France May Redirect Carbon Revenues To Power-Hungry Firms

Reuters 26/06/13 France is considering switching its use of revenues raised from carbon permit auctions next year, possibly giving funds to large, energy-intensive companies as Germany already does, sources with knowledge of the matter have told Reuters. France currently allocates its portion of revenues from the sale of European Union permits to the insulation of homes, but sources have told Reuters that may change in 2014. One source said the government is weighing the idea of compensation for such companies and noted the government’s emphasis on helping France’s struggling industrial champions. “The government said it will not compensate (costs for energy-intensive companies) in 2013, but did not rule out anything from 2014,” a second source said. Such state aid for companies is permitted under EU rules aimed at preventing so-called “carbon leakage”, or the outsourcing of activities and jobs to avoid CO2 taxes. Finance Ministry data shows there are 520 “sites” in France which qualify as electricity-intensive and therefore would qualify for the funds. Based on current carbon prices, revenues from permit sales in France would amount to about €300 million, Reuters calculations show. Germany currently uses part of the revenues from carbon permit sales to help energy-intensive companies. German government data shows that over 2,200 firms benefit. The carbon-derived payments must go into energy efficiency measures. The German government also offers such companies exemptions from network fee payments and from renewables support. France’s energy-intensive companies, such as Air Liquide , pay 30 per cent more for power than their German peers, reflecting both the refunds on permit sales and other exemptions, according to Uniden, the French union of energy-using industries. Power for delivery next year currently costs €37.50 ($53) a megawatt hour in Germany and €42.0 in France. Rio Tinto’s Saint-Jean-de-Maurienne aluminium plant in the French Alps is one plant threatened with closure because of high energy costs. Its 30-year electricity contract with French utility EDF expires in 2014 and its bill will rise as it catches up with current market prices. European power producers, among Europe’s main polluters, from this year have had to buy carbon permits in auctions under a scheme meant to reduce European carbon emissions. Taylor Scott International