French Minister Backs Diesel Tax Gain to Cut Dangerous Pollution

French Environment Minister Delphine Batho backed higher taxes on diesel fuel to cut pollution that’s dangerous to health and to reduce demand pressure on refineries.

“It’s inescapable,” Batho told RMC radio today when asked whether lower taxes paid on diesel compared with gasoline should be eliminated. “I am favorable. It’s a public health issue.”

Diesel, about 80 percent of the French car-fuel market, has been taxed less than gasoline for decades because of its use for trucks and farm vehicles. Carmakers have developed engines that run on diesel as consumers favored the cheaper fuel. About 73 percent of new cars sold in France last year ran on the fuel, figures from the French automakers’ association show.

Diesel demand gained 7.5 percent last year to 38.1 million metric tons, compared with a 6.5 percent drop in gasoline to 7.3 million tons, Union Francaise des Industries Petrolieres figures show. France imported 20.5 million tons of the cheaper fuel last year to meet demand, while exporting 4 million tons of gasoline.

Taxes should change “very gradually,” according to Jean- Louis Schilansky, head of the oil industry lobby. “It should be done in a determined way over the next five years,” he said.

The diesel tax rate makes it 20 cents cheaper than gasoline for each liter (0.26 gallon), according to the lobby. Making the rates the same would bring about 8 billion euros ($11 billion) into state coffers each year based on demand last year, it says.

Exhaust from diesel engines causes lung cancer, the World Health Organization said in June, citing a review of studies. It is also linked to increased risk of bladder cancer, according to the International Agency for Research on Cancer, based in Lyon.

The group published the findings after an eight-day review by a panel of scientists. An earlier review in 1988 classified diesel engine exhaust as “probably carcinogenic.”

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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