# C_2017256EN.01002901.xml

| 7.8.2017 | EN | Official Journal of the European Union | C 256/29 |
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Action brought on 15 May 2017 — Danpower Baltic v Commission

(Case T-295/17)

(2017/C 256/35)

Language of the case: English

Parties

Applicant: Danpower Baltic UAB (Kauno, Lithuania) (represented by: D. Fouquet, J. Nysten and J. Voß, lawyers)

Defendant: European Commission

Form of order sought

The applicant claims that the Court should:

| — | annul the Commission’s State aid decision of 19 September 2016 in case SA.41539 (2016/N) — Lithuania, Investment aid for high-efficiency cogeneration power plant in Vilnius, UAB Vilniaus kogeneracinė jėgainė Viniaus Kogeneracinee Jeqaine — C(2016) 5943final; |
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| — | order the defendant to pay the costs. |
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Pleas in law and main arguments

In support of the action, the applicant relies on seven pleas in law.

| 1. | First plea in law, alleging that the Commission decision constitutes a manifest error of assessment as it is based on insufficient, incomplete, insignificant and inconsistent evidence
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The Commission decision is based on insufficient, incomplete, insignificant, and inconsistent evidence. This concerns specifically the availability of private investment in combined heat and power plants (CHPs) and other heat plants, the impact of the CHP on the environment, the existing waste incineration capacities in Lithuania, the status quo of the heating market in Vilnius, and the failure of Lietuvos Energija to conduct a viable tender procedure for the selection of a private partner. This information has not been taken into account by the defendant. | — | The Commission decision is based on insufficient, incomplete, insignificant, and inconsistent evidence. This concerns specifically the availability of private investment in combined heat and power plants (CHPs) and other heat plants, the impact of the CHP on the environment, the existing waste incineration capacities in Lithuania, the status quo of the heating market in Vilnius, and the failure of Lietuvos Energija to conduct a viable tender procedure for the selection of a private partner. This information has not been taken into account by the defendant. |
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| — | The Commission decision is based on insufficient, incomplete, insignificant, and inconsistent evidence. This concerns specifically the availability of private investment in combined heat and power plants (CHPs) and other heat plants, the impact of the CHP on the environment, the existing waste incineration capacities in Lithuania, the status quo of the heating market in Vilnius, and the failure of Lietuvos Energija to conduct a viable tender procedure for the selection of a private partner. This information has not been taken into account by the defendant. | | |

| 2. | Second plea in law, alleging that the Commission decision infringes Article 107 TFEU in that it does not respect the individual notification and assessment necessary for large-scale aid and assumes the contribution to an objective of common interest
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The Commission decision infringes Article 107 TFEU in that it does not respect the individual notification and assessment necessary for large-scale aid and assumes the contribution to an objective of common interest. The Commission decision fails to assess properly according to paragraph 33 Guidelines on State aid for environmental protection and energy 2014-2020 if the State aid serves for the protection of the environment. The defendant used the wrong assessment standard and did not take into account that the potential CO2-reductions are considerably lower than stated in the decision. | — | The Commission decision infringes Article 107 TFEU in that it does not respect the individual notification and assessment necessary for large-scale aid and assumes the contribution to an objective of common interest. The Commission decision fails to assess properly according to paragraph 33 Guidelines on State aid for environmental protection and energy 2014-2020 if the State aid serves for the protection of the environment. The defendant used the wrong assessment standard and did not take into account that the potential CO2-reductions are considerably lower than stated in the decision. |
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| — | The Commission decision infringes Article 107 TFEU in that it does not respect the individual notification and assessment necessary for large-scale aid and assumes the contribution to an objective of common interest. The Commission decision fails to assess properly according to paragraph 33 Guidelines on State aid for environmental protection and energy 2014-2020 if the State aid serves for the protection of the environment. The defendant used the wrong assessment standard and did not take into account that the potential CO2-reductions are considerably lower than stated in the decision. | | |

| 3. | Third plea in law, alleging that the Commission decision infringes Article 107 TFEU in that it will result in a circumvention of the waste hierarchy in Lithuania
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The Commission decision infringes Article 107 TFEU in that it will result in a circumvention of the waste hierarchy in Lithuania. The State aid will further increase the overcapacity of waste incineration plants in Lithuania and reduce incentives to increase recycling and re-use. This will hinder Lithuania from meeting the 50 % recycling target under Directive 2008/98/EC. The European Commission itself has urged the Lithuanian Government not to incentivize the construction of waste incineration plants. | — | The Commission decision infringes Article 107 TFEU in that it will result in a circumvention of the waste hierarchy in Lithuania. The State aid will further increase the overcapacity of waste incineration plants in Lithuania and reduce incentives to increase recycling and re-use. This will hinder Lithuania from meeting the 50 % recycling target under Directive 2008/98/EC. The European Commission itself has urged the Lithuanian Government not to incentivize the construction of waste incineration plants. |
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| — | The Commission decision infringes Article 107 TFEU in that it will result in a circumvention of the waste hierarchy in Lithuania. The State aid will further increase the overcapacity of waste incineration plants in Lithuania and reduce incentives to increase recycling and re-use. This will hinder Lithuania from meeting the 50 % recycling target under Directive 2008/98/EC. The European Commission itself has urged the Lithuanian Government not to incentivize the construction of waste incineration plants. | | |

| 4. | Fourth plea in law, alleging that the Commission decision infringes Article 107 TFEU where it concludes that there would be the need for State intervention in the form of State aid.
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The defendant did not look into nor address evidence that the Vilnius district heat market would bring about similar improvements to environmental protection through replacing gas by biomass without the need for State intervention. There is no market failure on the heating market in Vilnius. The heating market is a competitive market with competitive prices that appropriately incentivize investment in CO2-neutral biomass and waste incineration capacities. | — | The defendant did not look into nor address evidence that the Vilnius district heat market would bring about similar improvements to environmental protection through replacing gas by biomass without the need for State intervention. There is no market failure on the heating market in Vilnius. The heating market is a competitive market with competitive prices that appropriately incentivize investment in CO2-neutral biomass and waste incineration capacities. |
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| — | The defendant did not look into nor address evidence that the Vilnius district heat market would bring about similar improvements to environmental protection through replacing gas by biomass without the need for State intervention. There is no market failure on the heating market in Vilnius. The heating market is a competitive market with competitive prices that appropriately incentivize investment in CO2-neutral biomass and waste incineration capacities. | | |

| 5. | Fifth plea in law, alleging that the Commission decision infringes Article 107 TFEU where it concludes the aid to be proportionate.
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The Commission decision fails to conduct an appropriate assessment of proportionality in that it accepts the information provided by the Lithuanian Government without testing, and uses a wrong counterfactual scenario comparing totally different investment projects (CHP and heat only boiler instead of comparing two CHP projects). | — | The Commission decision fails to conduct an appropriate assessment of proportionality in that it accepts the information provided by the Lithuanian Government without testing, and uses a wrong counterfactual scenario comparing totally different investment projects (CHP and heat only boiler instead of comparing two CHP projects). |
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| — | The Commission decision fails to conduct an appropriate assessment of proportionality in that it accepts the information provided by the Lithuanian Government without testing, and uses a wrong counterfactual scenario comparing totally different investment projects (CHP and heat only boiler instead of comparing two CHP projects). | | |

| 6. | Sixth plea in law, alleging that the Commission decision infringes Article 107 TFEU in concluding that the State aid would have an incentive effect.
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The defendant relied on the Lithuanian government’s submissions that the beneficiary would not otherwise have built the Vilnius CHP, which is however incorrect, as those activities are exactly within the scope of the normal business of the beneficiary, i.e. would not need to be incentivized any further. | — | The defendant relied on the Lithuanian government’s submissions that the beneficiary would not otherwise have built the Vilnius CHP, which is however incorrect, as those activities are exactly within the scope of the normal business of the beneficiary, i.e. would not need to be incentivized any further. |
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| — | The defendant relied on the Lithuanian government’s submissions that the beneficiary would not otherwise have built the Vilnius CHP, which is however incorrect, as those activities are exactly within the scope of the normal business of the beneficiary, i.e. would not need to be incentivized any further. | | |

| 7. | Seventh plea in law, alleging that the Commission decision infringes Article 107 TFEU in that it misjudges the impact on competition in the Vilnius heat market.
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The defendant had information at hand regarding the competition in the Vilnius heat market, but apparently misjudged it when concluding that there would be no impact. In particular, the threat of crowding out of existing market players as the Plaintiff was not looked at sufficiently and the conclusions of the Defendant are thus wrong. The stated aid will drive out independent heat producers that operate CO2-neutral biomass heat plants. Furthermore, the State aid enables Vilnius KJ to instantly become a dominant market player with a market share of around 51 %. | — | The defendant had information at hand regarding the competition in the Vilnius heat market, but apparently misjudged it when concluding that there would be no impact. In particular, the threat of crowding out of existing market players as the Plaintiff was not looked at sufficiently and the conclusions of the Defendant are thus wrong. The stated aid will drive out independent heat producers that operate CO2-neutral biomass heat plants. Furthermore, the State aid enables Vilnius KJ to instantly become a dominant market player with a market share of around 51 %. |
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| — | The defendant had information at hand regarding the competition in the Vilnius heat market, but apparently misjudged it when concluding that there would be no impact. In particular, the threat of crowding out of existing market players as the Plaintiff was not looked at sufficiently and the conclusions of the Defendant are thus wrong. The stated aid will drive out independent heat producers that operate CO2-neutral biomass heat plants. Furthermore, the State aid enables Vilnius KJ to instantly become a dominant market player with a market share of around 51 %. | | |

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