The Sarkozy letter: equal per capita; carbon tariffs

By Chris Layton

A cogent expression of trouble to come on both renewables and targets was provided by a letter from President Sarkozy to President Barroso on January 11 . He asked why France, which already has 25 % lower emissions than the European average thanks to nuclear power should have a stiff target for renewables. Sweden, with much of its energy coming from renewable hydro power, has a similar grudge. The move to auctions and a community cap will help resolve these issues, at least on emissions quotas for electric power and energy industries – half the Union’s emissions. France should have an interest in making the change effective and might see the political sense of backing a European carbon central bank, as it did Monetary Union.

President Sarkozy also suggested two wider principles: The first is that one day emissions quotas in the Union should be allocated on an equal per capita basis throughout the Union – a principle that could be applied one day to the two other largest parts of the Union’s emissions – housing and transport – if individuals are given a ’smart card’ to pay for their energy needs. The second is the valid concern of France (and European industry) that if the EU imposes binding emissions cuts, pushing up the carbon price, “a compensation mechanism at borders for imports from countries refusing to make binding cuts thus appears essential, whether it take the form of a tax adjustment or an obligation for importers to buy quotas”. Resolutions in the US Congress take up the same idea.

Carbon tariffs are contentious, with cries of unjustified protectionism coming especially from importers and developing countries. The answer is to build on the transformation of the ETS by reaching out to key developing countries such as India and inviting them to join it, in a balanced and binding north south deal based on the per capita principle which India, President Sarkozy and Chancellor Merkel now all espouse.

Gordon Brown, friend of justice for Africa and India, should like this global prospect, and ought to back the key move to a European carbon central bank. He made his name as Chancellor by giving the bank of England independence under clear political guidance. London, centre of the European carbon market, would be the natural candidate for a European carbon central bank.

Chris Layton is chair of Action for a Global Climate Community and author of A Community of the Willing; How Europe and the South can lead the world’s response to climate change. See www.climatecommunity.org