France announces voluntary adoption of a new law amending the Mining Code to meet Paris Agreement commitments.

By Paul Davies and Michael Green*

Background

After lengthy legislative debates, the amended Mining Code (MC) now provides that, as a matter of principle, the research and exploitation of coal, and of all liquid or gaseous hydrocarbons, shall be gradually phased out and then banned (Art. L.111-6§1). If liquid or gaseous hydrocarbons are “related” to deposits of substances not affected by the ban, then the title holder cannot exploit these either and must leave them untouched (Art. L.111-6§2). One exception to the ban is “mine gases” (i.e., gases located in formerly exploited coal seams for which recovery requires only necessary intervention to maintain mining cavities under low pressure for suctioning such gases) (Art. L.111-5).

To assist with the phase out and ban, the government has introduced measures to help title holders transition to an alternative use. As such, four years prior to the expiration of their permits, affected title holders may also apply to convert their permits to allow the exploitation of other substances or other uses of the sub-soil. In order to qualify for permit conversion, title holders must demonstrate both that: (i) the new substance or new use is “related” to the hydrocarbons present in the deposit; and (ii) the pursuit of the exploitation of such deposit is necessary to secure its profitability (Art. L.111-7).

The New Measures

The new law extends to the seabed and sub-soil of the French metropolitan maritime domain, the special economic zone, and the continental plateau (Art. L.111-8).

The ban also means that from now on, administrative authorities will no longer:

  • Issue exclusive research permits or preliminary prospection permits relating to coal, or to all liquid or gaseous hydrocarbons
  • Grant concessions relating to the same substances (subject to limited exceptions)
  • Extend concessions relating to the same substances beyond 1 January 2040 (Art. L.111-9)

The new law has immediate effect and applies:

  • To any application filed with competent authorities after 31 December 2017, for the initial issuance or extension of any exclusive research permits or preliminary prospecting permits involving coal, or liquid or gaseous hydrocarbons
  • To applications for concessions or for the extension of the same under review as of 31 December 2017

However, existing mining titles validly issued before 1 January 2018 — as well as those that remain valid pursuant to the new provisions — shall remain in force and the relevant provisions of the MC and the Environmental Code shall govern them (Art. L.111-11).

Aware of the economic hardship the new regime may entail, the government has implemented certain safeguards. This includes allowing limited extensions of permits beyond the 1 January 2040 cut-off date, if title holders can show that:

  • The anticipated cessation would prevent them from recouping research and exploitation costs
  • An extension would enable them to break even through the additional exploitation of the deposit (Art. L.111-12)

Further, the MC now provides that five years prior to the expiration of a concession, the title holder shall submit a dossier outlining the redevelopment potential of the relevant installations or site to the authorities — including any potential geothermal uses or the installation of renewables (Art. L.132-12-1).

The government also took the opportunity to update and reinforce the provisions of by Law n°2011-835 of 13 July 2011, which bans hydraulic fracturing (fracking).

A Decarbonised Economic Future

France currently drills only about 1% of its yearly consumption of hydrocarbons (815,000 tons). As such, industry stakeholders do not anticipate an immediate or radical reshuffling of the landscape, as a limited number of permits are affected and the sulphide gas field of Lacq (operated since 1957) may well continue to operate beyond 2040. The move is therefore essentially symbolic, but does highlight France’s continued current policy direction of moving to a decarbonised economy.

*This post was prepared with the assistance of David Desforges, Avocat à la Cour (Paris)