Households in rural areas of France spend more on fossil fuels than Paris dwellers

Households located in rural municipalities of France spend 2.7 times more on fossil fuels than those living in the inner urban area of Paris, and work in sectors that emit 2.8 times more greenhouse gases, according to Insee, the French statistics body.

Insee’s study was undertaken to examine how carbon taxation affects households in different locations and income levels.

As it found, rural dwellers are more highly affected by an increase in costs for fossil fuels, as well as by any slowdown in economic activity caused by carbon taxation.

Carbon tax

The study modelled a scenario in which a carbon tax was applied to all national emissions, including both household and business emissions, with the goal of reducing emissions by 10%. Under this scenario, household welfare, measured in terms of consumption, would decrease by about one percent on average, Insee noted.

Welfare for rural households would decline by roughly 1.2 times more than for households in central Paris. The poorest households would also be more strongly affected.

Taxing emissions

The researchers examined the effects of taxing only household emissions and found that this approach primarily affects household energy spending. Because energy costs account for a larger portion of the budgets of rural and low-income households, this method is more regressive.

Taxing business emissions alone, meanwhile, has a different effect. In this case, the cost is largely passed on to wages, affecting households in a more uniform manner, while also affecting capital income, which is concentrated among wealthier households.

The study also considered the effects of redistributing revenue from the carbon tax, which would ‘slightly increase’ average welfare, according to Insee.

‘Moreover, redistribution based on both income level and location would make it possible to better target the households most adversely affected by the carbon tax,’ it noted. ‘It would lead to an average welfare gain five times higher than under a uniform redistribution scheme. In that case, however, the welfare of the wealthiest households would still be negatively affected’. Read more here.