France calls for minimum carbon price to counter oil crash

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Oil prices of around $ 20 a barrel do not reflect the cost of the climate, French government argued before meeting of EU energy ministers

The Covid-19 crisis should strengthen Europe’s determination to reach the climate goals of the Paris Agreement by setting in motion policies that keep the prices of fossil fuels above a minimum level, said the French authorities. .

With oil prices hovering around $ 20 a barrel, world markets are inundated with excess oil that could jeopardize the clean energy transition, France warned.

“The extremely low prices of fossil fuels” recently seen on world markets “do not reflect their true cost to the climate,” say the French in a position paper sent to other EU member states.

“The cost of fossil fuels must be proportionate to their true environmental impact,” says the document, obtained by Euractiv.

The French document was distributed to national delegations before an informal video meeting of European energy ministers on Tuesday April 28.

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“The French authorities believe that these market conditions clearly plead in favor of mechanisms guaranteeing that these energies remain constantly above a certain floor price” from the point of view of consumers and investors alike, he said.

Such a mechanism could take the form of a “carbon floor price” which could be implemented either through the EU emissions trading scheme or by the Directive on the taxation of carbon dioxide. energy, which is to be reviewed under the Europe Green Agreement, the document said.

The United Kingdom has set an example in the European Union, introducing a floor price for carbon in 2013. But the idea is controversial in Poland, a country dependent on coal, and in other countries of central Europe. and eastern, which will probably be the hardest hit by the measure.

If adopted, the EU carbon floor price should be accompanied by social policies for regions in transition where jobs will be destroyed, said French President Emmanuel Macron during a visit to Brussels in 2018.

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The French are also concerned about the impact of the drop in electricity prices on the EU carbon market, saying that urgent measures should be taken to avoid an overabundance of emission allowances which would lower carbon prices.

“In this regard, the French authorities consider that a strengthening of the stability reserve of the EU ETS market must be implemented without delay to face the risk of resurgence of the structural surplus,” the newspaper said.

According to the French, “the current situation also calls for the rapid implementation of the carbon border adjustment mechanism” in order to prevent factories from leaving Europe in the face of rising carbon costs at home.

But these measures alone will not be enough to boost investment in clean energy and ensure a green recovery from the coronavirus crisis, the newspaper said.

More fundamentally, France is worried about structurally low electricity prices, saying that they hamper investments in new low-carbon electricity production capacities, which are absolutely necessary to achieve the decarbonisation objectives of the EU.

He says EU political reforms are needed to “secure funding for carbon-free electricity production”, which “does not exclude low carbon technologies” – a veiled reference to nuclear energy .

This story was originally published by Euractiv, media partner of CHN.

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