While Canada’s best effort at a carbon tax ended in failure, one worth about $25 a tonne seems likely to be adopted in France. The new tax is intended to be revenue neutral, with corresponding handouts to households (both those that pay tax and those that don’t) and corporations. Some expect the most significant impact to be on liquid fuel prices. Sweden has been rather more ambitious in this regard, having imposed a tax of about $100 per tonne on oil, coal, natural gas, liquefied petroleum gas, petrol, and aviation fuel used in domestic travel.
Like most carbon taxes, the French initiative includes significant loopholes – including for heavy industry and non-nuclear forms of electricity generation. Even so, it represents a bit of good news in the lead-up to the UNFCCC negotiations in Copenhagen this December. Hopefully, it will be progressively expanded to other emitting activities, at the same time as the level of the tax is progressively increased. Here, Sweden sets an encouraging example: when they imposed their carbon tax in 1991, it was at about 1/4 of its present level.
[Update: 23 March 2010] French government backs down on carbon tax plan