The French CO2 Pricing Policy:

Learning from the Yellow Vests Protests

  • Background

On the 17th of November 2018, over 250,000 demonstrators descended upon more than 2,000 locations throughout France in what was seen as an unprecedented challenge to the French government. This coalition of diverse and politically independent individuals commonly referred to as Yellow Vests was born in opposition to the increase in petrol and diesel prices resulting from the planned increase in CO2 pricing. Today this movement’s demands have evolved to encompass wider questions of social justice and greater consideration for the interests of lower income groups in rural areas.

What mistakes did the French government commit when it comes to CO2 pricing? After all, CO2 taxation is recognised as one of the most important and efficient instruments for climate protection and is recommended to governments by economists of all kinds. But the example of France shows that the redistribution effects associated with CO2 taxation must be taken into account from the outset. In this background paper, we explore the reasons that led to the situation in France and the lessons that can be drawn from it.

Project management

Core results

  1. 1
  2. 2

    The ongoing protests of the Yellow Vests are of the Macron government’s own making.

    Over the last 18 months, the French government has abolished the wealth tax, increased flat-rate social security contributions, reduced housing subsidies and increased the tobacco tax. Taken together with the energy tax increase and a lack of compensation, these measures have contributed to the widening of economic inequalities in French society.

  3. 3

    CO2 taxation is regressive in nature and necessitates the compensation of lower income groups to ensure political stability.

    Like any consumption tax, the CO2 surcharge on energy consumption has a greater effect on low-income households than high-income households in percentage terms. This was also the case in France. A per capita redistri-bution of revenue or other redistribution mechanisms are necessary to balance this.

  4. 4

    For CO2 taxation to be widely accepted, it must be implemented in a reve-nue-neutral manner.

    In France, most of the revenue from the CO2 surcharge on energy taxes was used for consolidating the budget. The contribution climat énergie was therefore not recognised by large parts of the population as a climate protection measure. In addition to so-cial compensation, it is therefore necessary to use the revenues for climate protection measures which are transparent and easily accessible.

Bibliographical Data

  • Authors

    Murielle Gagnebin, Dr. Patrick Graichen, Thorsten Lenck

  • Release date


  • Number of pages


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