Macron seeking stiff carbon costs to avert climate change.

Emmanuel Macron reached out to Germany to establish a common price floor for carbon dioxide emitted by power utilities as the French president seeks to strengthen his alliance with Angela Merkel after the U.S. decided to exit the Paris climate accord, according to people familiar with the matter.

Macron wants to revive a plan to set up a minimum price of 30 euros ($33.55) per ton of CO2 emissions, about six times the current European level, a French official said, asking not to be named as the matter isn’t yet public. France is seeking to convince Germany and other European countries to adopt a similar plan, the person said. It would also make sense for countries such as Belgium, the Netherlands and Luxembourg, said another person who has heard about Macron’s initiative.

Merkel and Macron

Photographer: Krisztian Bocsi/Bloomberg

Merkel and Macron have been leading the international opposition to the disruptive presidency of Donald Trump in the U.S. rallying support for trade and climate action. Macron this week launched an appeal to U.S. environmentalists to come work in France, while Merkel is in Latin America preparing for another meeting with Trump at the Group of 20 summit in Hamburg. 

The U.S. decision to exit the Paris climate accord comes after the price of European carbon permits plunged from their 2008 peak, eroding the penalty for burning coal, the most polluting fuel. Companies from Electricite de France SA to Engie SA have lobbied for a minimum price of at least 30 euros, arguing it would boost the use of cleaner natural gas-fired power stations.

Hard Sell

Spokesmen at Germany’s Environment Ministry weren’t immediately available for comment. Messages seeking comment from the French president’s office weren’t immediately replied to.

The proposal may be a hard sell in the short term for German Chancellor Merkel, who faces general elections in September. A floor price for carbon emissions might hurt German utilities RWE AG and Uniper SE, which have said it would lead to job losses because they rely heavily on lignite and coal to produce electricity.

France unsuccessfully tried to convince Germany to adopt a common carbon floor price last year in a bid to supplement the EU’s Emissions Trading System, which has failed to provide an efficient incentive to reduce greenhouse gases. A glut of pollution rights pushed prices in the $48 billion market down more than 80 percent since 2008.

France then considered introducing a floor price unilaterally last year before dropping the plan a few months before this year’s presidential elections amid labor union protests that it would prompt coal-fired plant closures.

The French and German leaders plan to hold a joint cabinet meeting over the summer.

Generating Revenue

A tax on carbon would generate government receipts, which could be used to mitigate the “social impacts” of the energy transition on the coal industry, EDF Chief Executive Officer Jean-Bernard Levy said Thursday at a conference in Paris organized by the Toulouse School of Economics. By introducing a levy of 18 pounds ($22.88) per ton of CO2 emissions, the U.K. has cut the share of coal in electricity production to 10 percent from 30 percent in two years, he said.

“The time is the right one today for an initiative that maybe could be generated in France, with quick support of Germany, obviously after the September elections,” Levy said. “It can be done gradually, and it can be done in such a way that it leads to no massive phasing out of production means in the short term.”