L’impôt carbone

The carbon tax was ruled to be in conflict with the constitution of France. The proposed French carbon tax is very similar to the Irish carbon tax (but 2 euro higher). The stated reason (IN THE GUARDIAN) is that emissions already regulated under the EU ETS would be exempt from the carbon tax. This is exactly as it should be. Anything else would be double regulation. In fact, as I argue here, a domestic tax on an internationally traded permit would not reduce total EU emissions (it would reduce French emissions and increase emissions elsewhere in the EU) but it would increase costs in France and the EU as a whole.

[DELETE: A bad decision, so.]

This may well have ramifications for EU climate policy, probably in the form of a renewed call for an EU wide carbon tax.

ADDITIONs: translated press release, original press release by the Constitutional Court

The court’s decision seems to rest not so much on the fact that some will pay taxes and others need permits, but rather that the permits are given away for free. The court did not rule in favour of double regulation, but against grandparenting for some.


Courtesy of Sarah Parlane, a new translation

Press release
Decision n° 2009-599 DC – December 29, 2009.
Finance Act for 2010.

On December 29, 2009, the Constitutional Council, by its decision n ° 2009-599 DC, ruled on the Finance Act 2010 which had been seized by over sixty members and over sixty senators. Applicants challenged the reform of the business tax which will be substituted by a territorial economic contribution. They also challenged some propositions relative to the carbon tax plan, the per diem work injury, the increase of the
domestic consumption tax for fuels and the extension of the active solidarity income to some young people under twenty-five years.


Secondly, the Council found that, in relation to the carbon tax, the broadly applicable authorized exemptions were contrary to the objective of reducing global warming and generated some “tax discrimination” in relation to public contributions. As a result it has censored the whole policy regime relative to the carbon tax (articles 7, 9 and 10).

II – Contribution carbon.
Article 7 of the law introduced a carbon tax. The parliamentary analysis outlined that the objective of this measure is to introduce a mechanism capable of reducing greenhouse gas emissions significantly in order to reduce global warming. To achieve this, it advocated “to impose an additional tax on fossil energy consumption” to induce businesses, households and governmental agencies to reduce their emissions.

However, Articles 7 and 10 of the Act also stipulated some exemptions, discounts, partial refunds and specific rates. According to these, the following emissions were not subject to the carbon tax:
– those of the thermal generating plants producing electricity,
– those of the 1018 most polluting industries such as refineries, cement producers, coke and glass factories,
– those of chemical industries relying heavily on energy,
– those of double-use products,
– those of energetic products used in electricity consumption,
– those of air and public transportations.
Furthermore, a discounted rate applies to the emissions issued from agricultural production, fishing, road freight and shipping.

Hyun Shin: New Advisory Position

Hyun Shin of Princeton has been among the most insightful analysts of the global crisis.  He now has taken on a new role: helping Korea in its presidency of the G20 during 2010, as chief advisor on international economics to the President of Korea .

You can learn more about his research here.

The announcement of the new position is here.

Politics and Economic Policymaking

This field of study addresses issues such as the factors militating against the adoption of growth-enhancing policies, even when politicians themselves might favour them, and the various sources of political cover that might be available to help resist such pressures.  (Some of the bigger questions can be intuited from the way I’ve phrased these particular ones).  A former student of mine emailed me recently to say that she found these topics “ridiculously interesting; it’s almost like reading gossip”.  (Thank you, N!)  I haven’t yet begun to model these processes (spent the semester boning up on game theory with the intention of doing so) but some of my musings on the topic (in the context of the last 50 years of Irish economic history) are available in this recent paper.  I have discussed other examples of available political cover, such as the “golden straightjacket” of EU and WTO rules (to use Thomas Friedman’s phrase from The Lexus and The Olive Tree) , in other recent writings.

Dublin Bikes

he Irish Times has a story reminding us of the runaway success of Dublin Bikes, the bike rental scheme in Dublin city. The question is why is this so popular? It strikes me that Dublin is small enough to cycle but too big too walk, while motorised public transport is inconvenient and taxis too expensive.

Dublin Bikes copies Velo’v in Lyons, which was introduced in May 2005. There is no academic literature on who uses these bikes and why (but there is work on the trips taken). Bike rental is typically presented as a complement to other forms of public transport. A look at the station map suggests that Dublin Bikes are used to get around the city, rather than get into the city. Bike rides would thus replace bus rides and walks. Assuming that Dublin Bus did not respond by changing routes or frequencies, that means that Dublin Bikes does not reduce emissions and increases congestion by putting more bikes on the road.