Published on Wednesday 21 February 2024
In order to implement a measure proposed by the “Convention Citoyenne pour le Climat”, the article 147 of the Climate and resilience Law has introduced a mandatory offsetting of greenhouse gas (GHG) emissions related to domestic flights in France.
An obligation for aircraft operators
This mandatory offsetting of greenhouse gas emissions applies to aircraft operators :
- subject to the EU Emissions Trading System (EU-ETS or SEQE in French), i.e.
- non-commercial operators whose emissions are equal to or greater than 1,000 tonnes of CO2 per year on the full scope (as defined in Annex I of Directive 2003/87/EC)
- commercial ones whose emissions are equal to or greater than 10,000 tonnes of CO2 per year and which have carried out 243 flights or more in at least one of the three consecutive four-month periods of the year on the full scope (as defined in Appendix I of Directive 2003/87/EC)
- and carrying out domestic flights within the French national scope leading to emissions exceeding 1,000 tonnes of CO2 per year.
Flights between France and its overseas departments and territories are not subject to the EU- ETS until 2030. They are therefore not included in this mandatory offsetting scheme.
This national measure do not replace the application of the EU-ETS for aircraft operators.
The legislative provisions (Art. L. 229-55 to 60 of the French Environmental Code) have been supplemented by an implementing Decree (décret) published on 26 April 2022 in the Official Journal, as well as an Order (arrêté) published on the same day setting the minimum percentage of emission reductions by projects on the territory of the European Union.
Timeline and implementing provisions
The measure is implemented gradually and concerns for 2022 50% of the emissions of the aircraft operator. This percentage rises to 70% in 2023 and is set to 100% from 2024. (Art. L. 229-57).
In addition, the minimum percentage of emissions reductions and removals by projects located in the European Union is set at 20% for 2022 emissions, 35% for 2023 emissions, 50% for 2024 emissions, of the total that has to be offset. For 2025 and subsequent years emissions, the percentage must be at least 50% and will be determined by revision of the Order of 26 April 2022, no later than 30 June 2024.
Aircraft operators (commercial and non-commercial ones) concerned by the scheme must submit to the Ministry for Ecological Transition and Territorial Cohesion (DGAC), no later than the 31st of March of each year, a report covering emissions of the previous year concerned by this obligation. The reporting of emissions must be sent by email to the following address: firstname.lastname@example.org.
The offsetting report justifying the financing of emissions reductions and removals projects and the acquirement of carbon credits, as well as the verification report which will be drawn up by an accredited verification body in accordance with the decree published on 6 February 2023 and which will be communicated to the operator, will be sent to the Ministry of Ecological Transition and Territorial Cohesion (DGEC) before the 1st of June by email to the following address: email@example.com.
The offsetting report includes a description of the projects and credits acquired, proof of allocation to the aircraft operator and proof of compliance with non-double counting (cancellation of the credits), as well as verification by a third-party organization of the eligibility of the projects and credits to the provisions with regards to the Decree. The offsetting report can be completed using this template.
In case of non-compliance with this law, the amount of the fine is €100 per tonne of greenhouse gas not compensated by the operator. The fine also applies if the offsetting report is not submitted.
Selection of projects
The decree also explains the methodology for calculating the emissions, the validation process by the competent authorities, but also the eligibility criteria for emissions reductions or removals projects (geographical location, benefits for biodiversity, timetable) and the process of purchasing and cancellation of carbon credits.
The projects which are selected shall comply with the principles of carbon credits (unique, measurable, verifiable, permanent and additional), whose conditions are explained in Article R. 229-102-1 of the French Environmental Code. In particular, projects eligible for the CORSIA program and projects certified by the Low Carbon Label are deemed to respect these principles. It is possible to use other certification standards, but compliance with the principles of carbon markets must be duly justified.
The Ministry for Ecological Transition and Territorial Cohesion commissioned a comparative study of existing European and international standards - including the Low-Carbon Label, which have been reviewed according to the 5 fundamental criteria (unicity, measurability, verifiability, permanence and additionality) as well as socio-economic and environmental criteria. In addition, the Decree specifies that the process to implement the projects must have started after 31 December 2019.
Projects that provide significant improvements in the preservation and restoration of natural ecosystems and their functions may benefit from an increase in the amount of carbon credits which are taken into account in order to assess compliance with the offsetting obligation.
The Order of 4 June 2023 sets out the criteria that will enable projects that contribute to preserving and restoring natural ecosystems and their functions to qualify for the bonus.
These criteria are determined by sector:
- For the forestry sector : projects need to provide a sustainable management document, to comply with regional decrees and to demonstrate the adaptability of forest stands to future climate, to show evidence of sustainable forestry certification and diversity of forest species, to preserve islands of aged stands and to be implemented within a given timeframe.
- For the agricultural sector : projects will require a certification or conversion of agricultural land to organic farming; for permanent grasslands not to be turned over, and for agro-ecological infrastructures to be properly maintained.
- Projects developped in natural areas must comply with the protection guidelines set out in a management document.
Projects that foster the preservation and restoration of natural ecosystems and their functions and that qualify to the bonus may be enhanced by an increase of up to 50%, enabling the aircraft operator to reduce its offset obligations accordingly, up to an annual limit of 15% per aircraft operator and per year - a percentage set in the decree.
Exemption from the percentage of projects located in the European Union territory
In case the aircraft operator is unable to find European emissions reductions and removals projects at a price lower than €40/tCO2e, an exemption from the minimum percentage of European projects (referred to in the Order of 26 April 2022) may take place. To do this, the aircraft operator must provide the proof that it has contacted at least 5 project holders, agents or intermediaries, including an agent of collective Low Carbon Label agricultural projects and an agent of Low Carbon Label forestry projects, and justify to the competent authority of the unavailability of projects in global volume below the ceiling price set at €40/TCO2. Requests for exemptions will be assessed by the competent authority according to the steps taken by the aircraft operator.
Transitional provisions up to 2025
In order to support the development of projects on the European Union territory and in particular in France, article 2 of Decree n°2022-667 of 26 April 2022 and article 3 of Order of 26 April 2022 provide for a transitional provision applicable for clearing obligations up to 2025 (included).
This transitional provision allows an aircraft operator to comply with its offsetting obligation by presenting a proof that it has financed projects, even if these have not yet been finalized and even if the related carbon credits have not been yet generated.
To benefit from this transitional provision, the aircraft operator must attach to the offsetting report supporting documents (contract) that ensure the carbon credits will be allocated to this aircraft operator. Each year, the operator's offsetting report must monitor these projects and at the end of the projects, the operator has to adjust whether the carbon credits are surplus or deficit.
Carbon compensation, what are we talking about?
The objective of the offsetting scheme is to finance projects that store CO2 (forest renewal or any practice promoting the storage of carbon in the soil, for example) or reduce greenhouse gas emissions in order to balance GHG-emissions that happen elsewhere. To fulfill their offsetting obligation, operators have to acquire carbon credits. Carbon credits are documents delivered by a carbon certification standard that certify that the project developer has reduced or removed a certain quantity of GHG. A carbon credit is a unit equivalent to one tonne of CO2 reduced or removed. The “Low Carbon Label” is a certification standard developed by the French administration.
The Decree specifies the principles and requirements of emissions reductions and removals, in particular to ensure a good assessment of the positive impact for the climate of the projects. These principles apply to all emissions reductions and removals projects, beyond the obligation to offset domestic flights in France.