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France commits to set a carbon price floor for electricity producers

The French government has committed to unilaterally set a carbon price floor for power generation companies as of 2017, in an attempt to boost renewable and curb cheap coal-fired power generation. The aim of the price floor is to reduce coal-fired power plants' operating times to 200 hours per year and that of gas-fired power plants to 500 hours per year, to save 12 Mt in carbon emissions. France is backing an European price corridor with carbon price floor and cap, to limit CO2 prices volatility and to incite low carbon investments; until an EU decision is made, the country will apply this carbon price floor alone.

Coal is currently benefiting from very low prices and from low carbon emission prices in Europe, making coal-fired power generation twice as profitable as gas-fired power plants. The last five coal-fired power plants in France are currently operating 4,000 hours per year, compared to 1,700 hours per year for gas-fired plants.

French's energy transition act ("loi de transition énergétique") has already raised the "energy and climate contribution" from €7/tCO2 in 2014 to €14.5/tCO2 in 2015 and to €22/tCO2 in 2016; it should reach €56/tCO2 in 2020 and €100/tCO2 in 2030.

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