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OECD Paper Evaluates Cost Effectiveness of French Environmental Policy

22 April 2011: The Organisation for Economic Co-operation and Development's (OECD) Economic Department has released a new working paper, by Balázs Égert, titled “France's Environmental Policies: Internalising Global and Local Externalities.”

This working paper evaluates the French policy to reduce greenhouse gas (GHG) emissions by 75% by 2050 (compared to 1990 levels) in terms of cost effectiveness, focusing on the policies and costs surrounding: carbon pricing; renewable and nuclear electricity generation; carbon intensity of the residential and transport sectors; waste management; and water management costs related to fertilizers and pesticides. It also compares French emissions status, potential and mitigation costs to other European countries, and makes a number of policy recommendations in each of the aforementioned policy areas. It identifies the current overarching challenge facing France in regard to decarbonization as the need to internalize global and local externalities in order to increase the cost-effectiveness of environmental policies.

Recommendations on greenhouse gas (GHG) emissions reductions include: systematically evaluating abatement cost options and emphasizing low-cost options in future policy; introducing a carbon tax in line with requirements set forth by the Constitutional Council; and unifying excise taxes on fossil energy products.

Recommendations on transport include unifying taxes on car purchases on the basis of carbon emissions and local pollution. Recommendations on electricity production include: promoting technologies to smooth high-carbon peak demand; altering and reducing subsidies to renewables based on marginal abatement costs; and improving sustainability of radioactive waste management. [Publication: France's Environmental Policies: Internalising Global and Local Externalities]