France to set carbon tax at €14 a tonne

The French government is poised to introduce a carbon tax of €14 (£12.22) a tonne from next year, brushing aside concerns that unilateral emission taxes could force carbon-intensive businesses to leave the country.

In an interview with Le Figaro magazine to be published tomorrow, prime minister Francois Fillon said the government would introduce the tax at a level in line with the current carbon market price of €14 a tonne before increasing it over time.

The bulk of France's electricity is generated by nuclear power plants and as a result the tax is expected to focus on transport fuel and fuels used for heating.

The announcement sparked immediate protests from motorists and haulage firms, but Fillon said that measures would be undertaken to protect businesses and poorer families from the impact of the tax.

He added that the entire €5.7bn that is expected to be raised by the tax will be redistributed to taxpayers through lower income and business taxes and new " green cheques" designed to be spent on environmental initiatives. "I assure you there will be no increase in the obligatory taxes," he said. "The carbon tax is about transferring taxation, it is not a new tax."

The proposals fall well short of those set out by an independent advisory panel headed by former socialist prime minister Michel Rocard, which had recommended setting the tax at €32 a tonne, rising to €100 a tonne by 2030.