France's Lead on Climate change Issue.

It is not often that this blog has praises for French president Sarkozy - in fact, it’s never happened - but one must render unto Caesar the things which are Caesar’s.

This week, Nicolas Sarkozy laid out his (radical) plan to impose a carbon tax on homes and businesses. Essentially, here’s the idea :

The tax would be initially based on the market price for carbon dioxide emissions permits, which is now euro17 ($24.74) per ton of carbon dioxide, Sarkozy said.

At that level, the government expects to raise euro 3 billion, which will be entirely returned to households and businesses through a reduction in other taxes or repaid via a so-called "Green Check," Sarkozy said.
The result would be a shift of the tax burden from other revenue sources to energy derived from fossil fuels in an effort to discourage their use.

There are many remarkable things about this plan :

• First, Sarkozy is delivering on a promise he made during the campaign but also during the Grenelle Environment round-table talks (Grenelle de l’Environnement) – France’s Green New Deal.
• the French president is fulfilling his promise against public opinion, which is I think a sign a of great leadership. (one does not govern by public polls).
• France will thus become the biggest country (with the largest economy) yet to try taxes to slow global warming. The smaller countries (Sweden, Denmark, Finland, Norway, Switzerland and parts of Canada) that have adopted similar plans have seen a significant reduction of CO2 emission.

Of course, one may always suspect Nicolas Sarkozy of ulterior motives – his ego showed up again when he talked about “saving the human race”, and of course, it is pretty clear that Sarkozy loves it when he can be in the lead. But so what? What matters also is that the rest of the E.U is likely to follow France’s example, which in turn might give Europe renewed credibility in international talks on climate change.

Of course, it will take strong leadership as people are always keen on helping the environment if someone else pays for it. And the French are no exception.

The most popular figure in France is environmentalist Nicolas Hulot who not only favors the carbon tax but “extracted a promise from all leading candidates during the 2007 presidential election that they would introduce the idea, if elected.” (Carbon taxes were also approved by an environmental conference, uniting politicians of all parties, pressure groups, unions and industry, in October 2007, a few months after President Sarkozy was elected.) Yet now in having to face the reality of it, the French are mostly against it. I understand they may distrust the government giving their money back with the Green check, but they should give it a chance if they have is any coherence.
The worst part is how the socialists jumped on the wagon of criticism on a plan they also initially favored. It blows my mind to see how much they are losing credibility on this (as on so many other things).

The good thing is that the French media – both left and right - have echoed such contradiction :

The centre-right paper Le Figaro says when Nicolas Hulot speaks about the carbon tax, everyone is in favour yet when Nicolas Sarkozy does the same, people disagree. Nicolas Hulot is a famous French television presenter who hosted a series on the environment. He is hugely popular and even considered running for the presidency. In the end, he didn’t but he used his popularity to get French politicians to sign an environmental pact. The paper says the time for words is over, action is needed and the tax should be introduced.

The left-leaning Libération is, for once, in agreement with Le Figaro. The paper says that the Ecology Party will inevitably claim the tax doesn’t go far enough while the Socialists will inevitably say the tax is unfair and hits the poorest hardest.
However Nicolas Hulot’s environmental tax was signed by all concerned so for the sake of coherence, the tax should be brought in and should be supported by all parties.

So the carbon-tax seems to me to be a sensible measure, no matter what ulterior motives Sarkozy may have. The French president has taken a lot of heat both the left who dimed his plan unfair to the poor and the right who fear protectionism in disguise. This makes me think it is actually a good emasure.

Sarkozy found a great ally in Nobel Price for Economics Paul Krugman's note in the NYT - and I could not agree more :

Yet when France’s Sarkozy says something entirely reasonable on the subject — and something that may well be an essential part of the politics of climate change policy — the usual suspects pop up declaring that it’s evil protectionism.
Again, it’s the economic principle that should matter — that and, um, saving the planet, which is is any case more important than the trading system.