The French government is set to drop plans to introduce a carbon tax, reported French financial daily Les Echos. The newspaper, quoting several sources, said the socialist government will not include the carbon tax in a draft 2016 budget update currently being discussed, reports Reuters.
Environment minister Ségolène Royal had said in May that France would unilaterally introduce a carbon price floor of about 30 euros ($33) a tonne with a view to kickstart broader European action to cut emissions and drive forward the December 2015 United Nations-led international climate accord.
The plan had pushed power prices higher in the spring.
Les Echos quoted a source as saying that the measure is too complicated to put in place and might be unconstitutional.
The paper said that state-owned electric utility EDF, which produces mostly carbon-free nuclear power, was in favour of the measure, but that gas utility Engie SA had lobbied against the tax because it would make its gas-fired power plants less competitive than similar plants in neighbouring countries.
A source close to the French government told Reuters that nothing had been decided yet on the carbon tax but confirmed there were doubts about it.