In economic terms, climate change is what we call a market failure: we do not pay the right price for goods that have a heavy carbon footprint, because the cost of that footprint is not incorporated into their price. And as a result, we emit far too much carbon. At the beginning of the 20e century, Arthur Cecil Pigou introduced the polluter pays principle, proposing to make polluters pay the social cost of their activity. The idea is that if the price of a good increases because of its social cost, we will produce less of it. And conversely, if the price of a good decreases because it results in a social benefit, more will be produced.
In France, this idea began to gain ground at the end of the 1980s. At the time, France was seen as a very bad student when it came to the environment. It is therefore first a question of remobilizing French diplomacy on the climate. In 1989, France organized the Hague Conference with the Netherlands and Norway, which promoted the idea of a global atmospheric authority. And in France, Brice Lalonde will launch an interministerial working group on the greenhouse effect. This group is led by Yves Martin, who is a fervent supporter of the carbon tax, just like Brice Lalonde. We are starting to get French economists to work on modeling a carbon tax, which at the time was called an “ecotax”.
France sends a memorandum to the European Commission recommending the adoption of the ecotax at European level, a project that will be taken up by the European Commissioner for the Environment and Energy, the Italian environmentalist Carlo Ripa di Meana. And in October, the European Council of Environment Ministers approved the principle of an ecotax, which Europe will have to take to the international level, during the Earth Summit in Rio, convened for the following year.
But that was without counting on the mobilization of French companies, who will mobilize against this ecotax. At the head of the revolt, we will find in particular Elf Aquitaine, led at the time by Loïc Le Floch-Prigent. Companies will begin intense lobbying work with ministers who are more favorable to them: Edith Cresson then Pierre Bérégovoy, who replaced Michel Rocard at Matignon, Roland Dumas, who is in Foreign Affairs, and especially Dominique Strauss-Kahn, who is arrived at Bercy. Alfred Sirven, Loïk Le Floch-Prigent’s henchman at Elf Aquitaine, infiltrates the ministers’ entourage, and generously distributes bribes and various gifts. We must fight against the ecotax, which was at the time, as historian Christophe Bonneuil points out, the group’s main concern. We must therefore kill the ecotax, and everything goes: interviews at the Elysée, public conferences to denounce the ecotax, lies about the reality of climate change, doubting science… And finally it is the Strauss line -Kahn who wins: on December 13, 1991, he managed to postpone the European ecotax project until later, arguing for the need for additional economic analyses.
From there, the ecotax project was gradually buried: in May 1992, the European Commission made the project conditional on the implementation of a similar tax by the United States and Japan. And a few days later, the Council of European Energy Ministers completely withdrew the project, at the request of France: Dominique Strauss-Kahn argued that such a tax would be a threat to employment and the competitiveness of European companies. . This withdrawal will lead to the resignation of European Commissioner Carlo Ripa di Meana, who will refuse to represent the European Commission at the Earth Summit in Rio. This failure obviously leaves a bitter taste for Jean-Charles Hourcade. “Why is it failing?he asks himself. Because it is not brought into public debate. That’s the first thing. It’s still not a very important thing. And the second thing is that you have real interests behind it.”
But after this failure at the European level, the negotiations which are opening to prepare the Protocol will provide the opportunity to put the carbon tax back on the table. We must choose the instrument that will allow emissions to be regulated. Either we start with a fiscal approach, which allows us to set the price, but without controlling the quantities. Either we start with a market approach, which allows us to set quantities without pricing. It will be the second approach which will prevail, at the insistence of the Americans. It’s still a failure for the carbon tax. Never mind, the debate returns to the national level: in 2006, the ecologist Nicolas Hulot made the presidential candidates sign an ‘ecological pact’, which marks their attachment to ambitious environmental measures. Among these ‘concrete and applicable in the short term’ measures, we find the carbon tax. In 2007, Nicolas Sarkozy was elected president, and he was a signatory to the Pact. At the end of the Grenelle de l’environnement, he committed to the creation of a carbon tax, in return for a reduction in taxes on labor.
The President entrusts Michel Rocard with the presidency of a working group on the subject, which must make concrete proposals to him. To assist him, we have added the services of Yves Martin, who is undoubtedly the biggest supporter of the carbon tax in France. In July 2009, Michel Rocard submitted his report: the carbon tax was renamed “climate energy contribution”, and the report recommended setting it at 32 euros per tonne, an amount which would increase each year by 5% to reach 100 euros per year in 2030. Michel Rocard’s report notes the extraordinary consensus that is being forged among experts around the tax.
But if the tax has a consensus among experts, this is far from being the case in public opinion. Two thirds of French people are hostile to it, according to polls, and Prime Minister François Fillon wants to reduce the amount of the tax to 14 euros per tonne. On September 10, 2009, during a trip to Ain, Nicolas Sarkozy decided: it would be 17 euros per ton, half the amount proposed by Michel Rocard.
For environmentalists, it’s a cold shower. Cécile Duflot denounces a tax which only serves to replenish state coffers, but not at all to reduce emissions. And the socialists find the measure unfair for the working classes: they will refer the matter to the Constitutional Council. The law was passed on December 18, 2019, but it was invalidated by the Constitutional Council 11 days later, on December 29: the Council considers that the law creates a break in equality before tax, and provides for far too many exceptions. And in March of the following year, the government definitively buried the carbon tax project, believing that such a tax would be too detrimental to the competitiveness of French companies, and that a discussion was needed at the European level… A discussion that would never come .
It will ultimately be François Hollande who will unearth and resurrect the climate and energy contribution. In August 2013, the Minister of Ecology Philippe Martin was invited to the summer university of Ecologists, who were still called Europe Ecologie Les Verts. He is responsible for reassuring them about the government’s environmental policy, and takes the opportunity to announce the creation of a new carbon tax. On December 29, 2013, exactly four years after the censure of the Constitutional Council, the finance law for 2014 was passed, with a carbon tax which will come into force on April 1, 2014. Its starting amount is very modest, at 7 euros per ton of greenhouse gases, but the law provides for regular increases: 14.50 euros in 2015 and 22 euros in 2016. The objective is to arrive, through regular increases, at 100 euros in 2030: the objective of Michel Rocard’s report.
In 2018, the carbon tax is set at 44.6 euros per tonne. But it is on fuels that the increase is mainly felt, which penalizes households located in rural areas who are forced to use their car for business trips: this is the France of roundabouts. The increase in the carbon tax will be the starting point of the anger of the Yellow Vests. And faced with the anger of the demonstrators and the unpopularity of the tax, the government is resigned to freezing the tax increase.
Today, almost all experts recommend a relaunch, even moderate, of the tax increase: the current amount is insufficient to redirect consumption. At a minimum, we should reach the amount of 100 euros per tonne. In February 2022, the Council for Compulsory Deductions seeks to analyze the unpopularity of the tax: it notes that it weighs much more heavily on the poorest households than on the wealthiest, and recommends, to make it more acceptable, to deviate from the principle of non-allocation of revenue and use tax revenue from the tax for transition projects or support for more modest households.
In France, things are therefore at a standstill. But in the meantime, many countries have adopted a carbon tax, starting with Sweden, which adopted it in 1991.
And the carbon tax could well come back into favor via the European route: in 2022, as part of the Green Deal, the European Union adopted the principle of a Carbon Border Adjustment Mechanism, i.e. a carbon tax at European borders, for imported goods. It is a cornerstone of the Green Deal. In principle, the tax should apply from 2026 – unless there are no further reversals by then, of course…
“Climate failures”, a franceinfo podcast by François Gemenne in collaboration with Pauline Pennanec’h, produced by François Richer, broadcast by Thomas Coudreuse. A podcast to be found on the franceinfo website, the Radio France application and several other platforms such as Apple podcasts, Podcast Addict, Spotify, or Deezer.