The legislation includes six key measures to cut greenhouse gas emissions and to reach carbon neutrality by 2050.

By Paul A. Davies and Michael D. Green

The French Parliament has adopted a new climate energy package to tackle the effects of climate change and boost France’s energy transition endeavors to reach carbon neutrality by 2050. As per Article 4.1 of the 2015 Paris Agreement, carbon neutrality is defined in the package as the balance, across the national territory, between anthropic emissions by sources and removal of greenhouse gases by sinks. Six key goals comprise this latest legislation.

1. Reducing Dependency on Fossil Fuels

France has increased its commitment to reduce fossil fuel consumption, now aiming to cut fossil fuel consumption by 40% by 2030, compared to 2012 levels (the previous target was 30%). To help meet this objective, beginning in January 2022, an emission ceiling will be imposed upon fossil fuel-fired power plants that exceed 0.55 tons of carbon equivalent per MW/h. This measure is aimed at closing the last four coal-fired plants still operating in France.

2. Boosting Renewables

The package intends to ensure that renewables will attain a 33% share of the total energy used in France by 2030. In order to achieve this, the government will strengthen the environmental evaluation of renewable energy projects to avoid time-consuming litigation that currently impedes development in the sector. Solar projects will also receive a boost, with a mandate that 30% of roofs on new warehouses, supermarkets, and parking shades must contain solar technology. The authorized installed capacity of offshore wind farms should also increase from an annual 750 MW to 1 GW by 2024.

3. Improving the Energy Efficiency of Homes and Buildings

Energy-efficient improvements to dwellings remain a priority. A three-phase action plan mandates that:

  • Energy audits precede all home sales and rentals, including an estimate of necessary costs, the obligation to inform purchaser and tenants of energy costs, and a prohibition on increasing rents between two rentals in the absence of energy-efficiency works, beginning in 2022
  • Owners of the least efficient categories of buildings complete works to achieve an “E” energy consumption status (on a scale of A to G) by 2028
  • Sellers of real estate in violation of the works obligation noted above must inform purchasers in transactional documents, beginning in 2028

4. Strengthening Climate Policy Evaluation Tools/ESG

Social and environmental reporting will be reinforced for portfolio management companies. The Monetary and Financial Code will be amended with three new sets of disclosure obligations, entailing: the inclusion of information relating to climate change risks and biodiversity risks in sustainability policies; documentation of the use of ESG criteria in investment strategies, and their application to the energy and ecological transition; and the publishing of information relating to reasonable diligence efforts intended to prevent the negative impact of the investment strategies on sustainability factors.

5. Controlling Energy Prices

In alignment with EU obligations, France will discontinue regulated natural gas tariffs by June 30, 2023, for all consumers. This measure will likely benefit consumers, as recorded market prices are 5% to 10% more competitive on average than regulated tariffs.

6. Reducing Dependency on Nuclear Energy

The law reaffirms the objective of reducing the electricity produced using nuclear power from the current 75% of France’s electricity usage, down to 50%. It nevertheless postpones this objective to 2035 (rather than 2025, as was contemplated in the 2015 Energy Transition Law).

Finally, the two reactors of the Fessenheim nuclear power plant — France’s oldest nuclear plant still in service — will be permanently closed as of the summer of 2020, thus ending a decade-long debate regarding the site’s safety.

This post was prepared with the assistance of David Desforges, Avocat à la Cour (Paris), and James Bee in the London office of Latham & Watkins.