France rejects EU proposal for a new carbon market

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(Bloomberg) – France rejects the European Union’s proposal to launch a new carbon market for heating and road transport, a move that worries some other EU countries and is quickly becoming the most controversial part a new climate plan.

Days after announcing the EU’s ambitious plan to tackle climate change, France began to lobby behind the scenes to weaken or delay the new carbon market, a central feature of the bloc’s proposal, have declared people familiar with the matter. Several countries, including the Netherlands and Hungary, are also concerned about its social impact, according to EU diplomats familiar with the talks.

Along with other European leaders, French President Emmanuel Macron struggles to balance climate goals with his own political constraints, the Macron government could step up its fight against the carbon plan when France takes over the rotating EU presidency in January .

France’s goal, the people said, is to try to mobilize enough support to either drop the proposal or adjust it to make room for increased financial compensation for those affected by the spike in prices that the measure should trigger.

EU governments expressed “a lot of reservations” at a meeting in Slovenia on Tuesday on the carbon market, Slovenian Environment Minister Andrej Vizjak said.

“This is going to be quite difficult to resolve,” Vizjak said after EU environment ministers discussed the plan for the first time since the announcement. “I think that at the beginning the commission will have a lot of explanations to give. But I am sure that at the end of the day we will come to a compromise ”

The new carbon market would extend emissions trading to heat and road transport as part of a larger package aimed at aligning the economy with a target of reducing emissions by at least 55% of by 2030 compared to 1990 levels.

While carbon markets may force a move away from fossil fuels, they have also raised concerns that prices will be passed on to consumers, a very sensitive issue for Macron ahead of the French presidential election in April.

Political constraints

Macron often presents himself as a champion of the environment and has made climate concerns a flagship objective of foreign policy. But he’s also fighting the legacy of his controversial 2018 plan to increase gasoline taxes, which has sparked a wave of sometimes violent protests from most low-income workers dubbed the Yellow Vests.

While the Yellow Vest protests have largely subsided, some popular anger continues to focus on Macron, a former investment banker seen by many as out of touch with ordinary people. After more than a year of restrictions on public gatherings to contain the coronavirus, anger has returned in recent days, this time against Macron’s plan to isolate and pressure people who refuse to be vaccinated.

French Environment Minister Barbara Pompili called the commission’s plan in a recent television interview a mere “proposal” and stressed that “France has expressed reservations on the creation, increase in carbon taxes for buildings and transport “. Citing the yellow vests movement, she said that “when you don’t support people, it can’t work”.

Macron has at times been torn between ambitious environmental commitments, especially on the international scene, and economic interests. Politics also gained ground. His government recently scrapped a plan to try to enshrine environmental protection in the constitution after disagreements with lawmakers over how to word the provisions.

The country is also resisting the EU’s proposal to phase out sales of combustion-engine cars by 2035, arguing for a more lenient target and for hybrid vehicles to stay on the market longer than this deadline. and protect its automotive industry.

France opposes EU ban on combustion cars by 2035

EU officials say the new package, dubbed ‘Fit For 55’, will not be too costly for average citizens. Instead, they say, revenues from the carbon market will support a fund to reduce fuel bills for low-income households. The objective is to strengthen the existing transition funds and create a new one to protect the most vulnerable households.

The EU will now embark on a long sales pitch for its ambitious plan, which must be endorsed by Member States and the European Parliament.

“No big shock”

“We want it to be managed in a rather controlled way so that the introduction of the price signal does not create a big revolution,” said Kurt Vandenberghe, European Green Deal adviser to Commission President Ursula von der on Tuesday. Leyen, during a webinar. “That’s why we won’t start until 2026, and we’ve taken precautions to make sure there isn’t a big shock to the system.”

Still, a person familiar with France’s position said the EU’s pledges were not enough and the origin of these funds needs to be clarified.

A French Ecology ministry official said France’s reservations could be lifted after France does its due diligence on the EU’s proposal. While the Macron government prefers not to refer to yellow vests as a wild card every time, there could be a similar effect, the official said, citing the example of households using heating oil.

It is not clear, however, that France and other countries will end up blocking the carbon market plan. The bloc has largely agreed on ambitious – and costly – climate goals, and the years-long struggle for details has only just begun.

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