Enactment of the energy transition law: implications and opportunities

‍

After a legislative process lasting nearly a year, the promulgation of the energy transition law for green growth was finally issued in the middle of summer. Achieving the ambitious objectives set by this text regarding the reduction of energy consumption and greenhouse gas emissions (GHG) in our country will largely depend on the measures to be included in the new governance tools provided by the law, primarily the National Low-Carbon Strategy (SNBC) and the Multi-Year Energy Program (PPE).

Nevertheless, several concrete provisions are already included among the 215 articles following the promulgation of the energy transition law. Here's an overview of the main ones likely to affect businesses.

Concrete provisions likely to affect businesses

Building construction and renovation projects

Without listing all the provisions relevant to the building sector here – measures aimed notably at accelerating the energy renovation of the national building stock or promoting the construction of positive-energy and high-environmental-performance public buildings – several new features in the law can directly impact companies' future real estate projects. In particular:

• The obligation to provide charging stations for electric vehicles and a dedicated space for secure bicycle parking, in the event of construction or renovation of an employee parking facility, is reinforced and clarified (Art. 41). Applicable since 2012 to tertiary buildings, this provision will be reviewed and extended to industrial buildings, as well as commercial complexes, starting from January 1,^st 2017. A new implementing decree is expected to further specify the affected parking facilities based on their type (closed/open) and capacity, as well as the minimum number of spaces to be equipped with charging stations.
• The certificate of compliance with thermal regulations, which must be attached to the declaration of completion of works submitted to the town hall upon completion of office building construction, may be issued by any organization certifying the energy performance of buildings that has signed an agreement with the State. This formality will thus be simplified for project owners opting for the construction of certified buildings with energy performance exceeding the requirements of thermal regulations (Art. 15).
• The local urban plan (PLU) may, in certain defined sectors (particularly areas to be urbanized), impose a minimum production of renewable energy, depending on the characteristics of the construction project and the energy consumption of the sites concerned (Art. 8).
• It will now be possible to obtain a derogation from the prescriptions set by urban planning regulations concerning the location, height, and external appearance of constructions, with a view to implementing certain facade or roof insulation solutions for buildings (Art. 7).

Energy Supply

The energy transition law provides for granting special electricity supply conditions for high-consumption businesses, known as "electro-intensive consumers" (Art. 156). These special conditions and the categories of beneficiary businesses will be defined by decree, according to the following criteria:

• degree of exposure to international competition
• annual electricity consumption volume
• ratio between the quantity of electricity consumed and the value added produced
• industrial processes implemented

In return, beneficiary companies must implement an energy management system certified to ISO 50001 and achieve energy performance targets yet to be defined. It is worth noting that a comparable scheme has already been established for gas-intensive consumers, who logically belong to the same sectors as electricity-intensive consumers: notably steel, chemical, glass, and paper industries.

In addition, electricity- and gas-intensive consumers will benefit from a reduction in their tariffs for using public electricity and gas networks [1], on the grounds that their stable and predictable consumption throughout the year helps absorb demand fluctuations (Arts. 157 and 159). The percentage reduction, as well as the criteria for eligibility, will be set by decree.

Employee Travel

The energy transition law includes several notable measures in this area:

• As of January 1^st , 2018, any company with at least 100 employees at a single site located in an urban area of over 100,000 inhabitants and subject to an urban travel plan (PDU) will be required to develop a mobility plan. This plan aims to optimize the efficiency of its staff's travel, encourage the use of public transport, and promote carpooling. Submitted to the transport organizing authority, this plan must assess existing and future transport options, analyze professional and home-to-work commutes of staff, and define an action program associated with a financing plan and an implementation schedule (Art. 51).
• More broadly, the enactment of the energy transition law now requires any company with at least 250 employees to facilitate carpooling solutions for its staff's home-to-work commutes "as much as possible" (Art. 52).
• Each employer must also cover all or part of the costs incurred by employees who cycle between their home and usual workplace, in the form of a "bicycle mileage allowance" whose amount will be set by decree. Partially exempt from social security contributions, this allowance can be combined with the reimbursement of subscriptions taken out by employees for the use of public transport or public bicycle rental services (Art. 50).
• Finally, companies subject to corporate income tax may benefit from a tax reduction equal to the costs incurred by providing their employees with a free fleet of bicycles for their home-to-work commutes, up to 25% of the bicycle purchase price (Art. 39).

CSR Reporting and GHG Emissions Assessment

Any company subject to non-financial reporting obligations under Article L. 225-102-1 of the Commercial Code must present in its management report or reference document how it takes into account "the consequences of its activity and the use of the goods and services it produces on climate change".

For publicly traded companies, the chairman of the board must also report on "the financial risks related to the effects of climate change and the measures the company is taking to reduce them by implementing a low-carbon strategy across all components of its activity" (Art. 173).

Furthermore, a sanction procedure for failing to complete the GHG emissions assessment (mandatory for companies with over 500 employees) could be established by ordinance. A change in the frequency of this assessment (currently every 3 years) could also be decided within the framework of this ordinance (Art. 167).

What future for the carbon tax?

Integrated into the domestic consumption tax on fossil energy products (TICPE) used as fuels or combustibles, the carbon tax will see its amount gradually increase to reach €56 per tonne of CO₂ emitted in 2020, then €100 in 2030 (Art. 1). As a reminder, the carbon tax amount is €14.50/t of CO₂ in 2015

Waste Management

Title IV, upon the promulgation of the energy transition law, is dedicated to the fight against waste and the promotion of thecircular economy. It includes several provisions concerning waste management that are directly relevant to businesses, including:

• The abandonment of the draft decree intended to define specific national measures for the characterization, packaging, and labeling of waste: On the one hand, the implementation of a systematic waste characterization procedure by producers was deemed too restrictive [2] and excessive given the requirements of European law. On the other hand, hazardous waste is already subject to packaging and labeling rules under ADR regulations, which are now considered sufficient (Art. 82)
• The implementation, effective from 1^er January 2017, of a system for taking back construction materials, products, and equipment used by building professionals. Specifically, distributors will have to provide collection points for their professional clients at or near their sales sites (Art. 93)
• The express obligation for any person using waste to backfill or raise land for development or rehabilitation purposes to be able to justify the inert nature of the waste concerned and its use for recovery rather than disposal (

Promulgation of the Energy Transition Law: New Measures on the Horizon

The implementation of the objectives set by the enactment of the energy transition law will largely stem from new medium- and long-term strategic documents, the development of which is already underway within the Ministry of Ecology.

Firstly, a National Low-Carbon Strategy (SNBC), adopted by decree, will define the main guidelines for cross-cutting and sectoral policies to be implemented to achieve greenhouse gas (GHG) emission reduction targets by 2030 (40% less than 1990 emissions) and 2050 (75% less than 1990 emissions [3]).

The guidelines and instructions set out in the SNBC must ensure compliance with national emission caps established at the national level and by activity sectors (Transport, Industry, Residential-commercial, Agriculture, etc.) for the period 2015-2018, and then for 5-year periods, known as "carbon budgets" (Art. 173).

The carbon budgets for the periods 2015-2018, 2019-2023, and 2024-2028, along with the SNBC, must be published by October 15, 2015, at the latest. Carbon budgets for subsequent periods and the simultaneous update of the SNBC will be published at least 10 years before the start of each period (e.g., 2018 for the 2029-2033 period).

Secondly, a multi-year energy program (PPE), also set by decree, will henceforth determine the priority actions and measures to be implemented, specifically to:

• secure energy supplies and reduce costs
• improve energy efficiency and decrease primary energy consumption
• develop the use of renewable and recovered energy sources and reduce the share of nuclear power in electricity generation
• promote local energy production and self-consumption, as well as the development of smart grids.

Established in coherence with the SNBC, the PPE will formalize French energy policy, serving as its reference document. It will replace previous energy planning tools by merging and complementing them [4].

Each PPE will cover two successive 5-year periods, with the exception of the first PPE, which will cover the 2016-2018 and 2019-2023 periods. Although work on this first PPE began in March 2015, it is not expected to be adopted before the end of the year, as initially planned.

Ultimately, the SNBC and PPE will ensure the concrete and progressive implementation desired by the law on energy transition. They will constitute its roadmap and thus condition the future efforts required from businesses in light of this major challenge.

The recovery plan updates this information in favor of industrial decarbonization.

[1] These transmission and distribution tariffs are set by regulation and constitute one of the components of gas and electricity prices. They remunerate the managers of transmission networks (RTE, GRT Gaz & TIGF) and distribution networks (ErDF, GrDF, and local distribution companies)

[2] The draft decree notably provided for the establishment of a hazardous waste identification sheet, prepared under the responsibility of waste producers and containing the characterization data necessary for treatment providers (nomenclature code, hazard properties, waste generation process...).

[3] An objective called "Factor 4" as it aims to reduce GHG emissions by a factor of 4 between 1990 and 2050.

Multi-year investment program (MYIP) for electricity and heat, Multi-year indicative plan (MYIP) for gas, National Renewable Energy Action Plans (NREAP) and Energy Efficiency Action Plans (NEEAP)

‍

‍