Carbon Border Tax: an order of magnitude for French consumers

France - Apr 04 2019
  • #carbon
  • #inequality
  • #paris agreement

Carbon Border Tax: an order of magnitude for French consumers

The overall French carbon footprint is about 11 tCO2e per capita, but only 6.6 tCO2e is produced within the territory of France. This means that France doesn’t have direct means of action on a large part of its emissions because they are generated out of the country. One way to address this would be to establish a carbon border tax (CBT) that would increase tariffs based on the carbon content of imported products. In March 2018, French president Emmanuel Macron proposed a CBT at the EU border for imports from countries that are not aligned with Paris Agreement.

In France, a fuel carbon tax triggered the yellow vest movement because it was seen as a tax on an unavoidable expenditure, that would highly impact the most vulnerable households. To participate in the public debate, it seems important to assess the impact (before any redistribution) for different category of households. Figure 1 presents the impact of a limited CBT at 20€:

Figure 1: impact of a 20€/TCO2e Carbon Tax at the EU border for French households by income decile

Sources: Exiobase3, INSEE BDF, OFCE and BR calculations

Unsurprisingly, the most impacted decile is the first one (the poorest part of the population) with a loss of 1% of their disposable income (about 50€ per year). At the top of the pyramid, it represents about 0,3% and about 150€ per year and per household. It confirms that the richest are the main emitters in absolute terms but would be the least impacted relatively to their income. It opens the discussion to a redistribution process (proportional or fixed amount), full or partial and to local usage for decarbonation process and incentives.

However, this assessment might remain a theoretical exercise for a long time before members of the European Union agree on a Carbon Border Tax even for a limited type of product with an easy to calculate carbon content.

Emeric Nicolas, Head of Data Science Dpt.

Sources: Beyond Ratings, INSEE, OFCE

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