October 20, 2015 / 4:06 PM / 2 years ago

INTERVIEW-Veolia chief calls for European carbon tax

* Tax of 30-40 euros/tonne needed

* Cash should be redistributed for low-carbon investment

* Cars should be included

* Border tax could be applied to EU imports

By Susanna Twidale

LONDON, Oct 20 (Reuters) - Europe should abandon its failing emission trading system and impose an economy-wide carbon tax of 30-40 euros ($34-45) a tonne to spur investment in low-carbon technology, the CEO of French water company Veolia said on Tuesday.

Antoine Frerot’s comments came as negotiators from almost 200 nations are meeting in Bonn this week to thrash out the details of a draft climate pact to be agreed at the end of the year in Paris.

As CEO of a major water and waste management company, Frerot takes a keen interest in environmental policies and attended the high level U.N. climate summit in New York last year.

The EU Emissions Trading System (ETS) is meant to be central to EU efforts to cut carbon emissions, but oversupply following recession has meant the price of permits is so low, it remains very cheap to burn coal, the most carbon-intensive fossil fuel.

“It is necessary to clearly send a clear message to investors to de-pollute and we need to have something clearer and simpler,” Frerot said in an interview with Reuters.

He said the tax should be economy wide and include sectors not currently covered by the EU ETS such as road transport.

An average car in Europe emits roughly two tonnes of carbon dioxide a year.

“Two tonnes at 30-40 euros a tonne will be 60-80 euros a year per car. It is not completely unacceptable,” he said.

Money from the tax should be paid to an agency, rather than governments, with cash redistributed among companies to help pay for measure to cut pollution such as greenhouse gas emissions.

“I‘m sure that if (politicians) are able to say to the population that these receipts will go to de-pollution the payment will be much more acceptable,” Frerot said.

Some EU countries have already put in place a tax to compensate for the shortcomings of the EU ETS, in which carbon allowances currently trade at around 8.40 euros a tonne.

British utilities pay a carbon tax of 18 pounds per tonne on top of the EU carbon allowance price while France recently introduced carbon taxes for sectors not covered by the scheme.

Frerot acknowledged fears over global competitiveness meant it would be difficult to get EU countries to agree to the tax and said a carbon tax on imports would also be needed.

Under the EU ETS, companies deemed at risk of relocating abroad to countries with looser environmental regulations are given free carbon allowances to avoid so-called carbon leakage.

$1 = 0.8812 euros Editing by Mark Potter

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