# 62019CJ0189

JUDGMENT OF THE COURT (Sixth Chamber)

14 May 2020 (
  *1
  )

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(Reference for a preliminary ruling – Environment – Scheme for greenhouse gas emission allowance trading in the European Union – Directive 2003/87/EC – Article 10a – Transitional regime for free allocation of allowances – Decision 2011/278/EU – Article 9 – Determination of the historical activity level – Significant change in the capacity of an installation which took place before the baseline period – Determination of the relevant baseline period)

In Case C‐189/19,

REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesverwaltungsgericht (Federal Administrative Court, Germany), made by decision of 22 November 2018, received at the Court on 26 February 2019, in the proceedings

Spenner GmbH & Co. KG

Spenner GmbH & Co. KG

v

Bundesrepublik Deutschland,

Bundesrepublik Deutschland,

THE COURT (Sixth Chamber),

composed of M. Safjan, President of the Chamber, J.‐C. Bonichot (Rapporteur), President of the First Chamber, L. Bay Larsen, Judge,

Advocate General: H. Saugmandsgaard Øe,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

| – | Spenner GmbH & Co. KG, by S. Altenschmidt and D. Jacob, Rechtsanwälte, |
| --- | --- |

–

Spenner GmbH & Co. KG, by S. Altenschmidt and D. Jacob, Rechtsanwälte,

| – | the German Government, by S. Eisenberg and J. Möller, acting as Agents, |
| --- | --- |

–

the German Government, by S. Eisenberg and J. Möller, acting as Agents,

| – | the European Commission, by J.‐F. Brakeland and A.C. Becker, acting as Agents, |
| --- | --- |

–

the European Commission, by J.‐F. Brakeland and A.C. Becker, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

Judgment

| 1 | This request for a preliminary ruling concerns the interpretation of Article 9(1) and (9) of Commission Decision 2011/278/EU of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2011 L 130, p. 1) and Article 1 of Commission Decision (EU) 2017/126 of 24 January 2017 amending Decision 2013/448/EU as regards the establishment of a uniform cross-sectoral correction factor in accordance with Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2017 L 19, p. 93). |
| --- | --- |

1

This request for a preliminary ruling concerns the interpretation of Article 9(1) and (9) of Commission Decision 2011/278/EU of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2011 L 130, p. 1) and Article 1 of Commission Decision (EU) 2017/126 of 24 January 2017 amending Decision 2013/448/EU as regards the establishment of a uniform cross-sectoral correction factor in accordance with Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2017 L 19, p. 93).

| 2 | The request has been made in proceedings between Spenner GmbH & Co. KG and the Bundesrepublik Deutschland (Federal Republic of Germany) concerning an application for a free allocation of greenhouse gas emission allowances (‘the emission allowances’) to a cement clinker production plant. |
| --- | --- |

2

The request has been made in proceedings between Spenner GmbH & Co. KG and the Bundesrepublik Deutschland (Federal Republic of Germany) concerning an application for a free allocation of greenhouse gas emission allowances (‘the emission allowances’) to a cement clinker production plant.

Legal context

Legal context

European Union law

European Union law

Directive 2003/87

Directive 2003/87

| 3 | Article 10a(5) of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32), as amended by Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 (OJ 2009 L 140, p. 63) (‘Directive 2003/87’), provides:
  ‘The maximum annual amount of allowances that is the basis for calculating allocations to installations which are not covered by paragraph 3 and are not new entrants shall not exceed the sum of:





  (a) | the annual Community-wide total quantity, as determined pursuant to Article 9, multiplied by the share of emissions from installations not covered by paragraph 3 in the total average verified emissions, in the period from 2005 to 2007, from installations covered by the Community scheme in the period from 2008 to 2012; and |
| --- | --- | --- |

3

Article 10a(5) of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32), as amended by Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 (OJ 2009 L 140, p. 63) (‘Directive 2003/87’), provides:

‘The maximum annual amount of allowances that is the basis for calculating allocations to installations which are not covered by paragraph 3 and are not new entrants shall not exceed the sum of:

(a)

the annual Community-wide total quantity, as determined pursuant to Article 9, multiplied by the share of emissions from installations not covered by paragraph 3 in the total average verified emissions, in the period from 2005 to 2007, from installations covered by the Community scheme in the period from 2008 to 2012; and

| (b) | the total average annual verified emissions from installations in the period from 2005 to 2007 which are only included in the Community scheme from 2013 onwards and are not covered by paragraph 3, adjusted by the linear factor, as referred to in Article 9. |
| --- | --- |

(b)

the total average annual verified emissions from installations in the period from 2005 to 2007 which are only included in the Community scheme from 2013 onwards and are not covered by paragraph 3, adjusted by the linear factor, as referred to in Article 9.

A uniform cross-sectoral correction factor shall be applied if necessary.’

Decision 2011/278

Decision 2011/278

| 4 | Recital 16 of Decision 2011/278 is worded as follows:
  ‘The amount of allowances to be allocated free of charge to incumbent installations should be based on historical production data. In order to ensure that the reference period is as far as possible representative of industry cycles, covers a relevant period where good quality data is available and reduces the impact of special circumstances, such as temporary closure of installations, the historical activity levels have been based on the median production during the period from 1 January 2005 to 31 December 2008, or, where it is higher, on the median production during the period from 1 January 2009 to 31 December 2010. It is also appropriate to take account of any significant capacity change that has taken place in the relevant period. For new entrants, the determination of activity levels should be based on standard capacity utilisation based on sector-specific information or on installation-specific capacity utilisation.’ |
| --- | --- |

4

Recital 16 of Decision 2011/278 is worded as follows:

‘The amount of allowances to be allocated free of charge to incumbent installations should be based on historical production data. In order to ensure that the reference period is as far as possible representative of industry cycles, covers a relevant period where good quality data is available and reduces the impact of special circumstances, such as temporary closure of installations, the historical activity levels have been based on the median production during the period from 1 January 2005 to 31 December 2008, or, where it is higher, on the median production during the period from 1 January 2009 to 31 December 2010. It is also appropriate to take account of any significant capacity change that has taken place in the relevant period. For new entrants, the determination of activity levels should be based on standard capacity utilisation based on sector-specific information or on installation-specific capacity utilisation.’

| 5 | Article 1 of Decision 2011/278 states:
  ‘This Decision lays down transitional Union-wide rules for the harmonised free allocation of emission allowances under Directive 2003/87/EC from 2013 onwards.’ |
| --- | --- |

5

Article 1 of Decision 2011/278 states:

‘This Decision lays down transitional Union-wide rules for the harmonised free allocation of emission allowances under Directive 2003/87/EC from 2013 onwards.’

| 6 | Article 3 of that decision provides:
  ‘For the purposes of this Decision, the following definitions shall apply:





  (a) | “incumbent installation” means any installation carrying out one or more activities listed in Annex I to Directive 2003/87/EC or an activity included in the Union scheme for the first time in accordance with Article 24 of that Directive which:





  (i) | obtained a greenhouse gas emission permit before 30 June 2011; or |
| --- | --- | --- | --- |

6

Article 3 of that decision provides:

‘For the purposes of this Decision, the following definitions shall apply:

(a)

“incumbent installation” means any installation carrying out one or more activities listed in Annex I to Directive 2003/87/EC or an activity included in the Union scheme for the first time in accordance with Article 24 of that Directive which:

(i)

obtained a greenhouse gas emission permit before 30 June 2011; or

| (ii) | is in fact operating, obtained all relevant environmental permits, including a permit provided for in Directive 2008/1/EC [of the European Parliament and of the Council of 15 January 2008 concerning integrated pollution prevention and control (OJ 2008 L 24, p. 8)] where applicable, by 30 June 2011 and fulfilled by 30 June 2011 all other criteria defined in the national legal order of the Member State concerned on the basis of which the installation would have been entitled to receive the greenhouse gas permit; |
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(ii)

is in fact operating, obtained all relevant environmental permits, including a permit provided for in Directive 2008/1/EC [of the European Parliament and of the Council of 15 January 2008 concerning integrated pollution prevention and control (OJ 2008 L 24, p. 8)] where applicable, by 30 June 2011 and fulfilled by 30 June 2011 all other criteria defined in the national legal order of the Member State concerned on the basis of which the installation would have been entitled to receive the greenhouse gas permit;

...

| (i) | “significant capacity extension” means a significant increase in a sub-installation’s initial installed capacity whereby all of the following occur: |
| --- | --- |

(i)

“significant capacity extension” means a significant increase in a sub-installation’s initial installed capacity whereby all of the following occur:

...

| (j) | “significant capacity reduction” means one or more identifiable physical changes leading to a significant decrease in a sub-installation’s initial installed capacity and its activity level of the magnitude considered to constitute a significant capacity extension; |
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(j)

“significant capacity reduction” means one or more identifiable physical changes leading to a significant decrease in a sub-installation’s initial installed capacity and its activity level of the magnitude considered to constitute a significant capacity extension;

| (k) | “significant capacity change” means either a significant capacity extension or a significant capacity reduction; |
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(k)

“significant capacity change” means either a significant capacity extension or a significant capacity reduction;

| (l) | “added capacity” means the difference between the initial installed capacity of a sub-installation and the installed capacity of that same sub-installation after having had a significant extension determined on the basis of the average of the 2 highest monthly production volumes within the first 6 months following the start of changed operation; |
| --- | --- |

(l)

“added capacity” means the difference between the initial installed capacity of a sub-installation and the installed capacity of that same sub-installation after having had a significant extension determined on the basis of the average of the 2 highest monthly production volumes within the first 6 months following the start of changed operation;

| (m) | “reduced capacity” means the difference between the initial installed capacity of a sub-installation and the installed capacity of that same sub-installation after having had a significant capacity reduction determined on the basis of the average of the 2 highest monthly production volumes within the first 6 months following the start of changed operation; |
| --- | --- |

(m)

“reduced capacity” means the difference between the initial installed capacity of a sub-installation and the installed capacity of that same sub-installation after having had a significant capacity reduction determined on the basis of the average of the 2 highest monthly production volumes within the first 6 months following the start of changed operation;

...

| (r) | “verifier” means a competent, independent, person or verification body with responsibility for performing and reporting on the verification process, in accordance with the detailed requirements established by the Member State pursuant to Annex V to Directive 2003/87/EC; |
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(r)

“verifier” means a competent, independent, person or verification body with responsibility for performing and reporting on the verification process, in accordance with the detailed requirements established by the Member State pursuant to Annex V to Directive 2003/87/EC;

...’

| 7 | Article 6(1) of that decision provides:
  ‘For the purposes of this Decision, Member States shall divide each installation eligible for the free allocation of emission allowances under Article 10a of Directive 2003/87/EC into one or more of the following sub-installations, as required:





  (a) | a product benchmark sub-installation; |
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7

Article 6(1) of that decision provides:

‘For the purposes of this Decision, Member States shall divide each installation eligible for the free allocation of emission allowances under Article 10a of Directive 2003/87/EC into one or more of the following sub-installations, as required:

(a)

a product benchmark sub-installation;

| (b) | a heat benchmark sub-installation; |
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(b)

a heat benchmark sub-installation;

| (c) | a fuel benchmark sub-installation; |
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(c)

a fuel benchmark sub-installation;

| (d) | a process emissions sub-installation. |
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(d)

a process emissions sub-installation.

Sub-installations shall correspond, to the extent possible, to physical parts of the installation.

...’

| 8 | According to Article 7(1), (2) and (8) of that decision:
  ‘1.   For each incumbent installation eligible for the free allocation of emission allowances under Article 10a of Directive 2003/87/EC, including installations that are operated only occasionally, in particular, installations that are kept in reserve or on standby and installations operating on a seasonal schedule, Member States shall, for all years of the period from 1 January 2005 to 31 December 2008, or 1 January 2009 to 31 December 2010 where applicable, during which the installation has been operating, collect from the operator all relevant information and data regarding each parameter listed in Annex IV.
  2.   Member States shall collect data for each sub-installation separately. If necessary, Member States may require the operator to submit more data.
  ...
  8.   Where data is missing, Member States shall require the operator to duly justify any lack of data.
  Member States shall require the operator to substitute all missing data with conservative estimates, in particular, based on best industry practice, recent scientific and technical knowledge before or, at the latest, during verification by the verifier.
  ...’ |
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8

According to Article 7(1), (2) and (8) of that decision:

‘1.   For each incumbent installation eligible for the free allocation of emission allowances under Article 10a of Directive 2003/87/EC, including installations that are operated only occasionally, in particular, installations that are kept in reserve or on standby and installations operating on a seasonal schedule, Member States shall, for all years of the period from 1 January 2005 to 31 December 2008, or 1 January 2009 to 31 December 2010 where applicable, during which the installation has been operating, collect from the operator all relevant information and data regarding each parameter listed in Annex IV.

2.   Member States shall collect data for each sub-installation separately. If necessary, Member States may require the operator to submit more data.

...

8.   Where data is missing, Member States shall require the operator to duly justify any lack of data.

Member States shall require the operator to substitute all missing data with conservative estimates, in particular, based on best industry practice, recent scientific and technical knowledge before or, at the latest, during verification by the verifier.

...’

| 9 | Article 8 of Decision 2011/278 states:
  ‘1.   In the process of collecting data in accordance with Article 7, Member States shall only accept data that has been verified as satisfactory by a verifier. The verification process shall relate to the methodology report and the reported parameters referred to in Article 7 and Annex IV. The verification shall address the reliability, credibility and accuracy of the data provided by the operator and shall come to a verification opinion that states with reasonable assurance whether the data submitted is free from material misstatements.
  ...
  4.   Member States shall not allocate emission allowances free of charge to an installation where data relating to this installation has not been verified as satisfactory.
  ...’ |
| --- | --- |

9

Article 8 of Decision 2011/278 states:

‘1.   In the process of collecting data in accordance with Article 7, Member States shall only accept data that has been verified as satisfactory by a verifier. The verification process shall relate to the methodology report and the reported parameters referred to in Article 7 and Annex IV. The verification shall address the reliability, credibility and accuracy of the data provided by the operator and shall come to a verification opinion that states with reasonable assurance whether the data submitted is free from material misstatements.

...

4.   Member States shall not allocate emission allowances free of charge to an installation where data relating to this installation has not been verified as satisfactory.

...’

| 10 | Article 9 of that decision provides:
  ‘1.   For incumbent installations, Member States shall determine historical activity levels of each installation for the baseline period from 1 January 2005 to 31 December 2008, or, where they are higher, for the baseline period from 1 January 2009 to 31 December 2010, on the basis of the data collected under Article 7.
  2.   The product-related historical activity level shall, for each product for which a product benchmark has been determined as referred to in Annex I, refer to the median annual historical production of this product in the installation concerned during the baseline period.
  3.   The heat-related historical activity level shall refer to the median annual historical import from an installation covered by the Union scheme, production, or both, during the baseline period, of measurable heat consumed within the installation’s boundaries for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, or exported to installations or other entity not covered by the Union scheme with the exception of the export for the production of electricity expressed as terajoule per year.
  4.   The fuel-related historical activity level shall refer to the median annual historical consumption of fuels used for the production of non-measurable heat consumed for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, including safety flaring, during the baseline period expressed as terajoule per year.
  5.   For process emissions, which occurred in relation with the production of products in the installation concerned during the baseline period referred to in paragraph 1, the process-related historical activity level shall refer to the median annual historical process emissions expressed as tonnes of carbon dioxide equivalent.
  ...
  9.   Where an incumbent installation has had a significant capacity extension or a significant reduction of capacity between 1 January 2005 and 30 June 2011, the historical activity levels of the installation concerned shall be the sum of the median values determined in accordance with paragraph 1 without the significant capacity change and the historical activity levels of the added or reduced capacity.
  The historical activity levels of the added or reduced capacity shall be the difference between the initial installed capacities of each sub-installation having had a significant capacity change determined in accordance with Article 7(3) until the start of changed operation and the installed capacity after the significant capacity change determined in accordance with Article 7(4) multiplied by the average historical capacity utilisation of the installation concerned of the years prior to the start of changed operation.’ |
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10

Article 9 of that decision provides:

‘1.   For incumbent installations, Member States shall determine historical activity levels of each installation for the baseline period from 1 January 2005 to 31 December 2008, or, where they are higher, for the baseline period from 1 January 2009 to 31 December 2010, on the basis of the data collected under Article 7.

2.   The product-related historical activity level shall, for each product for which a product benchmark has been determined as referred to in Annex I, refer to the median annual historical production of this product in the installation concerned during the baseline period.

3.   The heat-related historical activity level shall refer to the median annual historical import from an installation covered by the Union scheme, production, or both, during the baseline period, of measurable heat consumed within the installation’s boundaries for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, or exported to installations or other entity not covered by the Union scheme with the exception of the export for the production of electricity expressed as terajoule per year.

4.   The fuel-related historical activity level shall refer to the median annual historical consumption of fuels used for the production of non-measurable heat consumed for the production of products, for the production of mechanical energy other than used for the production of electricity, for heating or cooling with the exception of the consumption for the production of electricity, including safety flaring, during the baseline period expressed as terajoule per year.

5.   For process emissions, which occurred in relation with the production of products in the installation concerned during the baseline period referred to in paragraph 1, the process-related historical activity level shall refer to the median annual historical process emissions expressed as tonnes of carbon dioxide equivalent.

...

9.   Where an incumbent installation has had a significant capacity extension or a significant reduction of capacity between 1 January 2005 and 30 June 2011, the historical activity levels of the installation concerned shall be the sum of the median values determined in accordance with paragraph 1 without the significant capacity change and the historical activity levels of the added or reduced capacity.

The historical activity levels of the added or reduced capacity shall be the difference between the initial installed capacities of each sub-installation having had a significant capacity change determined in accordance with Article 7(3) until the start of changed operation and the installed capacity after the significant capacity change determined in accordance with Article 7(4) multiplied by the average historical capacity utilisation of the installation concerned of the years prior to the start of changed operation.’

| 11 | Annex IV to that decision provides that, for the purposes of the baseline data collection referred to in Article 7(1) of that decision, Member States are to require the operator to submit at least the data contained in that annex ‘at installation and sub-installation level for all calendar years of the baseline period chosen in accordance with Article 9(1) (2005-2008 or 2009-2010)’. Those data are to include the ‘initial installed capacity’, ‘the added or reduced capacity as well as the installed capacity of the sub-installation after having had a significant capacity change in case of a significant capacity change between 1 January 2009 and 30 June 2011’ and the ‘historical activity levels’. With regard to the latter, it follows from that annex that they must be determined ‘according to type of sub-installation’ and in the light of ‘all annual production volumes on the basis of which the median has been determined’. |
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11

Annex IV to that decision provides that, for the purposes of the baseline data collection referred to in Article 7(1) of that decision, Member States are to require the operator to submit at least the data contained in that annex ‘at installation and sub-installation level for all calendar years of the baseline period chosen in accordance with Article 9(1) (2005-2008 or 2009-2010)’. Those data are to include the ‘initial installed capacity’, ‘the added or reduced capacity as well as the installed capacity of the sub-installation after having had a significant capacity change in case of a significant capacity change between 1 January 2009 and 30 June 2011’ and the ‘historical activity levels’. With regard to the latter, it follows from that annex that they must be determined ‘according to type of sub-installation’ and in the light of ‘all annual production volumes on the basis of which the median has been determined’.

Decision 2013/448/EU

Decision 2013/448/EU

| 12 | Article 4 of Commission Decision 2013/448/EU of 5 September 2013 concerning national implementation measures for the transitional free allocation of greenhouse gas emission allowances in accordance with Article 11(3) of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2013 L 240, p. 27) was, before its amendment by Decision 2017/126, worded as follows:
  ‘The uniform cross-sectoral correction factor referred to in Article 10a(5) of Directive 2003/87/EC and determined in accordance with Article 15(3) of Decision 2011/278/EU is set out in Annex II to this Decision.’ |
| --- | --- |

12

Article 4 of Commission Decision 2013/448/EU of 5 September 2013 concerning national implementation measures for the transitional free allocation of greenhouse gas emission allowances in accordance with Article 11(3) of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2013 L 240, p. 27) was, before its amendment by Decision 2017/126, worded as follows:

‘The uniform cross-sectoral correction factor referred to in Article 10a(5) of Directive 2003/87/EC and determined in accordance with Article 15(3) of Decision 2011/278/EU is set out in Annex II to this Decision.’

| 13 | Annex II to Decision 2013/448 contained a table for determining the cross-sectoral correction factor for each year in the period from 2013 to 2020. |
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13

Annex II to Decision 2013/448 contained a table for determining the cross-sectoral correction factor for each year in the period from 2013 to 2020.

Decision 2017/126

Decision 2017/126

| 14 | Article 1 of Decision 2017/126 provides:
  ‘Decision 2013/448/EU is hereby amended as follows:





  1. | Article 4 shall be replaced by the following:
  “Article 4
  The uniform cross-sectoral correction factor referred to in Article 10a(5) of Directive 2003/87/EC and determined in accordance with Article 15(3) of Decision 2011/278/EU is set out in Annex II to this Decision.” |
| --- | --- | --- |

14

Article 1 of Decision 2017/126 provides:

‘Decision 2013/448/EU is hereby amended as follows:

1.

Article 4 shall be replaced by the following:

“Article 4

The uniform cross-sectoral correction factor referred to in Article 10a(5) of Directive 2003/87/EC and determined in accordance with Article 15(3) of Decision 2011/278/EU is set out in Annex II to this Decision.”

| 2. | Annex II shall be replaced by the text appearing in the Annex to this Decision.’ |
| --- | --- |

2.

Annex II shall be replaced by the text appearing in the Annex to this Decision.’

| 15 | The annex to Decision 2017/126 contains a table for determining the cross-sectoral correction factor for each year of the period from 2013 to 2020, which replaces the table in Annex II to Decision 2013/448. |
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15

The annex to Decision 2017/126 contains a table for determining the cross-sectoral correction factor for each year of the period from 2013 to 2020, which replaces the table in Annex II to Decision 2013/448.

German law

German law

| 16 | The provisions of German law applicable to the dispute in the main proceedings are contained in the Verordnung über die Zuteilung von Treibhausgas-Emissionsberechtigungen in der Handelsperiode 2013 bis 2020 (Zuteilungsverordnung 2020) (Regulation on the allocation of greenhouse gas emission allowances for the trading period 2013 to 2020 (Allocation regulation 2020)) of 26 September 2011 (BGBl. 2011 I, p. 1921), as amended by the Law of 13 July 2017 (BGBl. 2017 I, p. 2354) (‘the ZuV 2020’). Paragraph 8 of the ZuV 2020 reads:
  ‘(1)   For incumbent installations, the relevant activity level shall be determined, on the basis of the data collected in accordance with Paragraph 5 and in a uniform manner in relation to all the allocation elements of the installation, by reference either to the baseline period from 1 January 2005 up to and including 31 December 2008 or to the period from 1 January 2009 up to and including 31 December 2010, at the choice of the operator.
  (2)   For each of the installation’s products for which an allocation element within the meaning of Paragraph 3(1), point 1, must be formed, the relevant activity level shall be the median value of all annual quantities of that product in the baseline period selected in accordance with subparagraph 1 ...
  ...
  (8)   For significant capacity extensions between 1 January 2005 and 30 June 2011, the relevant activity level of the allocation element shall be the sum of the median values determined in accordance with subparagraphs 2 to 5 without the significant capacity extension and the activity levels of the added capacity. In this connection, the activity level of the added capacity shall be the difference between the installed capacity of the allocation element after the capacity extension and the installed initial capacity of the allocation element until the start of the changed operation, multiplied by the average capacity utilisation of the allocation element concerned during the period from 1 January 2005 to the end of the calendar year prior to the start of the changed operation. In the event of significant capacity extensions in the year 2005, these shall, on application by the operator, be treated as not being significant capacity extensions; otherwise, in such cases, the average monthly capacity utilisation in 2005 up until the calendar month prior to the start of the changed operation shall be applicable for the purposes of determining the average capacity utilisation of the allocation element concerned. In the event of there being more than one capacity extension, the average capacity utilisation of the allocation element concerned prior to the start of operation of the first change shall be relevant.’ |
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16

The provisions of German law applicable to the dispute in the main proceedings are contained in the Verordnung über die Zuteilung von Treibhausgas-Emissionsberechtigungen in der Handelsperiode 2013 bis 2020 (Zuteilungsverordnung 2020) (Regulation on the allocation of greenhouse gas emission allowances for the trading period 2013 to 2020 (Allocation regulation 2020)) of 26 September 2011 (BGBl. 2011 I, p. 1921), as amended by the Law of 13 July 2017 (BGBl. 2017 I, p. 2354) (‘the ZuV 2020’). Paragraph 8 of the ZuV 2020 reads:

‘(1)   For incumbent installations, the relevant activity level shall be determined, on the basis of the data collected in accordance with Paragraph 5 and in a uniform manner in relation to all the allocation elements of the installation, by reference either to the baseline period from 1 January 2005 up to and including 31 December 2008 or to the period from 1 January 2009 up to and including 31 December 2010, at the choice of the operator.

(2)   For each of the installation’s products for which an allocation element within the meaning of Paragraph 3(1), point 1, must be formed, the relevant activity level shall be the median value of all annual quantities of that product in the baseline period selected in accordance with subparagraph 1 ...

...

(8)   For significant capacity extensions between 1 January 2005 and 30 June 2011, the relevant activity level of the allocation element shall be the sum of the median values determined in accordance with subparagraphs 2 to 5 without the significant capacity extension and the activity levels of the added capacity. In this connection, the activity level of the added capacity shall be the difference between the installed capacity of the allocation element after the capacity extension and the installed initial capacity of the allocation element until the start of the changed operation, multiplied by the average capacity utilisation of the allocation element concerned during the period from 1 January 2005 to the end of the calendar year prior to the start of the changed operation. In the event of significant capacity extensions in the year 2005, these shall, on application by the operator, be treated as not being significant capacity extensions; otherwise, in such cases, the average monthly capacity utilisation in 2005 up until the calendar month prior to the start of the changed operation shall be applicable for the purposes of determining the average capacity utilisation of the allocation element concerned. In the event of there being more than one capacity extension, the average capacity utilisation of the allocation element concerned prior to the start of operation of the first change shall be relevant.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

The dispute in the main proceedings and the questions referred for a preliminary ruling

| 17 | Cement clinker is produced in cement kilns. That component of cement must next be ground to powder. Spenner is a German company which operates a cement clinker production plant. |
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17

Cement clinker is produced in cement kilns. That component of cement must next be ground to powder. Spenner is a German company which operates a cement clinker production plant.

| 18 | By a decision of 17 February 2014, the Deutsche Emissionshandelsstelle (German Emissions Trading Authority; ‘the DEHSt’) determined the quantity of free emission allowances to be allocated to that company during the trading period 2013 to 2020 for its cement clinker production plant. Spenner unsuccessfully lodged a complaint against that decision, for the purposes of obtaining an additional allocation of emission allowances. The court proceedings subsequently brought by Spenner were dismissed at first instance. |
| --- | --- |

18

By a decision of 17 February 2014, the Deutsche Emissionshandelsstelle (German Emissions Trading Authority; ‘the DEHSt’) determined the quantity of free emission allowances to be allocated to that company during the trading period 2013 to 2020 for its cement clinker production plant. Spenner unsuccessfully lodged a complaint against that decision, for the purposes of obtaining an additional allocation of emission allowances. The court proceedings subsequently brought by Spenner were dismissed at first instance.

| 19 | In its direct appeal on a point of law before the Bundesverwaltungsgericht (Federal Administrative Court, Germany), Spenner maintains that the interpretation of Paragraph 8(1), (2) and (8) of the ZuV 2020 adopted at first instance is incompatible with Article 9(1) and (9) of Decision 2011/278. In particular, that company takes the view that the DEHSt wrongly disapplied Article 9(9) of Decision 2011/278 and that the DEHSt should have reviewed and corrected Spenner’s choice of baseline period. |
| --- | --- |

19

In its direct appeal on a point of law before the Bundesverwaltungsgericht (Federal Administrative Court, Germany), Spenner maintains that the interpretation of Paragraph 8(1), (2) and (8) of the ZuV 2020 adopted at first instance is incompatible with Article 9(1) and (9) of Decision 2011/278. In particular, that company takes the view that the DEHSt wrongly disapplied Article 9(9) of Decision 2011/278 and that the DEHSt should have reviewed and corrected Spenner’s choice of baseline period.

| 20 | As regards Article 9(1) of Decision 2011/278, the Bundesverwaltungsgericht (Federal Administrative Court) considers that that provision provides for the determination of the historical activity level of installations, based on the highest level of activity, during one of the two baseline periods provided for in that provision, namely the period from 1 January 2005 to 31 December 2008 or the period from 1 January 2009 to 31 December 2010. |
| --- | --- |

20

As regards Article 9(1) of Decision 2011/278, the Bundesverwaltungsgericht (Federal Administrative Court) considers that that provision provides for the determination of the historical activity level of installations, based on the highest level of activity, during one of the two baseline periods provided for in that provision, namely the period from 1 January 2005 to 31 December 2008 or the period from 1 January 2009 to 31 December 2010.

| 21 | As regards Article 9(9) of that decision, that article governs the manner in which significant capacity changes are to be taken into account, when determining the historical activity level of an installation. The first subparagraph of that provision sets out a mathematical formula according to which it is necessary to add together the historical activity level of the installation ‘without the significant capacity change’ and the historical activity level of the added or reduced capacity. The historical activity level of the installation without the production volume associated with the change is determined in accordance with Article 9(1) of Decision 2011/278. The historical activity level of the added or reduced capacity is calculated in accordance with the rule set out in the second subparagraph of Article 9(9) of that decision. |
| --- | --- |

21

As regards Article 9(9) of that decision, that article governs the manner in which significant capacity changes are to be taken into account, when determining the historical activity level of an installation. The first subparagraph of that provision sets out a mathematical formula according to which it is necessary to add together the historical activity level of the installation ‘without the significant capacity change’ and the historical activity level of the added or reduced capacity. The historical activity level of the installation without the production volume associated with the change is determined in accordance with Article 9(1) of Decision 2011/278. The historical activity level of the added or reduced capacity is calculated in accordance with the rule set out in the second subparagraph of Article 9(9) of that decision.

| 22 | It is clear from the order for reference that, pursuant to Paragraph 8(1) of the ZuV 2020, it is for the operator to determine the baseline period. According to the German Government, it is bound by the operator’s choice. |
| --- | --- |

22

It is clear from the order for reference that, pursuant to Paragraph 8(1) of the ZuV 2020, it is for the operator to determine the baseline period. According to the German Government, it is bound by the operator’s choice.

| 23 | In the present case, Spenner chose the baseline period from 1 January 2009 to 31 December 2010 for its cement clinker production plant. At that installation, a significant capacity expansion took place during the previous baseline period from 1 January 2005 to 31 December 2008. |
| --- | --- |

23

In the present case, Spenner chose the baseline period from 1 January 2009 to 31 December 2010 for its cement clinker production plant. At that installation, a significant capacity expansion took place during the previous baseline period from 1 January 2005 to 31 December 2008.

| 24 | According to the Bundesverwaltungsgericht (Federal Administrative Court), Spenner argues that it follows from Article 9(1) of Decision 2011/278 that the choice of the baseline period is a matter for the national authorities and not for the operators of installations. Those authorities should select the baseline period with the highest level of activity. |
| --- | --- |

24

According to the Bundesverwaltungsgericht (Federal Administrative Court), Spenner argues that it follows from Article 9(1) of Decision 2011/278 that the choice of the baseline period is a matter for the national authorities and not for the operators of installations. Those authorities should select the baseline period with the highest level of activity.

| 25 | Spenner further argues that any significant capacity change should be taken into account, pursuant to Article 9(9) of Decision 2011/278, even if it did not take place during the chosen baseline period. |
| --- | --- |

25

Spenner further argues that any significant capacity change should be taken into account, pursuant to Article 9(9) of Decision 2011/278, even if it did not take place during the chosen baseline period.

| 26 | The Bundesverwaltungsgericht (Federal Administrative Court) considers that the latter provision lacks clarity but should be interpreted as applying only to capacity extensions which took place during the chosen baseline period. As regards any capacity extension which took place earlier, the resulting increase in activity is, in any event, included in the historical activity during that baseline period. Taking additional account of the capacity extension pursuant to Article 9(9) of Decision 2011/278 would result in the capacity extension being counted twice. |
| --- | --- |

26

The Bundesverwaltungsgericht (Federal Administrative Court) considers that the latter provision lacks clarity but should be interpreted as applying only to capacity extensions which took place during the chosen baseline period. As regards any capacity extension which took place earlier, the resulting increase in activity is, in any event, included in the historical activity during that baseline period. Taking additional account of the capacity extension pursuant to Article 9(9) of Decision 2011/278 would result in the capacity extension being counted twice.

| 27 | In the event that a significant capacity extension should be taken into account under that provision, even though it took place before the chosen baseline period, it is also appropriate to examine whether it is necessary to subtract the capacity thus added, in order to ensure that it is not taken into account twice. |
| --- | --- |

27

In the event that a significant capacity extension should be taken into account under that provision, even though it took place before the chosen baseline period, it is also appropriate to examine whether it is necessary to subtract the capacity thus added, in order to ensure that it is not taken into account twice.

| 28 | If the Court were to find that Article 9(9) of Decision 2011/278 covers only significant capacity changes which occurred after the beginning of the chosen baseline period, it would also be necessary to interpret paragraph 1 of that article. |
| --- | --- |

28

If the Court were to find that Article 9(9) of Decision 2011/278 covers only significant capacity changes which occurred after the beginning of the chosen baseline period, it would also be necessary to interpret paragraph 1 of that article.

| 29 | According to Article 9(1) of Decision 2011/278, Member States should determine the historical activity level of installations on the basis of the baseline period during which that level is highest. However, it cannot be excluded that it is ultimately for the operators of installations to determine the relevant period. Where appropriate, it would be necessary to establish whether the competent authorities are required to correct of their own motion an operator’s erroneous choice. In Germany, such a check is possible, since operators of installations are invited to provide data relating to both baseline periods, whereas Article 7(1) of Decision 2011/278 requires the collection of data for only one of those two periods. |
| --- | --- |

29

According to Article 9(1) of Decision 2011/278, Member States should determine the historical activity level of installations on the basis of the baseline period during which that level is highest. However, it cannot be excluded that it is ultimately for the operators of installations to determine the relevant period. Where appropriate, it would be necessary to establish whether the competent authorities are required to correct of their own motion an operator’s erroneous choice. In Germany, such a check is possible, since operators of installations are invited to provide data relating to both baseline periods, whereas Article 7(1) of Decision 2011/278 requires the collection of data for only one of those two periods.

| 30 | Moreover, if, on the basis of the Court’s answers, Spenner’s action is upheld, it will be necessary to determine the quantity of additional emission allowances to be allocated to Spenner and to apply, in that context, the cross-sectoral correction factor. Initially, the cross-sectoral correction factor was established by the European Commission in Article 4 of, and Annex II to, Decision 2013/448. In its judgment of 28 April 2016, Borealis Polyolefine and Others (C‐191/14, C‐192/14, C‐295/14, C‐389/14 and C‐391/14 to C‐393/14, EU:C:2016:311), the Court held that those provisions of Decision 2013/448 were invalid, while limiting the temporal effects of its declaration of invalidity, so that, first, the measures already adopted could not be called into question and, secondly, the Commission would have a period within which to adopt a new decision. By adopting Decision 2017/126, the Commission established a new cross-sectoral correction factor, the applicability of which was determined on the basis of the requirements laid down in that judgment. |
| --- | --- |

30

Moreover, if, on the basis of the Court’s answers, Spenner’s action is upheld, it will be necessary to determine the quantity of additional emission allowances to be allocated to Spenner and to apply, in that context, the cross-sectoral correction factor. Initially, the cross-sectoral correction factor was established by the European Commission in Article 4 of, and Annex II to, Decision 2013/448. In its judgment of 28 April 2016, Borealis Polyolefine and Others (C‐191/14, C‐192/14, C‐295/14, C‐389/14 and C‐391/14 to C‐393/14, EU:C:2016:311), the Court held that those provisions of Decision 2013/448 were invalid, while limiting the temporal effects of its declaration of invalidity, so that, first, the measures already adopted could not be called into question and, secondly, the Commission would have a period within which to adopt a new decision. By adopting Decision 2017/126, the Commission established a new cross-sectoral correction factor, the applicability of which was determined on the basis of the requirements laid down in that judgment.

| 31 | The Bundesverwaltungsgericht (Federal Administrative Court) considers that it follows from Decision 2017/126 that, for allocations made before 1 March 2017, the cross-sectoral correction factor defined in the original version of Decision 2013/448 applies. However, there remains unanswered the question whether, with respect to additional emission allowances granted by a court from that date, the cross-sectoral correction factor established in Decision 2017/126 should be applied to all additional allocations or only to those relating to the years 2018 to 2020. |
| --- | --- |

31

The Bundesverwaltungsgericht (Federal Administrative Court) considers that it follows from Decision 2017/126 that, for allocations made before 1 March 2017, the cross-sectoral correction factor defined in the original version of Decision 2013/448 applies. However, there remains unanswered the question whether, with respect to additional emission allowances granted by a court from that date, the cross-sectoral correction factor established in Decision 2017/126 should be applied to all additional allocations or only to those relating to the years 2018 to 2020.

| 32 | In those circumstances, the Bundesverwaltungsgericht (Federal Administrative Court), decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:





  ‘(1) | Does Article 9(9) of ... Decision [2011/278] presuppose that the significant capacity extension of an incumbent installation has taken place within the baseline period determined by the Member State in accordance with Article 9(1) of ... Decision [2011/278]? |
| --- | --- | --- |

32

In those circumstances, the Bundesverwaltungsgericht (Federal Administrative Court), decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)

Does Article 9(9) of ... Decision [2011/278] presuppose that the significant capacity extension of an incumbent installation has taken place within the baseline period determined by the Member State in accordance with Article 9(1) of ... Decision [2011/278]?

| (2) | As regards significant capacity extensions, is the first subparagraph of Article 9(9) of Decision [2011/278], read in conjunction with Article 9(1) thereof, to be interpreted as meaning that, for the purposes of determining the historical activity levels for the baseline period from 1 January 2009 to 31 December 2010, the historical activity levels of the added capacity are to be left out of account (even) if the significant capacity extension took place in the baseline period from 1 January 2005 to 31 December 2008? |
| --- | --- |

(2)

As regards significant capacity extensions, is the first subparagraph of Article 9(9) of Decision [2011/278], read in conjunction with Article 9(1) thereof, to be interpreted as meaning that, for the purposes of determining the historical activity levels for the baseline period from 1 January 2009 to 31 December 2010, the historical activity levels of the added capacity are to be left out of account (even) if the significant capacity extension took place in the baseline period from 1 January 2005 to 31 December 2008?

| (3) | (a) | If Question 1 is to be answered in the affirmative:
  Is Article 9(1) of Decision [2011/278] to be interpreted as meaning that the competent authority of the Member State must itself determine the baseline period from 1 January 2005 to 31 December 2008 or from 1 January 2009 to 31 December 2010 or may the Member State confer on the operator the right to choose the baseline period? |
| --- | --- | --- |

(3)

(a)

If Question 1 is to be answered in the affirmative:

Is Article 9(1) of Decision [2011/278] to be interpreted as meaning that the competent authority of the Member State must itself determine the baseline period from 1 January 2005 to 31 December 2008 or from 1 January 2009 to 31 December 2010 or may the Member State confer on the operator the right to choose the baseline period?

| (b) | In the event that the Member State may confer on the operator the right to choose:
  Must the Member State take into account the baseline period leading to the higher activity level of each installation even if the operator has the freedom under national law to choose between the baseline periods and decides to choose a baseline period with lower historical activity levels? |
| --- | --- |

(b)

In the event that the Member State may confer on the operator the right to choose:

Must the Member State take into account the baseline period leading to the higher activity level of each installation even if the operator has the freedom under national law to choose between the baseline periods and decides to choose a baseline period with lower historical activity levels?

| (4) | Is Commission Decision [2017/126] to be interpreted as meaning that the cross-sectoral correction factor for allocations made before 1 March 2017 is to be applied to the years 2013-2020 in the form in which it appears in the original version of Article 4 of, and Annex II to, Decision [2013/448], and, in the case of additional allocations of emission entitlements granted by judicial decision after 28 February 2017, to the full quantity of additional allowance for the years 2013 to 2020 or only to the additional allowance for the years 2018 to 2020?’ |
| --- | --- |

(4)

Is Commission Decision [2017/126] to be interpreted as meaning that the cross-sectoral correction factor for allocations made before 1 March 2017 is to be applied to the years 2013-2020 in the form in which it appears in the original version of Article 4 of, and Annex II to, Decision [2013/448], and, in the case of additional allocations of emission entitlements granted by judicial decision after 28 February 2017, to the full quantity of additional allowance for the years 2013 to 2020 or only to the additional allowance for the years 2018 to 2020?’

Consideration of the questions referred

Consideration of the questions referred

The first question

The first question

| 33 | It is clear from the order for reference that the historical activity levels of Spenner’s cement clinker production plant were determined for the baseline period from 1 January 2009 to 31 December 2010. At that installation, a significant capacity expansion took place during the previous baseline period from 1 January 2005 to 31 December 2008. However, no significant capacity changes were noted after 1 January 2009. |
| --- | --- |

33

It is clear from the order for reference that the historical activity levels of Spenner’s cement clinker production plant were determined for the baseline period from 1 January 2009 to 31 December 2010. At that installation, a significant capacity expansion took place during the previous baseline period from 1 January 2005 to 31 December 2008. However, no significant capacity changes were noted after 1 January 2009.

| 34 | Consequently, it must be concluded that, by its first question, the referring court is asking, in essence, whether Article 9(9) of Decision 2011/278 must be interpreted as meaning that it does not apply to significant extensions of the capacity of an incumbent installation which took place before the baseline period determined in accordance with Article 9(1) of that decision. |
| --- | --- |

34

Consequently, it must be concluded that, by its first question, the referring court is asking, in essence, whether Article 9(9) of Decision 2011/278 must be interpreted as meaning that it does not apply to significant extensions of the capacity of an incumbent installation which took place before the baseline period determined in accordance with Article 9(1) of that decision.

| 35 | As a preliminary point, it should be noted that, for ‘incumbent’ installations existing before 30 June 2011, Articles 5 to 14 of Decision 2011/278 govern the detailed rules for the free allocation of emission allowances. The quantity allocated to them depends, inter alia, on their ‘historical’ activity levels during a baseline period determined pursuant to Articles 7 and 9 of that decision. |
| --- | --- |

35

As a preliminary point, it should be noted that, for ‘incumbent’ installations existing before 30 June 2011, Articles 5 to 14 of Decision 2011/278 govern the detailed rules for the free allocation of emission allowances. The quantity allocated to them depends, inter alia, on their ‘historical’ activity levels during a baseline period determined pursuant to Articles 7 and 9 of that decision.

| 36 | Under Article 7(1), Member States must, for all years of the period from 1 January 2005 to 31 December 2008, or 1 January 2009 to 31 December 2010 where applicable, during which the installation has been operating, collect from the operator all relevant information and data regarding each parameter listed in Annex IV to that decision. Those parameters include the ‘initial installed capacity’, the ‘added or reduced capacity’ and the ‘historical activity levels’ of the installation. |
| --- | --- |

36

Under Article 7(1), Member States must, for all years of the period from 1 January 2005 to 31 December 2008, or 1 January 2009 to 31 December 2010 where applicable, during which the installation has been operating, collect from the operator all relevant information and data regarding each parameter listed in Annex IV to that decision. Those parameters include the ‘initial installed capacity’, the ‘added or reduced capacity’ and the ‘historical activity levels’ of the installation.

| 37 | As regards historical activity levels, it is clear from Article 9(1) that Member States are to determine historical activity levels of each installation for the baseline period from 1 January 2005 to 31 December 2008, or, where they are higher, for the baseline period from 1 January 2009 to 31 December 2010, on the basis of the data collected under Article 7. |
| --- | --- |

37

As regards historical activity levels, it is clear from Article 9(1) that Member States are to determine historical activity levels of each installation for the baseline period from 1 January 2005 to 31 December 2008, or, where they are higher, for the baseline period from 1 January 2009 to 31 December 2010, on the basis of the data collected under Article 7.

| 38 | It is clear from Article 9(2) to (5) of Decision 2011/278, read in the light of Annex IV to that decision, that the historical activity levels of an installation are to be determined on the basis of the benchmarks applicable to each sub-installation. Accordingly, it is necessary to take into account the median annual historical production, median annual historical import of measurable heat, median annual historical consumption of fuels and median annual historical process emissions during the baseline period chosen pursuant to paragraph 1 of that article. |
| --- | --- |

38

It is clear from Article 9(2) to (5) of Decision 2011/278, read in the light of Annex IV to that decision, that the historical activity levels of an installation are to be determined on the basis of the benchmarks applicable to each sub-installation. Accordingly, it is necessary to take into account the median annual historical production, median annual historical import of measurable heat, median annual historical consumption of fuels and median annual historical process emissions during the baseline period chosen pursuant to paragraph 1 of that article.

| 39 | However, if, during the baseline period determined pursuant to Article 9(1) of Decision 2011/278, a significant capacity change has taken place, in accordance with Article 9(9), the capacity thus added or reduced need not be taken into account when determining the median values pursuant to paragraphs 2 to 5 thereof. |
| --- | --- |

39

However, if, during the baseline period determined pursuant to Article 9(1) of Decision 2011/278, a significant capacity change has taken place, in accordance with Article 9(9), the capacity thus added or reduced need not be taken into account when determining the median values pursuant to paragraphs 2 to 5 thereof.

| 40 | It is clear from the first subparagraph of Article 9(9) of that decision that, in such a situation, the historical activity level of the installation concerned is be the sum, first, of the median values of the baseline period determined pursuant to paragraph 1 of that article ‘without the significant capacity change’ and, secondly, of the historical activity level of the added or reduced capacity, determined in accordance with the second subparagraph of paragraph 9 of that article. |
| --- | --- |

40

It is clear from the first subparagraph of Article 9(9) of that decision that, in such a situation, the historical activity level of the installation concerned is be the sum, first, of the median values of the baseline period determined pursuant to paragraph 1 of that article ‘without the significant capacity change’ and, secondly, of the historical activity level of the added or reduced capacity, determined in accordance with the second subparagraph of paragraph 9 of that article.

| 41 | However, contrary to what is claimed by the applicant in the main proceedings, Article 9(9) of Decision 2011/278 does not govern the manner in which reduced or added capacities are to be taken into account when a significant capacity change has taken place before the baseline period determined in accordance with Article 9(1). |
| --- | --- |

41

However, contrary to what is claimed by the applicant in the main proceedings, Article 9(9) of Decision 2011/278 does not govern the manner in which reduced or added capacities are to be taken into account when a significant capacity change has taken place before the baseline period determined in accordance with Article 9(1).

| 42 | In that regard, it should be noted that the first subparagraph of Article 9(9) of that decision refers to the period ‘between 1 January 2005 and 30 June 2011’ only in order to limit its scope. Thus, only significant capacity changes taking place during that period are capable of resulting in the application of Article 9(9). However, this does not mean that any significant change during that period must be taken into account under that provision. |
| --- | --- |

42

In that regard, it should be noted that the first subparagraph of Article 9(9) of that decision refers to the period ‘between 1 January 2005 and 30 June 2011’ only in order to limit its scope. Thus, only significant capacity changes taking place during that period are capable of resulting in the application of Article 9(9). However, this does not mean that any significant change during that period must be taken into account under that provision.

| 43 | Under Article 9(2) to (5) of Decision 2011/278, the median values are based on the historical activity of an installation from the beginning of the baseline period, determined in accordance with Article 9(1), until the end of that period. |
| --- | --- |

43

Under Article 9(2) to (5) of Decision 2011/278, the median values are based on the historical activity of an installation from the beginning of the baseline period, determined in accordance with Article 9(1), until the end of that period.

| 44 | Accordingly, where the baseline period is that from 1 January 2009 to 31 December 2010, as in the case in the main proceedings, any significant capacity changes which took place between 1 January 2005 and 31 December 2008 determine, by definition, the historical activity levels on 1 January 2009. Those changes are therefore reflected in the median values calculated pursuant to Article 9(2) to (5) of Decision 2011/278, with the result that it is not necessary to apply Article 9(9). |
| --- | --- |

44

Accordingly, where the baseline period is that from 1 January 2009 to 31 December 2010, as in the case in the main proceedings, any significant capacity changes which took place between 1 January 2005 and 31 December 2008 determine, by definition, the historical activity levels on 1 January 2009. Those changes are therefore reflected in the median values calculated pursuant to Article 9(2) to (5) of Decision 2011/278, with the result that it is not necessary to apply Article 9(9).

| 45 | The same is true of changes which took place before the first baseline period. For that reason, Article 9(9) is applicable only from 1 January 2005. |
| --- | --- |

45

The same is true of changes which took place before the first baseline period. For that reason, Article 9(9) is applicable only from 1 January 2005.

| 46 | Moreover, the taking into account, pursuant to the latter provision, of changes which took place before the baseline period determined in accordance with Article 9(1) would result in the added or reduced capacities being counted twice. |
| --- | --- |

46

Moreover, the taking into account, pursuant to the latter provision, of changes which took place before the baseline period determined in accordance with Article 9(1) would result in the added or reduced capacities being counted twice.

| 47 | However, the Court has held that it is necessary to avoid emissions of installations being taken into account twice in the allocation of allowances, since Directive 2003/87 and Decision 2011/278 preclude double counting of emissions and the double allocation of allowances (judgment of 17 May 2018, Evonik Degussa, C‐229/17, EU:C:2018:323, paragraph 45). |
| --- | --- |

47

However, the Court has held that it is necessary to avoid emissions of installations being taken into account twice in the allocation of allowances, since Directive 2003/87 and Decision 2011/278 preclude double counting of emissions and the double allocation of allowances (judgment of 17 May 2018, Evonik Degussa, C‐229/17, EU:C:2018:323, paragraph 45).

| 48 | That interpretation of Article 9(9) of Decision 2011/278 is supported by documents which the Commission has made available to Member States and undertakings in order to facilitate the interpretation and application of the legislation on emission allowance trading, including Decision 2011/278. |
| --- | --- |

48

That interpretation of Article 9(9) of Decision 2011/278 is supported by documents which the Commission has made available to Member States and undertakings in order to facilitate the interpretation and application of the legislation on emission allowance trading, including Decision 2011/278.

| 49 | While those documents are not legally binding, they nonetheless constitute additional indications of such a kind as to clarify the general scheme of Directive 2003/87 and of Decision 2011/278 (judgment of 18 January 2018, INEOS, C‐58/17, EU:C:2018:19, paragraph 41). |
| --- | --- |

49

While those documents are not legally binding, they nonetheless constitute additional indications of such a kind as to clarify the general scheme of Directive 2003/87 and of Decision 2011/278 (judgment of 18 January 2018, INEOS, C‐58/17, EU:C:2018:19, paragraph 41).

| 50 | In that regard, it is apparent from the document entitled ‘Guidance Document No 2 on the harmonised free allocation methodology for the EU-ETS post 2012 (Guidance on allocation methodologies)’, of 14 April and 29 June 2011 (pages 40 and 41), that the historical activity levels of an installation must be determined on the basis of the capacity available during the baseline period determined pursuant to Article 9(1) of Decision 2011/278. |
| --- | --- |

50

In that regard, it is apparent from the document entitled ‘Guidance Document No 2 on the harmonised free allocation methodology for the EU-ETS post 2012 (Guidance on allocation methodologies)’, of 14 April and 29 June 2011 (pages 40 and 41), that the historical activity levels of an installation must be determined on the basis of the capacity available during the baseline period determined pursuant to Article 9(1) of Decision 2011/278.

| 51 | Furthermore, it is clear from pages 28 and 29 of that document that only a significant capacity change taking place after the beginning of that baseline period must be taken into account pursuant to Article 9(9) of Decision 2011/278. This is reiterated on page 6 of the document entitled ‘Questions & Answers on the harmonised free allocation methodology for the EU-ETS post 2012’. |
| --- | --- |

51

Furthermore, it is clear from pages 28 and 29 of that document that only a significant capacity change taking place after the beginning of that baseline period must be taken into account pursuant to Article 9(9) of Decision 2011/278. This is reiterated on page 6 of the document entitled ‘Questions & Answers on the harmonised free allocation methodology for the EU-ETS post 2012’.

| 52 | In the light of all the foregoing considerations, the answer to the first question is that Article 9(9) of Decision 2011/278 must be interpreted as meaning that it does not apply to significant extensions of the capacity of an incumbent installation which took place before the baseline period determined in accordance with Article 9(1) of that decision. |
| --- | --- |

52

In the light of all the foregoing considerations, the answer to the first question is that Article 9(9) of Decision 2011/278 must be interpreted as meaning that it does not apply to significant extensions of the capacity of an incumbent installation which took place before the baseline period determined in accordance with Article 9(1) of that decision.

The second question

The second question

| 53 | In view of the answer given to the first question, there is no longer any need to answer the second question, concerning the detailed rules for the application of Article 9(9) of Decision 2011/278 in the event that a significant capacity change has taken place before the baseline period determined in accordance with Article 9(1) of that decision. |
| --- | --- |

53

In view of the answer given to the first question, there is no longer any need to answer the second question, concerning the detailed rules for the application of Article 9(9) of Decision 2011/278 in the event that a significant capacity change has taken place before the baseline period determined in accordance with Article 9(1) of that decision.

The third question

The third question

| 54 | By its third question, the referring court asks, in essence, whether Article 9(1) of Decision 2011/278 must be interpreted as meaning that it requires the competent national authority itself to determine the relevant baseline period for assessing the historical activity levels of an installation. |
| --- | --- |

54

By its third question, the referring court asks, in essence, whether Article 9(1) of Decision 2011/278 must be interpreted as meaning that it requires the competent national authority itself to determine the relevant baseline period for assessing the historical activity levels of an installation.

| 55 | In that regard, it should be recalled that, pursuant to Article 9(1) of Decision 2011/278, Member States are to determine historical activity levels of each installation for the baseline period from 1 January 2005 to 31 December 2008, or, where they are higher, for the baseline period from 1 January 2009 to 31 December 2010, on the basis of the data collected under Article 7 of that decision. |
| --- | --- |

55

In that regard, it should be recalled that, pursuant to Article 9(1) of Decision 2011/278, Member States are to determine historical activity levels of each installation for the baseline period from 1 January 2005 to 31 December 2008, or, where they are higher, for the baseline period from 1 January 2009 to 31 December 2010, on the basis of the data collected under Article 7 of that decision.

| 56 | Article 9(1) of Decision 2011/278, in that it is addressed in general terms to Member States, does not establish detailed procedural rules allowing them to fulfil the obligations laid down therein. |
| --- | --- |

56

Article 9(1) of Decision 2011/278, in that it is addressed in general terms to Member States, does not establish detailed procedural rules allowing them to fulfil the obligations laid down therein.

| 57 | As regards the wording of Article 7(1) of Decision 2011/278, it follows there from that Member States are to collect from the operator data serving to establish the parameters referred to in Annex IV to that decision, including the historical activity levels of an installation, which supports the conclusion that it is for the operators of installations to provide the relevant data, as is expressly confirmed by Annex IV. |
| --- | --- |

57

As regards the wording of Article 7(1) of Decision 2011/278, it follows there from that Member States are to collect from the operator data serving to establish the parameters referred to in Annex IV to that decision, including the historical activity levels of an installation, which supports the conclusion that it is for the operators of installations to provide the relevant data, as is expressly confirmed by Annex IV.

| 58 | Moreover, Article 7(1) of, and Annex IV to, Decision 2011/278 require the collection of data relating to a single baseline period. However, without data relating to both baseline periods, the competent national authorities cannot assess whether the historical activity of an installation was highest during the first or second period. Accordingly, it is for operators of installations to determine whether they should submit data for the period from 1 January 2005 to 31 December 2008 or for the period from 1 January 2009 to 31 December 2010. |
| --- | --- |

58

Moreover, Article 7(1) of, and Annex IV to, Decision 2011/278 require the collection of data relating to a single baseline period. However, without data relating to both baseline periods, the competent national authorities cannot assess whether the historical activity of an installation was highest during the first or second period. Accordingly, it is for operators of installations to determine whether they should submit data for the period from 1 January 2005 to 31 December 2008 or for the period from 1 January 2009 to 31 December 2010.

| 59 | It is true that Article 7(2) of Decision 2011/278 and Annex IV to that decision allow Member States to request, where necessary, that operators of installations provide additional data to Member States. Accordingly, competent authorities may, where necessary, carry out additional or enhanced checks. However, this in no way implies that those authorities are systematically required to check whether operators of installations have indeed chosen the baseline period with the highest historical activity. A fortiori, those provisions cannot be interpreted as requiring those authorities to correct the operators’ choices. |
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59

It is true that Article 7(2) of Decision 2011/278 and Annex IV to that decision allow Member States to request, where necessary, that operators of installations provide additional data to Member States. Accordingly, competent authorities may, where necessary, carry out additional or enhanced checks. However, this in no way implies that those authorities are systematically required to check whether operators of installations have indeed chosen the baseline period with the highest historical activity. A fortiori, those provisions cannot be interpreted as requiring those authorities to correct the operators’ choices.

| 60 | The same applies with regard to Article 7(8) of Decision 2011/278, in that it specifies that, where data is missing, Member States are to require the operator to justify any ‘lack of data’ and to substitute ‘partly available data’ with conservative estimates, without, however, establishing a procedure that would make it possible to correct or supplement the information provided (judgment of 22 February 2018, INEOS Köln, C‐572/16, EU:C:2018:100, paragraph 41). |
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60

The same applies with regard to Article 7(8) of Decision 2011/278, in that it specifies that, where data is missing, Member States are to require the operator to justify any ‘lack of data’ and to substitute ‘partly available data’ with conservative estimates, without, however, establishing a procedure that would make it possible to correct or supplement the information provided (judgment of 22 February 2018, INEOS Köln, C‐572/16, EU:C:2018:100, paragraph 41).

| 61 | Contrary to what is claimed by the applicant in the main proceedings, nor does Article 8 of Decision 2011/278 impose an obligation on the competent national authorities to check the operator’s choice of baseline period for an installation and to correct it where necessary. That provision requires, first, that data collected from operators should be examined by a verifier, in particular with regard to the reliability, credibility and accuracy of the data, and, secondly, that the competent national authorities should accept only data that has been verified as satisfactory by a verifier. |
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61

Contrary to what is claimed by the applicant in the main proceedings, nor does Article 8 of Decision 2011/278 impose an obligation on the competent national authorities to check the operator’s choice of baseline period for an installation and to correct it where necessary. That provision requires, first, that data collected from operators should be examined by a verifier, in particular with regard to the reliability, credibility and accuracy of the data, and, secondly, that the competent national authorities should accept only data that has been verified as satisfactory by a verifier.

| 62 | As the Court has held in that regard, while Article 8 of Decision 2011/278 prohibits Member States from accepting data that have not been verified as satisfactory by a verifier, that provision does not establish any procedure for correcting unsatisfactory data (see, to that effect, judgment of 22 February 2018, INEOS Köln, C‐572/16, EU:C:2018:100, paragraph 41). |
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62

As the Court has held in that regard, while Article 8 of Decision 2011/278 prohibits Member States from accepting data that have not been verified as satisfactory by a verifier, that provision does not establish any procedure for correcting unsatisfactory data (see, to that effect, judgment of 22 February 2018, INEOS Köln, C‐572/16, EU:C:2018:100, paragraph 41).

| 63 | That interpretation of Articles 7(1) and 9(1) of Decision 2011/278 is confirmed by the purpose of collecting data on the historical activities of an installation. As follows from recital 16 of that decision, the purpose of that data collection is to ensure that the reference period is as far as possible representative of industry cycles, covers a relevant period where good quality data is available and reduces the impact of special circumstances, such as temporary closure of installations. It is for those reasons that a choice can be made between two baseline periods. |
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63

That interpretation of Articles 7(1) and 9(1) of Decision 2011/278 is confirmed by the purpose of collecting data on the historical activities of an installation. As follows from recital 16 of that decision, the purpose of that data collection is to ensure that the reference period is as far as possible representative of industry cycles, covers a relevant period where good quality data is available and reduces the impact of special circumstances, such as temporary closure of installations. It is for those reasons that a choice can be made between two baseline periods.

| 64 | Therefore, that choice is a matter for the operators of the installations, who are best placed to verify the availability of data and to compare the activity of their installations during the two baseline periods. If, for whatever reason, they do not choose the period during which the activity levels of their installations were highest, Decision 2011/278 does not require the competent national authorities to do so in their place. |
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64

Therefore, that choice is a matter for the operators of the installations, who are best placed to verify the availability of data and to compare the activity of their installations during the two baseline periods. If, for whatever reason, they do not choose the period during which the activity levels of their installations were highest, Decision 2011/278 does not require the competent national authorities to do so in their place.

| 65 | In the light of the foregoing considerations, the answer to the third question is that Article 9(1) of Decision 2011/278 must be interpreted as meaning that it does not require the competent national authority itself to determine the relevant baseline period for assessing the historical activity levels of an installation. |
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65

In the light of the foregoing considerations, the answer to the third question is that Article 9(1) of Decision 2011/278 must be interpreted as meaning that it does not require the competent national authority itself to determine the relevant baseline period for assessing the historical activity levels of an installation.

The fourth question

The fourth question

| 66 | As regards its fourth question, the referring court considers that, if, on the basis of the answers to its first to third questions, the action before the referring court is upheld, it will be necessary to determine the quantity of additional emission allowances to be allocated to the applicant in the main proceedings and to apply, in that context, the cross-sectoral correction factor. |
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66

As regards its fourth question, the referring court considers that, if, on the basis of the answers to its first to third questions, the action before the referring court is upheld, it will be necessary to determine the quantity of additional emission allowances to be allocated to the applicant in the main proceedings and to apply, in that context, the cross-sectoral correction factor.

| 67 | In that regard, it should be pointed out that, by its action, the applicant in the main proceedings claims that the DEHSt erred in law in adopting its decision of 17 February 2014. In particular, the DEHSt wrongly disapplied Article 9(9) of Decision 2011/278 and should have checked and corrected the choice of baseline period made by the applicant in the main proceedings. The merits of those claims are, in essence, the subject matter of the first to third questions from the referring court. |
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67

In that regard, it should be pointed out that, by its action, the applicant in the main proceedings claims that the DEHSt erred in law in adopting its decision of 17 February 2014. In particular, the DEHSt wrongly disapplied Article 9(9) of Decision 2011/278 and should have checked and corrected the choice of baseline period made by the applicant in the main proceedings. The merits of those claims are, in essence, the subject matter of the first to third questions from the referring court.

| 68 | However, as is clear from the answer given to the first question, the competent authority of a Member State cannot be criticised for not having applied Article 9(9) of Decision 2011/278 to a significant capacity change which took place before the baseline period chosen by the operator of an installation. |
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68

However, as is clear from the answer given to the first question, the competent authority of a Member State cannot be criticised for not having applied Article 9(9) of Decision 2011/278 to a significant capacity change which took place before the baseline period chosen by the operator of an installation.

| 69 | Moreover, it is clear from the answer given to the third question that Decision 2011/278 does not require such an authority either to check or to correct the choice of baseline period made by the operator concerned. |
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69

Moreover, it is clear from the answer given to the third question that Decision 2011/278 does not require such an authority either to check or to correct the choice of baseline period made by the operator concerned.

| 70 | There is therefore no need to answer the fourth question. |
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70

There is therefore no need to answer the fourth question.

Costs

Costs

| 71 | Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. |
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71

Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

| | On those grounds, the Court (Sixth Chamber) hereby rules: |
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On those grounds, the Court (Sixth Chamber) hereby rules:

| | 1. | Article 9(9) of Commission Decision 2011/278/EU of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council must be interpreted as meaning that it does not apply to significant extensions of the capacity of an incumbent installation which took place before the baseline period determined in accordance with Article 9(1) of that decision. |
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1.

1.

Article 9(9) of Commission Decision 2011/278/EU of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council must be interpreted as meaning that it does not apply to significant extensions of the capacity of an incumbent installation which took place before the baseline period determined in accordance with Article 9(1) of that decision.

Article 9(9) of Commission Decision 2011/278/EU of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council must be interpreted as meaning that it does not apply to significant extensions of the capacity of an incumbent installation which took place before the baseline period determined in accordance with Article 9(1) of that decision.

| | 2. | Article 9(1) of Decision 2011/278 must be interpreted as meaning that it does not require the competent national authority itself to determine the relevant baseline period for assessing the historical activity levels of an installation. |
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2.

2.

Article 9(1) of Decision 2011/278 must be interpreted as meaning that it does not require the competent national authority itself to determine the relevant baseline period for assessing the historical activity levels of an installation.

Article 9(1) of Decision 2011/278 must be interpreted as meaning that it does not require the competent national authority itself to determine the relevant baseline period for assessing the historical activity levels of an installation.

| | [Signatures] |
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[Signatures]

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  *1
  )	Language of the case: German.

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