In a landmark decision, the EU Court of Justice ruled that the free carbon emissions allownaces handed to carbon intensive industries were too much. Jointly judging six cases referred by national courts for preliminary rulings, the CJEU declared invalid the maximum annual amount of free allowances for greenhouse gas emissions determined by the Commission for the period 2013-2020.
According to the Court's press release of 28 April 2016: "In today’s judgment the Court finds, first of all, that the Commission’s 2011 decision, which precludes the taking into account of emissions from electricity generators in the determination of the maximum annual amount of allowances, is valid. It is apparent from the directive that, unlike emissions generated by industrial installations, emissions from electricity generators are never taken into account to determine the maximum annual amount of allowances. The Commission is granted no discretion in that respect. Such asymmetrical treatment of emissions, which limits the number of available allowances, is consistent with the objectives of the directive.
As regards the Commission’s 2013 decision, namely the one determining the correction factor, the Court notes, first, that the scope of the directive has been broadened from 1 January 2013 onwards so as to include, inter alia, emissions from the production of aluminium and from certain sectors of the chemicals industry. Next, the Court points out that, according to the directive and in spite of the various language versions – which have affected the uniformity of its interpretation and its application by the different Member States – the Commission, when calculating the maximum annual amount of allowances, is required to refer only to the emissions of the installations included in the Community system from 2013 onwards, and not to all of the emissions included from then onwards. Thus, the Commission should have ensured that the Member States communicated the relevant data to it. At the very least, in so far as that data did not enable it to determine the maximum annual amount of allowances and, consequently, the correction factor, it should have requested the Member States to make the necessary corrections. However, the Commission took account of data of certain Member States which, unlike others, communicated to it data concerning emissions generated by new activities carried out in installations already subject to the allowance trading scheme before 2013. The Commission’s decision is invalid in that respect.”
“The EU ETS needs to be reformed in order to make polluters pay, rather than paying polluters, as today’s ruling confirms. Policy makers must ensure that the European carbon market delivers more and faster emission reductions, and commit to phasing out free pollution permits”, commented Imke Lübbeke, head of climate and energy at WWF European Policy Office.
€24 billion in pollution permits - or ‘emissions allowances’ - were handed out by the European Commission to the most polluting industries, such as chemicals, steel and refineries in 19 European countries from 2008-2014. Yet several companies from those industries went to court to demand even more free pollution permits in order to reduce the perceived risk of job losses to regions with less stringent pollution rules - so-called ‘carbon leakage’ - even though there has never been any evidence of such carbon leakage.
“We must not allow scaremongering by a handful of large polluters to undermine the ETS, and its ability to deliver a high level of environmental protection,“ said Lübbeke.
Read more: WWF EU