France to introduce carbon tax

France has stolen a march in the fight against climate change by announcing a new carbon tax on the use of oil, gas and coal.

The new tax will be introduced gradually from 2010 and will charge householders and businesses the equivalent of £15 per tonne of emitted CO₂.

Most electricity in France is excluded from the carbon tax because it is nuclear generated, but the new tax is expected to generate billions of Euros in revenue nonetheless.

In response to critics who say the tax is simply a prop for the country’s damaged finances, French President Nicolas Sarkozy insists the new tax is all about changing consumer habits and cutting energy consumption.

A spokesperson for the Environmental Transport Association (ETA) said: “Whatever else we do in this country, the introduction of a carbon tax is an essential tool to combat climate change. Education; persuasion; regulation; cap and trade and targets can provide reductions but a carbon tax, which only increases if we are not meeting our target of an 80% reduction by 2050, tells industry and the public at large that the government means business.”

How a carbon tax would affect the cars we drive

At the moment producing electricity from coal costs around 3p a kilowatt per hour (3p/kW/h). This is cheaper than burning natural gas or oil and that is why most power stations still use coal to generate electricity. Renewables cannot produce electricity this cheaply as electricity from wind turbines costs 4p/kW/h and the latest solar technology also costs 4p/kW/h.

However, once a Carbon Tax Commission set its rate for a carbon tax, the cost of producing electricity from coal fired power stations would cost more than renewables. From that moment almost all new “power stations” in this country would be wind or solar based (being Britain more wind than solar).

The nature of the national grid would change from the current ‘hub and spokes’ system to a peer-to-peer network system. This would radically reduce the cost of power supply and in turn enable cars to run on electricity (currently if all cars ran on electricity the national grid would struggle to cope).

This could allow cities (should they have wish to do so) to ban all vehicles that were not zero emission from all or part of their cities. The first bans could be on days and in places where local pollution is above World Health Organisation limits.

This will encourage the motor industry to build cars that can perform 100-mile round trips without refuelling, and filling stations to offer rapid electrical charging.

This could all happen extraordinarily quickly – faster than past changes in informatics – from computers to telephones and high-definition televisions. The reason is this. The informatics industry is big – a few hundred billion pounds a year, but the energy industry is huge – around three trillion pounds a year and demand for energy is growing rapidly. So the opportunity for renewables is mind boggling – as soon as the price it right.