France's Climate and Resilience Law (Loi n° 2021-1104 du 22 août 2021 portant lutte contre le dérèglement climatique et renforcement de la résilience face à ses effets) allows companies to use the low-carbon label 'label bas-carbone' (LBC) as credits for compliance purposes. The creation of the label was established in November 2018 under Decree n° 2018-1043.
Usage of the LBC
LBC cannot be used in the EU-ETS. However, LBC can be used by buyers to meet their offset obligations in application of the law (see Articles L. 229-57 and L. 229-68 of the Environmental Code and Article 36 of Law No. 2022-1158 of 16 August 2022 on emergency measures to protect purchasing power).
The LBC label is applicable to aircraft operators and fossil fuel power generation facilities. Since 1 January 2022, aircraft operators generating at least 1,000 tonnes of CO2e/year must offset emissions from domestic flights by purchasing carbon credits from projects located within the EU (CORSIA-eligible or LBC). The obligation covers 50% of GHG emissions in 2022, 70% in 2023 and 100% in 2024. Fossil fuel power generation facilities that reopened in the winter of 2022/2023 (to address energy risks related to the war in Ukraine) have obligations to offset their emissions on French territory, and the LBC label is recommended in this context.
Guidelines on LBC Project Activities
Preference is given to carbon absorption projects located on French territory or on the territory of other Member States of the European Union, in particular those that promote forest renewal, agroforestry and, more generally, the adoption of any agricultural practice that reduces GHG emissions or any practice that promotes the storage of carbon in the soil. The LBC is also encouraged in the context of Article 227, for the protection and conservation of land, as well as biodiversity on which it depends (Article 227). The law also encourages the deployment of methods and projects that could result in carbon credits in favour of sustainable forestry practices in France (Article 50).
