A French perspective on the impact of climate change on the construction sector and construction law
According to the French Federation of Insurance (FFA), the cumulative costs of damage relating to storms, severe winds, drought, floods and marine flooding in the period to 2040 will increase by 90% in constant euros compared to the previous 25 years (1988-2013). The FFA forecasts that during 2014-2039, the climate change event most likely to affect the French insurance sector is flooding, with €34 billion in annual claims to be paid by French insurers. The French Insurance Association (AFA) also indicates that the damage caused by the Seine flooding in 2016 alone is estimated at between €900 million and €1.4 billion paid in compensation by insurers. As a consequence, legal measures have been taken within the construction sector to adapt all buildings to climate change.
The 2012 Thermal Regulations
The construction sector has had climate laws in force since 2012. The 2012 Thermal Regulations (RT 2012) were implemented to set construction requirements on the energy performance of a building as well as the building’s overall environmental impact. The regulations aim to cover the entire building cycle and include additional parameters such as greenhouse gas emissions, water consumption, the composition of materials and waste generation from construction operations. In the event of non-conformity with RT 2012, the project owner risks a fine of €45,000 (and six months' imprisonment for repeated offences).
The impact of RT 2012 on decennial liability
A breach or non-conformity of RT 2012 (and all umbrella legislation) may trigger decennial liability, namely a legal liability borne by builders towards project owners for physically damaged buildings or buildings rendered unsuitable for their intended purpose. This responsibility is imposed on builders for 10 years from the date of ‘receipt of the works’ by the project owner, i.e. when the project owner declares that he accepts the work with or without reservations. It is mandatory for builders to take out a 10 year policy covering decennial liability. This has raised various issues for insurers, the principal concern being the lack of clarity in determining if the energy performance inefficiency of a project will render it unsuitable for its intended purpose (which in turn will determine liability for the contractor and its insurer). The relevant legislation only refers to the hypothesis of energy overconsumption to qualify a building unsuitable and not to energy performance inefficiency. These terms will need a more precise and clearer framework in order to reduce legal uncertainty for insurers.
These regulations may also affect more than one party to a construction project as shown by a recent case where a builder was held contractually liable for not performing his masonry service in accordance with the construction plans. This prevented the installation of glass wool insulation in accordance with RT 2012 and he was held liable for the cost of the construction work (€5,400). However, the cost was met by the project owner to avoid payment of the RT 2012 fine for the said breach.
The RT 2020 reform
The 2010 EU Directive on energy/emissions has since been replaced by a new directive dated 30 May 2018 which aims to create a highly energy-efficient building stock by 2050 by renovating the existing stock (ideally 3% of the stock per year) and meeting new standards for the construction of new buildings. In order to achieve these objectives, the current RT 2012 will be replaced by RT 2020, which effectively encourages the construction of “passive” and “positive” energy buildings.
Passive energy buildings are structures with a low energy consumption or which perform entirely on solar energy, the heat released by the ground and even by the inhabitants of the house. The energy performance of passive energy buildings far exceeds that of buildings complying with RT 2012.
Conversely, positive energy buildings produce more energy than they consume. They are often efficient passive energy buildings with a high level of energy production compared to their energy needs. This means that new buildings will have to use little energy and recycle what they produce whilst producing more energy than they consume.
France has had prescriptive building energy efficiency requirements since 1955 and is quite advanced in this area compared to other EU Nations. This is reflected by the RT 2012 which includes many dynamic requirements, such as mandatory computer simulations, air-tightness testing for residential buildings, and bio-climatic design considerations.
With new technology comes the risk of uncertainty and insurers will want to take this into account when monitoring the new RT 2020 reform.
The RT 2020 promises more advanced technology to help the construction sector achieve all targets. As such, it could be a model for the rest of Europe to follow and something for insurers to monitor. However, as the application of the RT 2020 takes effect on 1 January 2021, the French construction sector have just a year to face the major challenges of the 21st century both in terms of the new technologies used and environmental imperatives in general. This means that French builders must quickly adapt to these new thermal regulations, failing which they will continue to risk incurring fines (in breach of the RT 2012/2020) and claims from project owners for structural damage that compromises the stability or renders the project unsuitable. With new technology comes the risk of uncertainty and insurers will want to take this into account when monitoring the new RT 2020 reform.