Page last updated at 13:33 GMT, Wednesday, 30 December 2009

France to rethink carbon tax plan

Paris traffic (file pic)
President Sarkozy says the French must cut their energy consumption

A new carbon tax that was supposed to go into effect in France at New Year has been struck down, delivering a blow to President Nicolas Sarkozy.

France's Constitutional Council, a legal compliance watchdog, said there were too many exemptions for polluters in the tax plan.

The body said 93% of industrial emissions, other than fuel use, would be exempt from the tax.

The tax was set at 17 euros (£15) per tonne of emitted carbon dioxide (CO2).

Prime Minister Francois Fillon has said the government will now work on a new law taking account of the legal ruling.

The tax was aimed at encouraging consumers to use less oil, gas and coal. It would have meant a rise in the price of fuel for cars, domestic heating and factories.

But it did not apply to the heavy industries and power firms included in the EU's emissions trading scheme.

Most electricity in France - excluded from the carbon tax - is nuclear-generated.

According to France's Le Monde newspaper, the tax would have generated about 4.3bn euros (£3.8bn) of revenue annually.

Commenting on the ruling, French government spokesman Luc Chatel said "France has shown that it is a leader in the fight against climate change and it will remain at the forefront by presenting new legislation on 20 January".

The Constitutional Council said the "large number of exemptions from the carbon tax runs counter to the goal of fighting climate change and violates the equality enjoyed by all in terms of public charges".

It said more than 1,000 of France's biggest polluters would have been able to avoid the tax.

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