbon allowance price.

Frerot said that to prevent a tax from becoming a competitiveness issue for EU businesses, the EU could consider a greenhouse gas emissions tax at its borders.

“This way, the EU would by a pioneer by encouraging its main trading partners to reduce their carbon emissions,” he said.

Critics say it would be hard to assess the carbon footprint of all EU imports and a tax could be seen as protectionism.

An EU plan to impose carbon charges on global airlines was dropped after an angry response from countries such as China.

“Retaliation could be avoided if we convince world leaders that a tax would primarily target global warming,” Frerot said. ($1 = 0.6379 pounds)

Additional reporting by Barbara Lewis and Susanna Twidale; Editing by David Goodman

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