France expressed “reservations” about the social consequences of extending the carbon market to the building and transport sectors, a proposal put forward by the European Commission on 14 July.
The proposed extension of the EU carbon market is part of the Commission’s ‘Fit for 55’ climate action plan, which aims to help the EU meet its new target of reducing CO2 emissions by 55% by 2030.
Although France shares the European Commission’s ambition “to put Europe at the forefront of the climate fight,” it still has reservations about the social consequences of extending the carbon market to the building and transport sectors.
This “socially risky” reform of the carbon market, according to NGO association Climate Action Network, could increase the gas and energy bills of the poorest households in France and in Europe.
“France has reservations about the relevance of this measure and its consequences on households and small businesses. It will continue discussions to ensure that social justice and solidarity remain at the heart of climate action,” the Ecological Transition Ministry has warned.
The same is true of the conservative EPP group in the European Parliament: “While the proposal to create a Climate Action Social Fund is commendable so that the most vulnerable do not bear the brunt of the ecological transition, the European Commission seems to forget that it is the middle classes who, in France as in Europe, will bear the brunt of an increase in fuel prices,” MEP Agnès Evren commented.
The radical left party La France Insoumise (LFI) follows a similar line, expressing worries that the costs of pollution and decontamination will be borne by individuals, and not the polluting companies.
“The citizens pay, the polluters pocket,” it said.
Some fear the EU carbon market reform could lead to a return of the 2018 Yellow Vest movement in France, which saw protests against the increase in taxes on fuel prices.
“Do not make the mistake of extending the carbon market to heating and fuel. We experienced it in France, it gave us the Yellow Vests,” warned Pascal Canfin, the chair of the European Parliament’s environment committee, who called the proposed reform “politically suicidal.”
“There is a real risk of political mobilisation in several EU countries, particularly in France, where it is possible that this issue will be politicised nine months before the presidential elections,” said Thomas Pellerin-Carlin, Director of the Jacques Delors Institute’s energy centre.
According to Neil Makaroff of the Climate Action Network, the reform is all the more unfair as “heavy industry will be exempted from the polluter pays principle on the European carbon market until 2035.”
For its part, the European Commission is seeking to reassure and has announced its intention to create a €72bn European social climate fund to support those hardest hit by the reform. The subsidies will be used, for example, to purchase electric vehicles, install charging stations or renovate buildings.
“The European Commission has understood the social stakes. It is symbolically very strong. It is more intelligent than what the French government adopted in terms of a carbon tax in 2017-2018,” said Pellerin-Carlin.
This fund should be set up one year before the new European carbon market, in 2025. “This is the right logic. First, we help people and then we raise the prices,” he added.
But for MEP Philippe Lamberts of the Greens/EFA group in the European Parliament, the size of the social fund “remains limited and the fundamental problems for its creation are not addressed”. Lamberts fears “social imbalances,” and calls for “specific support for vulnerable citizens and people in fuel poverty to keep heating and fuel affordable.”
Other proposals in the Fit for 55 package seem to meet with consensus, however. Two key measures have particularly caught the government’s attention, starting with the carbon border adjustment mechanism (CBAM), which France has long been calling for.
“This tool is essential to ensure the effectiveness of our policies to combat climate change by preventing carbon leakage,” the ecological transition Ministry said. The mechanism should also make it possible to define a framework “compatible with international trade rules and in transparency with the Union’s partner countries,” it added.
Replacing free emission allowances under the EU carbon market with a CBAM is “extremely beneficial,” Pellerin-Carlin added because it removes incentives to pollute from the EU’s trade partners.
Another major positive point for France is the 2035 goal to have all new registered cars to be zero-emission. “It seems necessary to maintain an open technological approach that does not exclude high-performance plug-in hybrid vehicles and to provide support for the automotive industry,” the government said.
At the start of 2022, negotiations on the future Fit for 55 package will begin in Parliament. No doubt France will keep a close eye on the discussions on extending the carbon market to fuel and heating, particularly as it is set to take over the rotating EU Council presidency in January 2022 for six months.
“France is aware of the responsibility that will fall to it in the first half of 2022 and will be keen to move this emblematic issue forward during its presidency of the Council of the European Union,” the government said.