Implementation Of A "Low-Carbon Label" In France

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The French government is starting to implement a new "low-carbon label" created by a decree and a ministerial order, both dated November 28, 2018.
France Environment

The French government is starting to implement a new "low-carbon label" created by a decree and a ministerial order, both dated November 28, 2018. This low-carbon label aims at contributing to France's National Low-Carbon Strategy by certifying voluntary projects for the reduction of anthropic greenhouse gas ("GHG") emissions, implemented on French territory.

The low-carbon label recognizes the reduction of direct ("scope 1") GHG emissions, as well as "scope 2" indirect emissions (i.e., emissions related to the production of energy used by the project's activities) and "scope 3" indirect emissions (i.e., emissions which occur in the value chain of the project—including upstream and downstream emissions—such as raw material production or transportation, use of the finished product, etc.). GHG trapping qualifies as an emission reduction for purposes of the low-carbon label. The certification is granted by an independent third party, itself certified for other emission reduction schemes, such as Kyoto quotas or the European Union Emissions Trading System ("EU ETS").

The purpose of the low-carbon label is to certify voluntary reduction projects that go above and beyond standard practice. As a consequence, emission reductions that are otherwise implemented to comply with mandatory requirements, in particular the EU ETS, cannot qualify for the low-carbon label. In addition, low-carbon label certified emissions are not recognized as financial instruments and cannot be transferred or traded on a market.

The French low-carbon label certified emissions standard aims at answering the increasing appetite of the market, in particular the financial market for "green" projects, which may be difficult to identify in the midst of self-proclaimed labels or unregulated certification schemes. To promote the financing of the certified projects, the low-carbon label certified emissions standard specifically provides for the participation of financial partners who will be able to claim that they contributed to the additional GHG reductions resulting from such projects.

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