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09 September 2020

France's ELAN Law : Adopting The Right Strategy

by Myriam Busch

A wind of resilience blows through the French tertiary real estate market. Now more than ever, it must seize the regulatory opportunity that is this decree, and work towards the energy transition of its buildings. What is to be taken into consideration, and within what framework? What are the challenges of the building sector in relation to the decree? What are the ways in which this decree challenges the industry? What are the tools that could lead to an effective compliance management process?

Forms & Generalities

Recently, the French Government confirmed the strengthening of energy regulations for the building sector with the Loi ELAN decree (Housing, Planning and Digital Development law). As such, the decree of April 10, 2020 relating to obligations to reduce final energy consumption in buildings for tertiary use set ambitious energy reduction objectives with -40% for 2030, -50% for 2040 and -60% for 2050, applying to any tertiary building of more than 1000 sqm [1].

On May 3, 2020, a decree was published to complete the text and specify the implementing procedures. It specifies the consumption reference level’s definition according to the type of activity, from which the reduction objectives are then determined. It might be required that a technical file featuring energy studies should be drawn up to justify the relevance of the reduction objectives [2]. From 2021 onwards, the energy consumption of each building will have to be reported on the OPERAT platform (Energy Performance, Renovation and Tertiary Actions Observatory) managed by the French Environment and Energy Control Agency (ADEME).

The path towards these objectives’ achievement will be followed and represented by the Eco Energie Tertiaire process which indicates a building performance level using colours ranging from grey to green. This will allow a better perspective for a portfolio made of several assets.

If concerned parties do not comply with the decree requirements, they will be subject to a fine and their name will be published on a public government platform, thus causing a “name and shame” effect. The reputational risk is real.

Stakes

This new regulation represents a real turning point for the energy transition of the existing tertiary real estate market. Indeed, meeting the energy reduction objectives can be conceivable only if a solid strategy with sustainable means is implemented. It is then a 30-year trajectory that emerges, both to move towards energy efficiency and to substantially reduce the carbon footprint of existing buildings.

Technological and methodological innovation is today the main advantage when it comes to building efficiency. This approach must be studied in a holistic way, considering its innovative character that shakes up outdated approaches. Hence, energy issues should not outshine other environmental and well-being criteria. On the contrary, such issues should develop as an integral and transversal performance indicator of the tertiary real estate market. It is clear that we must no longer just think of an energy perspective but unquestionably adopt a carbon perspective.

On the other hand, the decree requires genuine collaboration between the various real estate players, particularly between owners and tenants. Together, they will have to find an agreement to define roles and responsibilities and share data on energy. This collective character will be reinforced by the contractualisation of this partnership and the development of green lease agreements. The “tertiary decree approach” will allow asset’s valuation and often offer very short returns on investments.

Application & tools

It is no longer enough to implement technical solutions without utilizing them correctly. The decree encourages the implementation of a method that will make the best use possible of data and energy installations. The approach and the means to be deployed should be considered with a long-term vision and strategy. It is not only a matter of implementing one-off measures but of implementing a continuous and sustainable monitoring plan. Those who integrate and understand this specific context will know how to commit and take the right decisions now. Although how would you know that you are using the right tools?

Today, the most efficient buildings performance tools are accessible to all: BREEAM, HQE, LEED, Well, Fitwel, ISO 50001, ISO 140001 for energy, environment and well-being ; efficient technical installations for use, management, information collection, materials, renewable energy production facilities, etc.

Digitalisation

Collecting data on energy is crucial to comply with the decree, as it helps creating a basis for guaranteeing an appropriate and reliable optimization. However, simply having access to information is not enough; it needs to be tracked, analysed and monitored. For instance, smart metering provides a clear vision of energy uses and consumption. It therefore simplifies access to the data as well as the declaration compliance process on the platform. Also, it creates data collection costs reduction when accompanied by energy management practices, ensuring efficient information processing.

Energy management system

The ISO 50001 standard is an energy management opportunity which has already proven its worth by being widely used across all types of activities. It is a perfect lever for achieving energy reduction objectives. This standard can be adapted to all types of organizations or buildings and certifies a management method based on continuous improvement. It can indeed be interesting to opt for a portfolio vision with a multi-site certification. The management system allows its user to choose personally tailored strategy and objectives, creating a "tertiary decree strategy” that is fully integrated into an ISO 50001 type of energy management. Besides, the French Government supports this approach through the PRO-SMen : a national program awarding a bonus to organisations that certify their energy management according to ISO 50001 standards [3]. The bonus can reach up to 40,000€ depending on the percentage of energy savings generated by the system. Furthermore, an energy management system implementation very often has a return on investment in over less than a year, therefore covering the compliance management costs.

Energy audits

When an energy management infrastructure is absent or insufficient, it then becomes essential to plan energy audits and diagnosis. In fact, the more precise and accessible the data is, the easier it will be to develop an appropriate plan for the asset. It is then possible to implement concrete energy efficiency measures, with optimized building management, efficient installations, and renewable power infrastructures.

Conclusion

Regulations evolve while a common, global awareness about human impact on the environment grows. It is possible to think that this awareness has increased with the current Coronavirus health crisis while reinforcing interrogations on the way we use buildings in the professional realm.

The building sector represents 47% of final energy consumption and 26% of greenhouse gas emissions in France [4]. It is therefore the responsibility of real estate players to take the necessary measures and to raise awareness. Complying to the decree represents an opportunity to answer to these challenges and integrate changes methodically. Longevity Partners is ready to act and position itself today as the French leader for guiding its clients through the decree compliance process.

 

Sources

[1] LEGIFRANCE. Décret n° 2019-771 du 23 juillet 2019 relatif aux obligations d'actions de réduction de la consommation d'énergie finale dans des bâtiments à usage tertiaire [En ligne]. Disponible sur : https://www.legifrance.gouv.fr/

[2] JOURNAL OFFICIEL DE LA REPUBLIQUE FRANCAISE. Arrêté du 10 avril 2020 relatif aux obligations d’actions de réduction des consommations d’énergie finale dans des bâtiments à usage tertiaire. 3 mai 2020. Texte 33 sur 95, 13 pages.

[3] PRO-SMEN PROGRAMME. PRO-SMEn, une prime pour mettre en place la norme ISO 50001 [En ligne]. Disponible sur : https://pro-smen.org/

[4] OBSERVATOIRE DE L’IMMOBILIER DURABLE. Bâtiment durable [En ligne]. Disponible sur : https://www.mooc-batiment-durable.fr/