France pushes back on EU proposal for new carbon market

Published Thu, Jul 22, 2021 · 05:50 AM

Paris

FRANCE is pushing back against the European Union's proposal to launch a new carbon market for heating and road transport, a move that worries some other EU nations and that's quickly becoming the most controversial part of a new climate plan.

Days after the EU's ambitious plan to tackle climate change was announced, France began lobbying behind the scenes to water down or delay the new carbon market, a central plank of the bloc's proposal, people familiar with the matter said. Several countries, including the Netherlands and Hungary, are also concerned about its social impact, according to EU diplomats with knowledge of the talks.

Along with other European leaders, French President Emmanuel Macron is struggling to balance climate targets with his own political constraints. Mr Macron's government could intensify its push against the carbon plan when France takes over the EU's rotating presidency in January.

France's goal, the people said, is to try and build enough support to either scrap the proposal or adjust it to make room for increased financial compensation for people affected by the spike in prices the measure is expected to trigger.

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

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"It is going to be quite a hard nut to crack," Mr Vizjak said after EU environment ministers discussed the plan for the first time since the announcement. "I think at the beginning the commission will have quite a lot of explanations to make. But I'm sure that at the end of the day we will come up with a compromise" The new carbon market would extend emissions trading to heating and road transport as part of a broader package to align the economy with a target to cut emissions by at least 55 per cent by 2030 from 1990 levels.

While carbon markets can force a shift away from fossil fuels, they have also raised concerns that prices will be passed on to consumers, a highly sensitive issue for Mr Macron ahead of April's French presidential election.

EU officials claim that the new package, dubbed "Fit For 55", won't be too costly for average citizens. Instead, they say, revenues from the carbon market will back a fund to curb low-income households' fuel bills. The aim is to bolster existing transition funds and create a new one to protect the most vulnerable households.

The EU will now embark on a lengthy sales pitch for its ambitious plan, which has to be approved by member states and the European Parliament.

"We want to have it managed in a rather controlled manner so that the introduction of the price signal does not create a big revolution," Kurt Vandenberghe, EU Green Deal adviser to Commission President Ursula von der Leyen, said on Tuesday during a webinar. "That's why we will start only in 2026, and we have taken precautions to make sure there's no big shock to the system." BLOOMBERG

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