By Stephanie Peatling
    Reuters

    Wednesday 15 November 2006

    France has threatened to tax imports from countries that have not signed the Kyoto Protocol on greenhouse gas emissions.

    Its Prime Minister, Dominique de Villepin, told a meeting on sustainable development yesterday: "Europe has to use all its weight to stand up to this sort of environmental dumping."

    "I would like us to study now with our European partners the principle of a carbon tax on the import of industrial products from countries which refuse to commit themselves to the Kyoto Protocol after 2012."

    Exports to France were worth $781 million in 2004, making it Australia's 23rd largest trading partner. Major exports include coal, iron ore and uranium.

    The Prime Minister, John Howard, announced on Monday the establishment of a taskforce on emissions trading, but he said of Mr de Villepin's remarks yesterday: "That is a thoroughly silly proposal and is totally out of touch with reality."

    Mr de Villepin's statements, which were published on his official website, do not appear to be an idle threat. French officials are expected to broach the plan at talks on climate change being held in Nairobi, with specific guidelines to be released early next year.

    "The environment is a global issue," Mr de Villepin said.

    "Our efforts will be worthless if we are the only ones fighting for the future of the planet."

    The Australian taskforce is likely to draw up proposals for carbon trading that do not impose onerous penalties on industry. All states and territories have tentatively approved a "cap and trade" scheme to limit emissions, although Queensland and Western Australia are wary of its effect on mining.

    The scheme would work by capping the amount of greenhouse gases produced by industry, starting with electricity generators, which account for nearly half of emissions. There would be firm caps on greenhouse emissions for 10 years and indicative caps for a further 10 years.

    Permits would be issued authorising emission of a certain amount of carbon each year. With time, fewer permits would be issued, pressing industry to cut emissions through innovation or energy efficiency. The permits could be traded, giving older, coal-fired power stations latitude to keep running.

    But more likely to be palatable to the Federal Government is a trading system devised by the economist and Reserve Bank board member Warwick McKibbin. Professor McKibbin's model allows for participating countries to distribute long-term emission permits, which could also be sold.

    Mr Howard said he would discuss climate change and energy security with other regional leaders at the Asia Pacific Economic Co-operation assembly later this week.

    It was an appropriate occasion to raise the issues, Mr Howard said, because APEC comprised countries with similar resource-dependent economies.

    The coordinator of the Australasian Emissions Trading Forum, Tony Beck, said it would be better for any trading system to involve as many countries as possible.