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France: Gas Tax Doubles in 2024

France is set to significantly increase the tax on natural gas in 2024, marking the end of the tariff shield and potentially impacting consumer bills.

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The French government has announced a significant increase in excise duty on natural gas for fuel use, from €8.45 to €16.37 per megawatt-hour from January 1, 2024. This measure, part of the 2024 Finance Act, marks the end of the tariff shield and could lead to higher costs for gas customers.
According to Nicolas Goldberg, analyst at Colombus Consulting, this increase in excise duty will mean a rise in gas bills of around 8 euros per megawatt-hour for subscribers to fixed-price offers. Consumers with indexed offers could also see their bills affected, despite an anticipated fall in gas prices.

Government strategy and cost savings

This increase in gas tax is a key component of the government’s strategy to phase out the tariff shield, introduced to cushion the impact of rising energy prices. The increase in excise duty should generate significant savings for the State, estimated at 1.9 billion euros.

Changes in the regulatory framework for gas

Since July 2023, the regulated gas sales tariffs (TRVG) have been abolished, replaced by a “benchmark” price updated monthly by the Energy Regulation Commission. This new approach aims to align tariffs with market prices, while offering consumers a degree of predictability.

Consequences for the Electricity Sector

Meanwhile, the electricity sector remains under scrutiny, with discussions underway on a possible increase in regulated tariffs. Experts, including Mr. Goldberg, warn against an excessive rise in the electricity tax, given the average 30% increase in rates over the past two years.
The end of the tariff shield and the increase in the tax on natural gas in France represent a major change in the country’s energy policy. As the government seeks to balance budgetary needs and consumer protection, these measures could redefine the French energy landscape in the years to come.

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