EDF / 2019 Universal registration document

1. The Group, its strategy and activities Legislative and regulatory environment

Regulations on the wholesale energy 1.5.2.3 markets Inspired by the rules contained in Directive no. 2003/6/EC on Market Abuse applicable to financial markets (see section 4.1 “Corporate Governance Code”), regulation (EU) no. 1227/2011, known as the “REMIT” regulation, on wholesale energy market integrity and transparency came into force on 28 December 2011 This regulation is aimed at preventing market abuse and manipulation on wholesale energy markets and strengthening the confidence of market participants and consumers. Strengthening wholesale energy market integrity and transparency must foster open and fair competition on these markets, in particular so that prices set on these markets reflect a fair and competitive interplay between supply and demand. The regulation prohibits insider trading and market manipulation, and establishes an obligation to publish inside information as defined in the REMIT. The European Agency for the Cooperation of Energy Regulators (ACER) is primarily responsible for monitoring wholesale trades in energy products, in order to detect and prevent transactions based on inside information and market manipulations. ACER also collects the data needed to assess and monitor markets. The regulation provides that market participants, or a person authorised to do so on their behalf, provide ACER with a detailed statement of the transactions in the wholesale energy market. Lastly, market participants that perform transactions for which a declaration to ACER is mandatory must register with the national regulatory authority of the Member State in which they are established (the CRE in France) or, if they are not established in the European Union, that of a Member State in which they do business. Regulations applicable to EDF 1.5.3 group facilities and activities EDF’s business in France, as well as in other countries where EDF operates, is subject to regulations that are applicable to the environment, nuclear power, health, hygiene and safety. Compliance with these increasingly strict and continuously changing regulations exposes the Group to significant costs in order to ensure it does business compliantly. Regulations applicable to fossil 1.5.3.1 fuel-fired facilities in France Regulations applicable to fossil fuel-fired 1.5.3.1.1 energy generation The EDF group’s fossil fuel-fired energy generation business is subject in France to the regulations that are applicable to ICPEs (see section 1.5.3.1.2 “Regulations applicable to facilities classified for the protection of the environment (ICPEs)”). EDF’s fossil fuel-fired facilities must also comply with specific regulations on air quality, adopted mainly as a result of European Directive 2001/81/EC of 23 October 2001 on national emission ceilings for certain atmospheric pollutants (the NEC Directive) and Directive 2010/75/EU of 24 November 2010 on Industrial Emissions (the IED). These Directives were transposed into French law by several orders, in particular the Order of 26 August 2013 (itself repealed on 20 December 2018) on combustion facilities with a power rating of 20MW or more, which as type 2910 and 2931 plants must be approved. Decree no. 2018-704 of 3 August 2018 amended the designations of type 2910 (Combustion) and 2770 & 2771 (Incineration) plants and lowered the approval and application thresholds from 2MW to 1MW. It modifies the application requirements for combustion facilities. From 20 December 2018, type 2781-1, 2910, 2931 & 3110 combustion plants will fall under the relevant stipulations set by the five Orders of 3 August 2018.

Exemptions from obligations concerning emissions into the air were possible until 31 December 2015. As of that time, the ceilings and the exemptions originating from the IED Directive mentioned above will apply, with, in particular, specific issues concerning production facilities in the overseas departments and emergency systems, for which the pollution levels require negotiating adapted provisions. Fossil fuel-fired energy production is also subject to the provisions of the Seveso 3 Directive and to the obligation to lodge financial guarantees (see section 1.5.3.1.2 “Regulations applicable to facilities classified for the protection of the environment (ICPEs)”). Directive no. 2015/2193/EU of 25 November 2015 on the limitation of emissions of certain pollutants into the air from medium combustion plants that was to be transposed into French law by 19 December 2017 was transposed by Decree no. 2018-704 of 3 August 2018 amending the classification of categorised facilities and some provisions of the French Environment Code. It lays down rules designed to limit the air pollution caused by sulphur dioxide (SO 2 ), nitrogen oxides (NO x ) and dust from medium combustion plants, and to reduce the airborne emissions and their potential risks for human and environmental health. The facilities concerned are combustion plants with a rated thermal input of 1MW or more and less than 50MW, regardless of the type of fuel they use. Five orders amending the regulations applicable to combustion facilities falling under environmental protection regulations governing categorised facilities in order to transpose Directive 2015/2193/EU were adopted on 3 August 2018. The Energy and Climate Law no. 2019-1147 of 8 November 2019 regulates the phasing out of fossil fuels by discontinuing coal-fired power generation by 2022. The Law amends Article L. 311-5-3 of the French Energy Code, to allow the administrative authority to set an emissions cap applicable, as of 1 January 2022, to fossil fuel-fired electricity generation facilities located in continental metropolitan France. Regulations applicable to facilities classified 1.5.3.1.2 for the protection of the environment (ICPEs) Facilities concerned and main obligations Certain facilities operated in France by the EDF group, in particular fossil fuel-fired power plants, are subject to legislation on facilities that are classified for the protection of the environment (ICPEs), which is organised in the French Environment Code. These facilities are subject to a prior declaration, simplified authorisation (known as “registration”) or to an authorisation depending on the magnitude of danger or adverse effects they may cause to the environment or public health. Since 1 March 2017, for projects subject to authorisation under ICPE or facilities, structures, works and activities (IOTA) subject to water legislation, the two procedures have been merged into the environmental authorisation. This new scheme incorporates, within book I of the French Environment Code, a new chapter VIII entitled “Administrative Procedures” comprising a separate section entitled “Environmental Authorisation” and is composed of Articles L. 181-1 to L. 181-31 and R. 181-1 to R. 181-56 The ICPE regulation requires that the site be restored when a facility is taken out of service, depending on the expected future use of the land. Under Article L. 516-1 of the French Environment Code, lodging financial guarantees is also required for certain ICPE facilities that are subject to authorisation (including Seveso facilities) and registration. The basis and amount of the financial guarantees vary depending on the facility. These financial guarantees are designed to provide collateral for the financing of the measures that must be adopted in the event of an accident before or after closure, as well as the surveillance, safety works and restoration operations after closure. These guarantees do not cover compensation owed by the operator to third parties who may suffer loss or harm in connection with the activity carried out. The EDF group operates facilities that are concerned by these new requirements. The Decree no. 2015-1250 of 7 October 2015 increased the threshold above which guarantees are required from €75,000 to €100,000 (Article R. 516-1 of the French Environment Code). It also provides for additional financial guarantees to be lodged with the Caisse des dépôts, as well as the amendment of the rules governing how guarantees are triggered, in particular by allowing them to be implemented as soon as court-ordered liquidation proceedings are initiated.

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EDF | Universal registration document 2019