PARIS, Sept. 17 -- French Prime Minister Jean-Pierre Raffarin announced Tuesday he will introduce a tax increase of 2.5 centimes/l. on diesel fuel for private cars in the country's draft budget for 2004.
The reasoning behind the increase, Raffarin said, is "ecological" as the 800 million euros generated from the tax will be dedicated to developing rail in an attempt to reduce sulfur dioxide and other particles emitted by diesel-fueled cars.
Commenting on the move, Jean-Louis Schilansky, delegate general of oil industry trade group Union Française des Industries Pétrolières (UFIP), which encompasses Total SA, BP PLC, Royal Dutch/Shell Group and a unit of ExxonMobil Corp., told OGJ that he was in two minds about the tax hike. On one hand, he said, UFIP dislikes "tax increases on [its] products," while on the other hand, the union has always been in favor of reducing the gap between low diesel oil taxation and high gasoline taxation, which has greatly encouraged the purchase of diesel-powered cars in France.
Diesel-fueled cars currently account for about half of the automobiles driven in France with purchases of such cars rising at a rate of 3%/year. Meanwhile, there exists a corresponding decline in purchases of gasoline-fueled cars in that country.
The prodisel trend has caused a great imbalance for refineries, which are compelled to import 11-12 million tonnes/year of diesel fuel to satisfy France's needs while exporting 3-4 million tonnes/year of gasoline. "We would, of course, have preferred 'killing two birds with one stone' with a decrease of the tax on gasoline. This would have closed the gap more efficiently," Schilansky said, also admitting that this was mere wishful thinking.
France's increased diesel fuel taxation was taken in the framework of its research plan into "clean" cars. Road transportation in France reportedly accounts for 24% of green house gas (GHG) emissions.
Over the next 2 years, France expects to raise some 155 million euros in its 2005 budget through the possible creation of a tax on the heaviest polluting vehicles. The intention is to create less-polluting private vehicles within a 10-year span. The funds also will be used to design trucks and trains of the future.
France said it is committed to quartering its GHG emissions by 2050, which would entail a 3%/year decrease in emissions.