PARIS Oct 7 France's plan to introduce a carbon
floor price mechanism will involve either charging coal-fired
power plants a flat rate for emissions or imposing a flat tax on
power facilities, according to an official document seen by
The plan, which will be finalised by next week, will target
only coal power plants initially.
France said in April it will unilaterally set a carbon floor
price for electricity producers, a move aimed at curbing
coal-fired power generation and boosting renewables in the
absence of a concerted European effort to strengthen carbon
The proposals outlined in the document, signed by the French
economy, finance, environment and budget ministers in September,
will be finalised and submitted next week for inclusion in a
revised 2016 budget bill to be adopted by November. They could
come into effect in January.
The first option would remove tax breaks on carbon used in
power production, and charge the power producer a flat rate for
its carbon dioxide (CO2) emissions.
The rate would take into account the cost of the European
Trading System (ETS) carbon allowances, whose prices have
tumbled to around 5 euros per tonne from 30 euros a decade ago
due to a glut of permits.
The proposal suggests that at the current ETS allowance
price of around 5 euros, the price floor imposed would be at
least 30 euros per tonne of CO2.
Such a move however, could entail legal risks vis-a-vis
French and European Union laws, the ministers said in the
There are five coal-fired plants still in operation in
France with a total installed capacity of 2.9 gigawatts owned by
state-controlled utility EDF and Uniper, a
German energy generation and energy trading company.
The other option would be to impose a flat tax on power
production facilities based on their level of carbon dioxide
emissions, although the document did not provide details.
The government will also look at compensation measures that
could be put in place so as not to put French consumers at a
The plan will target only coal power plants initially to
avoid broader disruptions to the power system.
"Evaluations during the last months have shown the risks
associated with a unilateral implementation of a carbon floor
price on the entire electricity production chain, notably in
terms of security of supply and job losses," the document,
signed by the French economy, finance, environment and budget
ministers in September, said.
Industry experts came up with the latest proposals after an
advisory committee created by Environment Minister Segolene
Royal recommended in July that France increase taxation on coal
power plants, or set stiffer carbon emissions standards on power
($1 = 0.8977 euros)
(Reporting by Bate Felix; Editing by Susan Fenton)