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Sarkozy Shelves Carbon Tax Plan

The French government unexpectedly dropped its proposal to levy a tax on carbon emissions, saying it preferred an EU-wide solution instead

France has abandoned plans to unilaterally introduce a tax on emissions in a move hailed by industry but criticised by environmentalists.

French Prime Minister Francois Fillon on Tuesday (23 March) told fellow centre-right MPs that the government will press for a carbon levy at EU-level instead and promised to ask the European Commission to step up work in the field.

"We want the decisions to be taken in common with other European countries, otherwise we are going to see a growing shortfall in our competitiveness," he said, according to the Financial Times.

The tax, unveiled with some pomp by President Nicolas Sarkozy in 2009, was due to raise ??3.5 billion to ??4.5 billion a year by adding a few cents to each litre of petrol and each household gas bill.

Mr Fillon's idea of an EU-wide levy is widely seen as a fig leaf for the government's retreat, which may have been caused by its heavy defeat in local elections at the weekend.

Denmark, Ireland, Finland and Sweden already have eco-taxes. But the UK, Germany, the Netherlands and Poland are highly unlikely to accept any EU tax-harmonisation moves.

Mr Sarkozy's own environment minister, Chantal Jouanno, hit out at the government on Tuesday. "I am in despair over this step back, in despair that eco-scepticism has defeated it," she said.

A group of 10 leading pro-green NGOs, including Greenpeace and WWF, also voiced disappointment.

"The carbon tax is no more and there is nothing left of your promise. We are outraged by the contempt that characterises this decision," they said in a joint letter to the French head of state.

The reversal met with a chorus of approval from business federations, however.

"We are relieved, for all industry, which could not bear this new handicap on competitiveness," Laurence Parisot, the president of the Medef employers' union, said in a statement.

"The fact that the carbon tax, which was in effect an extra economic penalty, seems to have been buried does not mean that manufacturers are not responsible for greenhouse gas emissions," Jean Pelin, the head of the chemical industry lobby, the UIC, said.

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