Impairment of spare parts depends mainly on the turnover of these parts.
EU Directive 2003/87/EC set up a greenhouse gas emission quota system for the European Union (the EU-ETS).
This system, which applies in all EU countries, sets an annual cap on emissions. Businesses (including EDF) receive or buy emission quotas below that limit, then the following year surrender to the European Commission a number of greenhouse gas emission rights corresponding to their Scope 1 emissions for the year elapsed, such as direct greenhouse gas emissions from production of the goods sold (e.g. electricity, heat, steel, paper, etc.). Fines are payable if there is a shortfall (€100 per tonne of CO2 not covered by quotas, and an obligation to cover these amounts by quota the following year).
The cap is being progressively reduced in order to bring down the total emissions in Europe.
The legislative framework of the EU-ETS for the fourth trading period (2021-2030) has been tightened up to achieve the emission reduction targets set in the 2030 Climate and Energy framework, and the EU’s contribution to the Paris Climate Agreement adopted in 2015 (which set a general target of a 40% cut in emissions compared to 1990 levels for the whole EU)*. One key step was accelerating annual quota reductions to 43 million tonnes per year (2.2% below the allocations for 2010).
The European Commission also presented a package of proposals on 14 July 2021 entitled “Fit for 55”, intended to bring the European Union closer to the augmented target of cutting CO2 emissions by at least 55% (compared to 1990 levels) by 2030. The European “trilogue negotiation”, finalised in December 2022, raised the initial targets set by the European Commission in its legislative proposals in July 2021. The quotas for the sectors concerned by the ETS will be reduced by 62% (compared to 2005) by 2030.
EDF applies the accounting methods for greenhouse gas emission rights stipulated in ANC regulation 2012-03 of 4 October 2012, incorporated into Articles 615-1 to 615-22 of ANC regulation 2014-03.
The accounting treatment of emission rights depends on the holding intention.
Emission rights held to comply with regulatory requirements on greenhouse gas emissions (the “Generation” model) are included in inventories at acquisition cost, and the FIFO (first in first out) method is applied. A write-down is recorded when the generation cost of the electricity that includes the cost of the rights is higher than the present value of that electricity. At year-end, a “net presentation” principle is applied as follows:
The net reporting principle assumes that the emission rights held in the portfolio will be the rights used to offset emissions produced. However, there is a limit to the fungibility of rights at EDF, as there are no transfers of rights between the island and mainland activities. This can lead to concurrent recognition of an asset and a liability.
* The current EU ETS allocations trajectory does not yet include changes to be made in application of the Fit for 55 package.
The book value of inventories by category is as follows:
| 31/12/2022 | 31/12/2021 | |||||
|---|---|---|---|---|---|---|
| (in millions of euros) | Gross value | Provisions | Net value | Gross value | Provisions | Net value |
| Nuclear fuel | 8,929 | (24) | 8,905 | 8,471 | (39) | 8,432 |
| Other raw materials | 351 | - | 351 | 126 | - | 126 |
| Other supplies (1) | 2,833 | (294) | 2,539 | 2,000 | (250) | 1,750 |
| Work-in-progress and other inventories (2) | 1,038 | - | 1,038 | 645 | - | 645 |
| TOTAL INVENTORIES | 13,151 | (318) | 12,833 | 11,242 | (289) | 10,953 |
(1) The increase in “Other supplies” is mainly explained by an increase in capacity certificates. Work-in-progress for gas inventories rose by a net amount of €189 million (see note 7 (2)).
(2) The increase in “Work-in-progress and other inventories” is mainly attributable to an increase in the stock of Energy Savings Certificates at 31 December 2022.
