IT MAY not be a good solution but it is a French solution and it has a certain elegance about it. Dominique de Villepin, the French Prime Minister, has put his mind to the problem of global warming and fossil fuel emissions. His answer: declare carbon war on China and America.

Let us tax goods from countries that have not signed the Kyoto Protocol, urges Mr de Villepin. The United Nations treaty binds its signatories to cuts in greenhouse gas emissions but the leading carbon junkie, the United States, declined to play ball because the protocol does not include the fastest-growing carbon emitters, China and India.

The International Energy Agency reminded us last week that carbon dioxide emissions are soaring, mainly because of a surge in coal consumption. Coal is cheap and abundant where it is most needed, in China and India, and the two countries are engaged in a scramble to build power stations to keep factories humming and call centres chattering. Mountains of coal are stoking a Chinese furnace. Up the stack goes the carbon dioxide and out the door fly the shirts, shoes, brassieres and knickers that are putting French workers on the dole.

Europe must stand up to environmental dumping, says Mr de Villepin. It’s a neat twist on previous French tirades about social dumping and the message will be delivered to this week’s meeting in Nairobi of the world’s environment ministers, who are struggling to agree about anything. Poor countries blame America and Europe (who created this carbon problem in the first place?). America blames China (you want our industry to disarm? Forgeddaboudit). Europe frets and creates a complex, flawed emissions trading scheme that achieves nothing.

The proposed French carbon duty will be greeted with an almighty shrug from the massed ranks of environment ministers. They will, rightly, presume that Europe has no appetite for a trade war with the entire world. You might think that Mr de Villepin is just grandstanding, but the mistake is in assuming that his tax threat is addressed at China and America.

For France, the real threat is in Brussels, where the European Commission is looking closely at the Emissions Trading System (ETS). Established in 2004, it was a grotesque, deformed creature from birth and member states were given permission to spoonfeed their utilities with huge helpings of free carbon permits. Instead of creating incentives to reduce carbon emissions, the ETS did the opposite: the price of carbon permits fell, creating runaway demand for coal. On Monday European carbon dioxide fell to a 22-month low of €8 per tonne.

Embarrassed, the Commission is having another look at ETS. New proposals include adding further greenhouse gases to the scheme, lengthening the trading period and bringing aviation into the net. More importantly, it proposed measures to prevent cheating by member states. The Commission would propose a Europe-wide cap, instead of allowing national authorities to decide their own carbon ceilings and, most important, carbon permits would not be doled out free but auctioned.

So generous was France’s national carbon allocation plan that in 2005 it emerged with a 19 million tonne surplus of carbon permits, without a noticeable reduction in emissions. Mr de Villepin knows that a serious attempt to curb emissions would carry costs and his message is that if France is to cut its cloth to suit this year’s fashion, he is going to make damned sure that the fabric is French, not Chinese.

VW gets blast from the past

AT VOLKSWAGEN, the past isn’t just haunting the house, it is busy painting and decorating. The spirit of things past comes in the form of Ferdinand Piech, scion of the Porsche-Piech dynasty and grandson of Ferdinand Porsche, who in the 1930s invented Hitler’s “people’s car”, which later went on a world tour as the “Beetle”.

The Porsche-Piech family control the sports car firm and Ferdinand Piech would like to extend that influence to VW, where Porsche has more than a fifth of the stock and Mr Piech heads the supervisory board.

Like Banquo’s ghost, Mr Piech watched over an unpleasant board meeting last week at which Bernd Pischetsrieder, VW’s chief executive, was under fire from investors, who demanded greater cost-cutting, and the works council, which is up in arms about lay-offs. He resigned, to be replaced by the Audi boss Martin Winterkorn.

His departure leaves a clearer path for a family takeover of VW and a return to a more corporatist alliance of family, state (Bavaria owns a fifth of the stock) and union (IG Metall). Other investors remain to be convinced.

carl.mortished@thetimes.co.uk

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