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France mulls diesel car scrappage bonus

Reuters (Paris) – France is considering creating a car scrappage scheme for owners of older diesel vehicles as the country reviews a pro-diesel policy criticized as costly and contributing to health risks.

Diesel accounts for 80 percent of road fuel consumption in France, supported by lower fuel taxes compared to gasoline. Like in other European countries, diesel has been favored on the basis that it offers greater fuel efficiency.

But this predominant role has been questioned after the World Health Organization said last year that diesel fumes can cause cancer.

The government is looking at "support for replacing (diesel) vehicles that emit most particulates," daily Le Parisien said on Saturday, quoting a letter by Environment Minister Delphine Batho in response to a report by the government's auditor.

Particulates are minute specks contained in diesel emissions and considered to contribute to diesel pollution.

The minister was reacting to the auditor's criticism of diesel policy, which it says does not contribute to energy goals and that the lower levies compared to gasoline deprived the state of 7 billion euros ($9 billion) a year in receipts.

A scrappage scheme for diesel cars, that account for about 60 percent of France's car fleet, would be a way of helping owners adjust to any rise in diesel taxes and would also be a way of boosting car sales, Batho told Le Parisien.

No decision would be taken before a committee on environmental tax policy submits proposals in the coming months, after which the government would include any measures in France's 2014 budget bill, she added.

France ran a general scrappage scheme to support new-car sales after a global economic crisis broke out in 2008. But its phasing out at the end of 2010 contributed to a sharp fall in sales last year and a biggest-ever full-year loss for troubled French car maker PSA Peugeot (PEUP.PA).

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