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French Carbon Tax Requires Tracking to Be Effective

3p Contributor | Monday January 25th, 2010 | 2 Comments

By Michael Woelk CEO of Picarro

Last Wednesday the much debated French carbon tax got a new chance at life.  The tax was struck down on Dec. 29 after the country’s highest court called the bill anti-constitutional. The concern was that the proposed bill had too many exemptions, but there are other problems with the bill that haven’t yet been raised. First and foremost, the bill does not require anyone to track carbon emissions in the ambient air–without such tracking, it is impossible to know whether the tax is working. Many companies are trying to fill this unmet need in the market place–high-powered technology startups and big companies alike say they have software that can measure carbon output. This is patently false. Software can’t see inside a smokestack or a tailpipe. And estimates are only an invitation to cheating. Witness the rash of incidents where reported emissions are vastly divergent from actual atmospheric measurements.

So I’ll lay out a new manifesto. No carbon taxation without verification. Full stop. If we put in place carbon taxes that do not measure and verify carbon emissions, then we are selling a cure that could be a super drug–or it could be snake oil. We will never know unless we put measurement infrastructure in place.

Say that this tax goes through. France begins to levy taxes on all sorts of things including power plants, cement works, as well as smaller emitters and even consumers. This should put a direct cost on carbon emissions and force emitters to pay for what comes out of their tailpipes, their smokestacks, and their chimneys. How do regulatory authorities know or measure the level of emissions?

The answer is, they don’t and they can’t. Beyond a few industries that have in situ carbon monitoring, the actual emissions resulting from activities can vary widely depending on lots of variables. Weather, chemical composition and type of mechanism are all factors which play into real carbon emissions levels. So the tax is a guestimate in the best of circumstances–a blunt instrument. Even if sophisticated carbon management and inventory software are employed, the emissions tracked will at best be a highly educated guess. Are guess-based carbon measurements a good idea? Definitely not.

Consider this scenario: Ten years go by. Billions of dollars in tax money is paid out by French businesses and individuals. Lo and behold, the tax has a very marginal impact on reducing carbon emissions in France. In other words, the tax is a failure. Because actual emissions levels were not tracked, there was no way to put a true price on carbon emissions and regulators could not calibrate the tax to achieve the desired effect. And now its too late and such changes have become politically suicidal. Or how about this scenario: Taxes are levied and emitters figure out ways to cheat the system. We can’t tell they are doing this. So ten years down the road we don’t see reductions in atmospheric GHG. Oops. Too late. What’s worse, bad policies not only will draw popular animosity but will also make it far harder to institute better policies that might achieve the intended goal.

How much would a true emissions tracking capability cost to install in France? At present, France has a patchwork quilt of emissions tracking systems but nothing that could accurate measure carbon emissions on a national scale. Sure, French meteorologists have some models resulting from atmospheric measurements. But these are generally ad hoc and hardly definitive. We estimate it would cost less than $100 million to build a carbon emissions tracking network that would let French regulators measure outputs down to a 10 kilometer grid. (We estimate a U.S. tracking network would only cost $300 million).

This week, Goldman Sachs is poised to pay out billions of dollars in bonuses. So in my mind, construction of such a network – an insurance policy that will allow France to construct and test a smart carbon policy – is a total bargain. A measurement and verification network is not a political solution. It’s a necessary pre-cursor to any effective environmental or economic GHG policy. So everyone say it with me – “no carbon taxation without verification.”

Michael Woelk is the CEO of Picarro, a maker of easy-to-use gas analyzers that perform real-time autonomous GHG emissions measurements. Customers include Le Laboratoire des Sciences du Climat et l’Environnement , NOAA, the World Meteorological Organization, and the Chinese Meteorological Administration.


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