The French government has decided not to introduce a carbon price floor of around €30/tonne as of 1 January 2017, citing concerns over the future of five coal-fired power plants in the country and risk over state-aid investigations from the European Commission.
That carbon price floor was proposed in the 2017 finance bill, that was due to be adopted by the Parliament in November 2016. It would have applied on the basis of CO2 emissions, but operators of gas-fired power plants such as Engie claimed that the measure would raise production costs and make French plants less competitive compared with foreign plants. In the summer 2016, the carbon price floor proposal was thus restricted to coal-fired power plants, which account for less than 2% of power generation. Uniper (E.ON), which operates two coal-fired plants, threatened to close them, inciting the government to cancel the project.
The United Kingdom has already introduced a domestic carbon floor price of £18/tonne (around €20/tonne), while Germany and several other European countries are considering a floor price for carbon emissions, an option that is increasingly supported by investment funds and companies.
Since 2008, carbon prices under the European Emissions Trading System (EU ETS) have fallen from around €30/tonne to €6/tonne due to a glut in emission permits.
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