France Passes New Energy Law Quadruples Carbon Price

French lawmakers adopted a long-delayed energy law that will reduce the country’s reliance on nuclear reactors and raise carbon prices almost fourfold.

Lawmakers late Wednesday passed legislation that included a last-minute amendment initially rejected by the government to increase the target price of carbon to 56 euros ($61.48) a ton in 2020 and 100 euros a ton in 2030, according to the National Assembly website. The rate, now 14.50 euros a ton, climbs to 22 euros a ton in 2016 and is integrated in a levy on fossil fuels.

The rise provides “visibility” to the business community on how carbon prices will evolve, Environment Minister Segolene Royal said. Higher taxes on fossil fuels will be offset by lower levies on other products, she also said.

The new energy transition law, passed by a show of hands with no count to be published, reflects a campaign pledge three years ago by President Francois Hollande to cut France’s nuclear-energy reliance in favor of renewables.

The law stipulates that nuclear reactors should provide half of all power output “by around” 2025. Electricite de France SA’s 58 reactors currently provide about three-quarters of French electricity production.

Engie Chief Executive Officer Gerard Mestrallet said Thursday on France Inter radio that he favors a carbon price. Business leaders including six European oil majors had come out in recent months for a carbon-pricing mechanism as an incentive to move to cleaner energies and cut climate-changing emissions.

The law, which also caps nuclear capacity at today’s 63.2 gigawatts, had been delayed by industry resistance and ministerial changes. The opposition-led Senate watered down nuclear provisions and backed the higher carbon price.

UN Summit

France, host of a United Nations climate summit at the end of the year, will have to raise the proportion of renewable energy to 23 percent of total consumption by 2020 and 32 percent by 2030 when renewables have to make up 40 percent of power output, according to the new law.

France will also have to lower carbon emissions by 40 percent by 2030 compared with 1990. The law stipulates lowering energy consumption by a fifth by 2030 and by half by 2050 as well as reducing “primary” fossil-fuel consumption by 30 percent in 2030 compared with 2012.

An increase in the carbon price in 2016 will raise the price of diesel by 2 cents a liter and 1.7 cents a liter for gasoline, according to calculations by the French oil lobby Union Francaise des Industries Petrolieres. A boost to 56 euros a ton in 2020 will add 9 cents a liter to the price of diesel and 7 cents a liter to gasoline compared with 2016 prices.