PARIS, France, Oct. 9, 2000—Over the objections of large energy consumers, the French government has released a draft law which extends the General Tax on Polluting Activities to corporate energy consumption.

The tax, to be deducted from taxable profits, will affect all enterprises with energy consumption of more than 100 tonnes of oil equivalent (toe)/year.

Excluded are farmers and the fishing and forestry industries. To avoid duplicating taxes, energy production will not be taxed.

Some 44,000 enterprises out of a total of 2.8 million will be concerned. The tax will bring in a little under 4 billion francs in 2001. It has been calculated on the basis of 216 francs/toe and according to the carbon content of the fossil fuel used.

For instance, heating oil will be taxed at a rate of 18.9 centimes/litre, coal 208 francs/tonne, and industrial natural gas 1.3 centimes/kw-hr. Nuclear and hydropower electricity will be taxed on a lump sum basis of 1.3 centimes/ kw-hr.

Special measures were introduced for companies that use “over 50 toe per million francs of added value” so that their international competitiveness will not be eroded. These involve 5-year voluntary emission reduction engagements, “quantifiable and controllable,” to be signed from 2002 onwards with the administration.

In this case, the tax will only be levied on energy consumption that exceeds the stated targets. These companies will, in due course, be allowed to take part in emission credit trading.

In 2001, before these agreements can be signed, the draft law provides a taxing of large consumer companies on the basis of their annual consumption, but with abatements of 50%, 80%, and 90%, depending on how much energy has been consumed.

Both the chemical and oil industries are unhappy over a tax against which they had been heavily lobbying. They were advocating no tax at all on energy to be replaced by voluntary greenhouse gas emission reductions.

They point out that their competitiveness will be harmed with regard to countries like Germany or the UK, where only voluntary reductions have been introduced with no taxation.

“What is likely to happen,” president of the chemicals trade group Ren