France supports floor price of fossil fuels to boost climate ambition

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BRUSSELS (Reuters) – The European Union should impose policies to support fossil fuel prices to protect the EU’s climate ambitions during its recovery from the coronavirus pandemic, the French government has said.

EU ministers meet on Tuesday to discuss the role of energy markets in supporting economic growth after the surge. A majority of EU countries have said that the EU’s stimulus package should maintain its Green Deal policy to decarbonize by 2050.

In a document sent to ministers before the virtual meeting, which was seen by Reuters, France called on the EU to use energy taxes or its carbon market to support fossil fuel prices, so that ” extremely low prices ”observed during the pandemic do not thwart climatic ambitions.

“The cost of fossil fuels should be proportionate to their true environmental impact in order to avoid overloading energy transition policies with unnecessary risks,” said the document.

France is proposing to set a minimum price for fossil fuels by modifying EU energy taxation or the emissions trading scheme (ETS), the EU carbon market policy which forces power plants, factories and airlines to pay for the carbon dioxide they produce.

This could be done by adding a minimum carbon price in the EU ETS and introducing measures to strengthen the ETS market stability reserve, which removes excess carbon permits from the system to avoid an accumulation of supply which could put pressure on the price of CO2.

But France’s proposal risks coming up against resistance from countries like Poland, which warned that the economic blow of the pandemic would make EU climate policies more difficult to achieve.

Poland has requested a review of the ETS in the light of the pandemic.

The European Commission, the bloc’s executive, plans to review the carbon market and EU energy taxation rules next year to align policies with its ambitions to cut emissions.

Countries, including the Netherlands, have previously asked for a floor price on the EU carbon market.

Report by Kate Abnett; Editing by Jan Harvey

Our standards:Principles of the Thomson Reuters Trust.

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