On 11 May 2016, French Environment and Energy Minister Ségolène Royal reconfirmed France’s intention to introduce a unilateral price floor for domestic electricity producers covered under the EU ETS. The proposed floor price would be initially set at EUR 30 per ton of CO2 and may increase thereafter. The proposal is expected to be included in the finance bill for 2017. The mechanism aims to decrease the amount of coal-fired electricity production in France, which, under current market conditions, is almost twice as profitable as gas.

This announcement is in line with an initial proposal for a carbon price floor, which was first made by Royal in an address to the French Power Association in October last year (French). The announcement also mirrors France’s non-paper for a “Soft price collar for the European Carbon Market” released in February 2016. The proposal outlines a minimum price below which permits would not be sold at auction and an upper price where additional permits would be released from a reserve, similar to the design of the Cost Containment Reserve operating in California and Québec. The French government is currently working on the implementation details for both the unilateral price floor and its proposed soft price collar. These details are expected to be released later this year.